IMS lowers forecast for video, remains positive

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Thursday, March 26, 2009

WELLINGBOROUGH, U.K.--In consideration of the difficult months of December, January and February in the world markets, IMS Research has revised downward its predictions for the video surveillance market. Specifically, IMS predicts a small contraction in the analog video market for the Americas in 2009, though IP video sales are expected to grow at better than 25 percent.

Globally, IMS predicts three percent growth for analog and 29 percent growth for IP. However, those predictions represent $750 million less revenue than IMS predicted for 2009 back in November. IMS still sees growth, but the research firm's predictions are 15 percent less robust after the past three months of watching the market.

Will this mean a quicker transition to IP-based systems as people leverage their network infrastructure, as Frost & Sullivan recently predicted, or will fewer installations and more price pressure move the date of the crossover back?

"I think there's merit in both arguments," said Simon Harris, senior research director at IMS. "We're currently collecting data for 2009 and we should be able to figure out some real data on that question soon, rather than just guessing. But my gut feeling is that it's not accelerating the move to IP. I haven't seen any evidence for that."

However, IMS is predicting, he said, a crossover to more IP camera revenue than analog camera revenue in 2012, roughly where Frost & Sullivan sees it.

One thing that makes Harris hesitant to sound analog's death knell is that "there's still a huge market for low-end systems, low camera counts, where the low cost of cameras and DVRs still has some real advantages to it. It's going to take a long time before IP can really compete at that low end of the market."

"It's surprising how big that low end of the market is," he continued. "There's a lot of small retailers out there. It's a quite chunky part of the market, and that's really the mainstay of analog today."

Not surprisingly, he sees IP taking hold in larger applications, "where the real arguments for IP show more return, the total cost of ownership is less, the lower maintenance costs, those factors really pay dividends for the bigger systems."

As other industries, and global economies, contract, what makes video surveillance so resilient? "I think surveillance's importance has escalated," said Harris. "It's seen as a must-have now, rather than a nice-to-have. It's critical to their business procedures that they have good security in place."

Further, he said, "technology is evolving at a faster pace than it probably ever has before, whether it's better compression with H.264, or much better image quality with megapixel cameras, the reasons to encourage users to upgrade their systems are really strong for 2009."