Micron enters surveillance field

Chip-maker sets sights on consumer, commercial markets
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Thursday, June 1, 2006

BOISE, Idaho--If you've got a camera phone in your pocket, there's a one-in-three chance you're at least somewhat familiar with Micron Technology, a maker of complementary metal oxide semiconductor image sensors whose product is in one-third of all camera phones and many digital cameras. In April, the company announced a portfolio of sensors geared specifically for the consumer and commercial security surveillance camera markets, immediately becoming a new major player in a market currently dominated by Sony's charge-coupled device chip, but also including companies like Pixim and OmniVision.
"We've been tracing the security industry for quite some time," said Paul Gallagher, director of market development for Micron Technology's imaging group. "Up until 18 months ago, I was not a proponent." He said feedback from camera manufacturers and integrators told him the cost of the camera didn't significantly affect the cost of the job, as CCTV installation costs far outweighed hardware cost. However, in the last 18 months, Gallagher said Micron believes the industry has reached a "tipping point for networked-based installations, especially in the consumer space ... If I no longer have to run the cables, the individual component price points become much more critical."
"This is where Micron brings a strong position," said Gallagher. "We have the performance on par with CCD, but have the price point for broad consumer acceptance." Traditionally, CCD image sensors have been known for superior quality, but higher price. CMOS chips are cheaper to manufacture, but deliver lesser quality. Micron believes it can change that perception and reality. Gallagher said Micron had a similar experience in the camera-phone market, where Gallagher said the company filled a gap that existed between high-priced quality and "low-end crap," becoming the largest manufacturer of images sensors in the cell-phone industry.
The question remains, however, whether a consumer market for video surveillance cameras will ever rise to significant levels, or whether surveillance will remain a high-end buy made by corporations and governments.
"The bottom line is, no, we don't see it being a huge market," said Bill Ablondi, director of home systems with Parks Associates, which conducts market research. "I think cost, for the consumer market, is a definite hurdle that definitely needs to be overcome, but I come back around and say, 'How bad do [consumers] need this?' So I think for opening the market, it's a matter of building the demand by informing people why they need it." Parks estimated the consumer surveillance camera market at $133 million in 2005, with an expected market of $140 million for 2006.
However, "We see the opportunity for a significant shift in the market to [do it yourself]," said Gallagher. "You're starting to hear that the big box retailers are talking to the network camera people. The price points are about 2.5 times higher than they want right now, but in 18 months the price points should drop down below that."
Micron believes it can be part of that price drop. Currently, Micron is in only a few cameras, Gallagher admitted. "We are repackaging these parts to be better suited for this market ... we're not expecting huge numbers this year. We're in about half a dozen lower-cost network camera solutions and would like to have that between 20 and 40 by 2007," split between the consumer and commercial marketplace.
Gallagher predicts the camera market will see rapid consolidation in the near future, along with the introduction of companies like Cisco, IBM, Hewlett Packard and other traditional PC peripherals manufacturers. This, he said, would further the consumer market's growth.