Cloud Video Revenue Prospects Are Sky-High
Few security areas have garnered more buzz of late than cloud-based video surveillance services. Offsite video data management offers end users enticing advantages and integrators big-time growth opportunities. Find out the business model, technology, and sales and marketing considerations you need to know to get started.
If your customers are interested in services from the “cloud” and you are looking for new ways to increase your recurring revenue, read on. Cloud video surveillance can be a profitable opportunity, and we will cover some ground rules to help you deliver this new service to your customers and earn more recurring revenue for your company.
What is the cloud? Almost a quarter of us admit that we have “pretended to know what the cloud is or how it works” and more than half of us believe that “other people are pretending to know what the cloud is,” according to a recent survey from Wakefield Research. Cloud computing does not have an agreed-upon technical definition. In general it is a colloquialism to describe anything that involves delivering hosted services over the Internet using multiple computers. More specifically, the cloud is different from traditional hosting in that it is available on demand (buy it when you need it), scalable (meets any level of needs), and dynamic (you can access as much or as little as you want when you want to).
Taken one step further, cloud video surveillance can be defined as “video surveillance services and storage that are available on demand, scalable, and dynamic.” According to Forbes more than half of U.S. businesses use the cloud every day ($150B in 2013 services revenue, Gartner) and it is expected to continue to grow. The opportunity is there — so how do you go about generating revenue from the cloud with video surveillance? There is much more to it than plugging in a camera, storing video in the cloud and charging your customer for it. Let’s investigate further.
Selecting a Business Model
There are different business models when it comes to cloud video surveillance and these are generally driven by different technology platforms. The two most common options include “camera direct” solutions that require you connect a camera to the Internet and “cloud server” solutions that require an onsite device that manages cameras and usually offers local storage as well. Should you select a “camera direct” or “cloud server” solution?
Regarding camera options, most all camera direct solutions are limited to using only the specific camera or cameras manufactured by the vendor. With most cloud server solutions, you can use existing analog or IP cameras from almost any manufacturer or select cameras with different features or price points that meet your customer’s specific needs.
Cloud server solutions require the additional cost of a server device. Although the retail cost of these servers can start below $300, using a camera direct option, only the cameras are required. In terms of installation and networking, if you have a 16-camera system, you will need to install and set up networking for 16 individual cameras and 16 individual Internet connections. You will need to address and manage the security of each of these Internet-connected cameras individually as well.
With a cloud server solution, there is only one device to set up and manage as the server handles all the camera communications. A cloud server that offers two network ports will also offer more security by separating the cameras from the local and Internet-connected network.
When it comes to storing video, with a camera direct solution, video is stored directly to the cloud and if the Internet is disconnected, no video is recorded. Some camera direct solutions offer limited local storage on built-in SD cards. It is important to note that SD cards are limited to the number of times data can be saved and erased from them. With a cloud server solution, video can be stored directly on the cloud and simultaneously on the local server with local storage available from 16GB to more than 100TB. Some cloud server solutions also offer options such as cloud storage of only specific cameras, cloud storage of only shared video clips, or low resolution cloud storage.
Cloud servers also offer the advantage of a local connection that allows you to view and manage all of the cameras from one local interface compared to logging into each camera individually to view or manage settings when using a camera direct solution. Bandwidth is always a challenge and some cloud servers offer built-in bandwidth management to adjust cloud connection utilization for all cameras and with camera direct options you can set individual rates for each camera.
Choosing a Technology Platform
Looking at specifications helps, but there is no substitute for seeing how these systems work in person. Regardless of how solutions are marketed or what any salesperson might claim — ask to evaluate the system and see for yourself. Be sure to test the solution with multiple cameras in more than one location. It is also important the evaluation is tested with a limited connection (such as DSL) or with the same bandwidth as your slowest location so you can see how the system works in a more realistic networking environment. Any legitimate vendor will be pleased to offer evaluations.
Before you select a technology platform, keep in mind that regardless of your solution (direct camera or cloud server), many of the features you are able to offer will be determined by your customer’s bandwidth. For a quick refresher, think of bandwidth as two pipes to the Internet. One pipe is download (how fast you can get data from the Internet down to your location) and the other is upload (how fast you can get data from your location up to the Internet). The bigger the pipe (bandwidth), the more data you can pass through it.
As the trend toward higher resolution cameras continues, surveillance video will require even larger amounts of data to go through the upload pipe to get to the Internet. Video can generate enormous amounts of data, and a business with 16 HD cameras can require an upload speed of up to 32Mbps or more for real-time online cloud video storage. If your locations have slow connections, there are ways to make cloud video surveillance solutions valuable.
One simple answer to the bandwidth problem can be achieved by storing the majority of the HD video files on a cloud server at the location and uploading to the cloud only important videos that need to be shared or backed up. Cloud storing only selected cameras, low resolution video or uploading only during off-hours may also provide viable solutions to bandwidth challenges. Optionally, consider no cloud video storage at all and use the cloud only for remote access to live and recorded video as well as a management and maintenance solution that allows you to remotely ensure all the systems are working. Even businesses that use cost-effective and slow bandwidth can benefit from cloud video surveillance.
Storage, Bandwidth and Pricing
Pricing of cloud video surveillance is most commonly broken down into two categories. Some services (mostly camera direct) charge by camera per month and others for data and storage used. Although a simple camera per month pricing plan may seem attractive, it might hide the fact that only low-resolution video is stored in the cloud and limit cameras to certain bitrates (data sizes) or frame rates. Other solutions (mostly cloud server) offer a “total storage required” model that doesn’t charge per camera, but only for storage used and based on your requirements (any resolution with any bitrate and any frame rate).
The trend in the cloud services industry is to allow the customers to pay for exactly what they require and to adjust the total amount of storage up or down when they need to. Consider both options to ensure your particular customer needs are met. The ultimate price for your customers will be driven by their requirements.
First determine the number of days and amount of storage needed (keep in mind the resolution of the cameras and how often they record — there are many free storage cal
culators online to help). Consider any other features required such as video sharing and central system management as well as what platforms your customer uses (Apple, Windows, iPhone, iPad, Android, Win8). Keep in mind that if you are managing the solution after installing it, you will want a simple way to maintain the systems, even from different locations, all from one interface.
Next, consider your ongoing cost from your technology partner and adjust with the appropriate margins and your service fees. When pricing a cloud video surveillance solution, there are two common challenges. The No. 1 deal killer is that the cost of cloud storage can be expensive. For some perspective, you can purchase a 1TB hard drive for $79 on Amazon.com while 1TB of Amazon cloud storage costs $97 per month.
If the budget to store HD video in the cloud is not available, there are ways to offer your customer many of the benefits of a cloud solution without all the cost. Consider a solution that has local storage of HD video and uses the cloud for central monitoring, systems management and sharing of important video clips. Storing only select cameras or only low resolution video on the cloud (while storing all the HD locally) offers low cost options as well.
The second-most common challenge is bandwidth. Your customer may want to have cloud surveillance, but their connection to the Internet will not support it. The alternative is the same as with storage. Offering a solution that has local storage of HD video and uses the cloud for central monitoring, systems management and sharing of important video clips can run on an Internet upload connection as slow as 175kbps. Closing a cloud deal is not as daunting as you might think and there are ways to deliver the benefits of the cloud without the high cost of online storage or with the limitations of poor bandwidth.
Making Your Value Proposition
Marketing a recurring revenue cloud solution is easier than it sounds. Today, most businesses are familiar with the concept of cloud computing and are not only open to that option but are being directed by management to move to the cloud.
The key value propositions that business stakeholders, as well as IT, are looking for include: 1) centralized offsite video storage of all or critical “shared” video; 2) central systems management and maintenance; 3) simple-to-use centralized monitoring of live and recorded video from any device; 4) bandwidth-aware solutions with integrated data management; and 5) on-demand control to increase or decrease services as needed. A focus on these benefits presented to the correct audience will generate opportunity.
To learn more, there are white papers on cloud computing and cloud video surveillance available (Google “cloud video surveillance”). Your technology partner should be a tremendous resource of marketing advice and offer you materials such as templates for presenting the offering to your customers.
Martin Renkis is Founder and CEO of Smartvue Corp. (smartvue.com).
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