In last month’s column, “As IP-Based Video Soars, Manufacturers Ask How High,” I described the viewpoint of video manufacturers concerning the IP video growth trend, and how much market penetration can be expected with IP cameras.

A quick review: According to new research, manufacturers estimate that IP units achieved a 20-percent share of the total camera market by the end of 2006. They then estimated that an additional 10 percent would be gained this year, for a total IP camera share of 30 percent. And looking out five years to 2011, their projection was all the way up to an IP share of 62 percent. The balance of the market, according to manufacturers, would consist of analog camera sales that are naturally expected to decline steadily during the five-year period. The camera market, however, cannot be defined simply as “IP vs. analog,” and the security marketplace doesn’t move overnight. Analog camera makers can’t be expected to sit tight while this inevitable decline whittles away at their business. More importantly, users are not often in a position to switch directly to a complete digital system, unless they can convince management that there is a demonstrable return on investment (ROI) payout for the funds they are requesting. So, we’ve taken a more detailed look at our examination of video market segmentation using data from our new 2007 reports on the Worldwide Video Surveillance Market, the IP & Network Video Market, and the Intelligent Video & Smart Camera Market.

Users Have Options to Consider

The video security user faces three options today…options that will change with each New Year, each lifecycle product breakdown and each new security budget.

The first option is to completely remake their video surveillance system into a complete digital system, and then consider the advisability of connecting it to the enterprise IT network. The second option is to face the “tightening economy” disappointment from obtaining insufficient management funds to accomplish option one (but allowed to at least begin the conversion to a digital system). The third choice is to do nothing about going digital, and to simply continue buying analog cameras and DVRs. The choices above comprise the three primary market segments, although there is another option within these segments. For example, the use of video technology to create an enterprise system that monitors more than just the security function. Retail shopper/ point-of-sale (POS) and industrial applications are just two cases in point. We asked manufacturers how they see the evolution of these market segments during the next three years, and the accompanying chart on this page reveals their thinking.

As a group (that is, companies with a combined share of greater than 80 percent of the U.S. video surveillance market), these executives believe that 30 percent of all installed video systems will be solely IP-based by 2010. Another 26 percent of systems are seen as being hybrid solutions using encoders to convert analog to digital signals, while another 24 percent are anticipated to remain completely analog systems. Manufacturers also foresee that 20 percent of all systems — most likely IP solutions — will be enterprise systems by 2010. Since we have three years yet to go before the true picture materializes, you can backtrack into your own judgments of where these numbers stand right now.

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