As part of the SDM State of the Market series, SDM has great conversations with industry professionals who offer tremendous insight. Sadly, we just don’t have the space to share all their information. This interview with PSA Security dealer, Tom Hagen, president and CEO, Pro-Tec Design, Minneapolis, is an extension of the comments that were used in this year’s article, “State of the Market: Video Surveillance.”
SDM: Looking ahead, how would you describe the “State of the Market” for video surveillance systems and services in 2014? What will make 2014 different from 2013?
Hagen: We believe the “State of the Market” for suppliers of IP video management systems and services in 2014 is one of great opportunity. Momentum that has been building during the last several years will continue to be fueled by technology innovation and advancement. The shift from analog to IP video continues to accelerate. New advancements in functionality and capability will continue unabated. The overall volume of business in this segment is widely forecasted to be significantly greater in 2014 than 2013.
SDM: How were your company’s sales of video surveillance systems and services in 2013 compared with 2012 — both in dollar volume and number of sales? How do you anticipate 2014 video sales to be? What changed?
Hagen: Our revenue from sales and services related to IP video have been the fastest growing segment of our business for the last five years. We expect that trend to continue in 2014 and beyond.
SDM: Which market segments have been noticeably healthy customers of video surveillance? Among those customer segments, what is driving them to purchase video surveillance products, systems and services?
Hagen: We have experienced growing success in the healthcare market. One driver in that market has been the need for compliance with HIPPA and other regulatory mandates. Consolidation and the need for video access and management across multiple facilities and locations are readily accomplished with networked video. A related driver is that high-quality video systems have been recognized as competitive differentiators by both caregivers and patients. Another market where we have experienced growth is in state, municipal, county and city surveillance markets. Again, regulatory mandates have been a factor. It is interesting to hear from some of the municipalities we serve that their high- performance video system has become part of their marketing effort to attract business and increase their tax base. Many school districts in our region have responded to the general sense of need for heightened security by introducing bond referendums to the voters in 2013. Many of these funding requests have led with presentation of needs for security improvements and most have been successful.
Another driver of business growth for us in all markets is not the hardware or software technology, per se, but the service and support technology we offer to assist clients to gain more effective use of the video management systems (VMS) they have or are considering for implementation. One element of this initiative is to work with clients in the development of a technology roadmap. This effort includes vetting the choice of technology and manufacturer to be used, steering away from pathways that lead to proprietary jail and planning to manage the life cycle and periodic refreshment of the system components in order to take advantage of the continual advancements in functionality.
Another rapidly growing segment is small-to-medium business (SMB) in all markets. Expectations of significantly lower priced systems are increasing as the market moves from the early adoption to the later adoption phase. This creates pricing pressure as some buyers simply do not require many of the services of interest to larger organizations. The race is on in the SMB market to find ways to deliver systems that support one-24 cameras and require minimum amounts of installation, training and support. This has opened up many new offerings such as the myriad of managed video solutions, plug-and-play NVRs, etc. We believe that success in this segment requires a different marketing, sales, deployment and support structure to be successful and that there is great opportunity here for those who are able to respond effectively.
SDM: Are there any technologies that are helping to boost video surveillance sales or changing the market in any way?
Hagen: Moore’s Law continues to hold true as chip power in the camera increases and costs decrease. The ways manufacturers are making use of this power is interesting. Beyond offering more and more megapixels, there is a trend to use that processing power to provide storage on the edge, improved low-light capability, ability to zoom in on a particular area of interest within the captured video and to provide VMS capabilities on the camera. The move to push and pull video to and from the camera to mobile devices is a definite market driver as this enables security operations to meet the demand placed on them to do more with less, while still meeting their obligations. As users of IP video are more and more being tasked to become predictive and proactive, effective analytics and the ability to archive and quickly recall high-quality video is helping to make forensic investigations much more effective.
SDM: What technologies are you specifically choosing to focus on in 2014 and why?
Hagen: We will continue to do more of what we have done in years past - focus on marketing VMS and related sub-systems and services that enable our clients to build upon and expand the usefulness of the systems in which they will or already have invested.
Many of the technologies and innovations we are investing and focusing on relate to the expanding service platforms we provide. These include a client-centric MIS that provides secure real-time information to clients regarding the status of project progress and service resolution plus metrics that measure SLA performance and other important criteria. We continue to introduce new services to provide a broader offering of support to our growing client base. We invest in continued education and training offerings to our clients, driven by observations that most clients use only a small percentage of the capabilities of their systems. As we grow these support-related services, both we and our clients discover that their video systems contribute to operational improvements in other areas of the organization that go far beyond the original security expectations.
1) Looking ahead, how would you describe the “State of the Market” for video surveillance systems and services in 2014? What will make 2014 different from 2013?
The industry will continue to change in 2014 as we see new imaging advancements, even greater adoption of IP-based systems, more options for video management, and ever-shifting price points. 2014 will stand out in that we’ll see the first introduction of a 4K Ultra HD imaging device for security surveillance. 4K imaging delivers 8MP resolution that conforms to the SMPTE HD standard. The larger and richer video provides a tremendous advantage in detail capture with crisp, vivid images even when zoomed in digitally. This will make 4K imaging ideal for tracking people, capturing facial characteristics and numbers and for large area surveillance.
2) How were your company’s sales of video surveillance systems and services in 2013 compared with 2012 — both in dollar volume and number of sales? How do you anticipate 2014 video sales to be? What changed?
Sales of our IP products have grown significantly compared to last year and are surpassing sales of our analog video portfolio. We expect this trend to continue into 2014.
This growth in IP sales is resulting from an expansion of our video portfolio with a range of new products. Our IP 2000 family of cameras offers good quality IP cameras at analog prices. They allow dealers to bring high-quality Bosch technology to SMB and residential markets. The new IP 5000 family also adds a robust mid-priced HD and megapixel portfolio with an ideal performance to price ratio for mainstream applications that require better quality imaging. We also introduced new models to our high line family which incorporate our most innovative technologies for more discerning customers and demanding applications.
3) Which markets segments — for example, commercial office space, retail, healthcare, etc. — have been noticeably healthy customers of video surveillance? Among those customer segments, what is driving them to purchase video surveillance products, systems and services?
The retail, energy and utility, and transportation markets continue to offer the best growth opportunities. Increased security is the main driver among these organizations, and high resolution cameras give these customers the ability to identify people or vehicles more easily.
In addition, the ability for video surveillance streams to be integrated with other systems allows the technology to be used for other purposes as well. In retail, video can become another point of data for marketing or business intelligence. In industrial environments, surveillance equipment brings improvements to process monitoring. Video can be used as a verification tool for processes and for safety alerts or concerns. Intelligent devices can help users anticipate potential threats to safety.
4) Are there any technologies that are helping to boost video surveillance sales or changing the market in any way?
Advancements in bandwidth control have helped increase the proliferation of HD cameras. End users can now deploy high resolution cameras but control their bandwidth consumption through a number of ways. Dynamic Transcoding technology provides high resolution image playback within limited network connections. Intelligent Dynamic Noise Reduction analyzes the contents of a scene to reduce bandwidth and improve compression efficiency, thereby reducing storage costs. And, encoding regions allow uninteresting areas of a scene to be highly compressed while important areas are tuned for best image quality; this allows the user to allocate bandwidth to the most important parts of the scene.
High definition cameras are also becoming increasingly sensitive. Whereas in the past, low light areas and projects with other challenging lighting conditions required the use of standard definition cameras, new wide dynamic range and low light HD cameras are now delivering superior image quality and detail for these applications.
IP video is also more accessible for small- and medium-sized businesses that have traditionally relied on analog video for their security surveillance. For example, a small retail shop can get a very cost-effective system by combining IP cameras with local SD card storage and free viewing software, or by using a Dropbox application for remote storage of recorded activity along with a transcoder for mobile access to video. These options deliver a very affordable IP video system for small applications.
In addition, standards, such as ONVIF, have simplified product and system integration, making it easier for dealers to deliver the exact capabilities and image quality their customers require. The growing number of strategic partnerships between manufacturers is also making IP video products easier to integrate than ever before and is making more advanced camera features accessible via a range of security software offerings.
5) What technologies are you specifically choosing to focus on in 2014 and why?
We will continue to expand our HD video portfolio. We’ll introduce more cameras that deliver detailed images in challenging lighting and environmental conditions. We’ll deliver new options for panoramic video, and we’ll move the market forward with the introduction of the first 4K Ultra HD video surveillance camera. Our 4K solutions will transmit video at up to 30 frames per second for smooth motion – the highest performance available in the industry. They can also deliver 12MP resolution at an industry-leading 20 frames per second.
6) Is anything changing with end users requests or expectations when it comes to video?
The proliferation of mobile devices is making apps an integral part of surveillance—enabling video monitoring at any time and place. End users now expect to be able to view their surveillance video regardless of where they are. And, they expect high quality video on their mobile devices—even megapixel resolutions. New Dynamic Transcoding technology enables high resolution image playback within limited network connections. It synchronizes available bandwidth and image quality for viewing HD images with the best possible video quality, conducting fast forensic searches on recorded video, and for controlling PTZ cameras—immediately from anywhere.
