Thursday, June 5, 2008

IP Video Market May or May Not Suck This Year: Report

Much has been written about this report from IMS Research. The very depressing synopsis says that

(T)he market has got off to a slower start in 2008 and it seems unlikely that the market will grow as fast this year as it did last year.

The main reason for the slow-down is the struggling US economy, which narrowly avoided entering a recession in the first quarter of the year, recording a modest increase of just 0.9%. Economists are divided as to whether a recession will take hold in the second quarter of the year. In this current climate of economic uncertainty, many companies are delaying capital expenditure and several major security projects have been put on hold. The retail industry, which is the largest spender on video surveillance equipment in the US, has been particularly hard hit. Soaring energy and food prices, together with the credit crunch, have curbed consumer spending. In the first quarter of 2008 consumer spending rose just 1%, the slowest since the second quarter of 2001, when the US was suffering its last recession. As a result, many retailers are scaling back new store expansion plans which will impact sales of video surveillance equipment.

First off, I'm not sure that a 1% rate of growth constitutes a recession, especially with our low unemployment rate (nearly the same as the economic boom years of 1998, when Internet money was going to make everyone a billionaire). This is slightly better than England's, much better than France's, and much better than Germany's. Of course, this is a CCTV blog, not an economic blog, so I may be wrong. And of course no one can deny the subprime mortgage meltdown has slowed new construction a little, although according to this they've been falling for the past two years so I guess the new housing market crisis isn't so much a result of irresponsible subprime mortgage lending practices and more the result of the housing market being flooded and the law of Supply and Demand really is true.

But that's not what this post is about. This post is about a press release Axis emailed me yesterday.

It reads:

The market research institute IMS Research announced today in a press release that the growth for network video products on the American market has slowed down. This affects the ongoing technology shift from analog to digital surveillance negatively. For a number of years, IMS has forecast that the market for installations of network video products has an annual global growth rate of approximately 40 percent. IMS expects slower growth in 2008 than in the preceding year as a consequence of the receding American economy. However, their estimation is that network video products will grow by at least 30 percent in the US. Axis' ambition, as announced previously, is to grow in pace with the market.

The interest for network video products has been considerable during spring and the inflow of new projects continued to be satisfactory, but the current financial turbulence has impacted new investments and expansion plans. This has now affected growth in the network video market. "We have seen signals from the market, e.g. from the retail trade in Europe but particularly in the US where major retail chains have chosen not to expand as planned. As approximately 25 percent of all video installations are performed within the segment, we have drawn the conclusion that the pace of the technology shift from analog to digital network video has slowed down", says Ray Mauritsson, President, Axis Communications.

Emphasis added for emphasis. Because I feel empathetic. Like, what they heck, guys?

I mean, 30% projected growth in an industry is not a reason for sackcloth and ashes, it's a reason for champagne and caviar and big stinky cigars.

At least Geoff Kohl of SIW is optimistic. He quotes a Panasonic rep as saying that "they are still experiencing year-over-year growth in the company's i-Pro IP video surveillance products." This is true. I'm hardly a big player in the IP sales market, and I can't even keep the WV-NS202A in e-stock- it flies off the cybershelves. That's because we have found all sorts of other markets for IP video. Vloggers, for example. Webcasting of all kinds, in fact. I have a customer who uses the WV-NS202A to save video of performances in his nighclubs. He likes the autotracking and the audio input. Another customer has a bunch of Axis 207Ws set up in his apartment. He feeds it to his website for entertainment purposes, ifyouknowwhatImeanandIthinkyoudo.

Anyway, my point is, relax. IP video isn't going anywhere, and the US economy is in semi-decent shape, too.


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