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A critical juncture in video surveillance
While highly anticipated, the transition of the video surveillance market from analog to network cameras has taken many years to play out. Over the past 24 months however, we believe the market has reached a critical juncture. With the exception of China (which continues to prefer analog cameras for their lower price points), revenues from network cameras now exceed those of analog devices in nearly every major market in the world. The widespread adoption of network video cameras has accelerated the convergence of the electronic physical security and IT industries, and triggered a period of robust expansion for well-positioned vendors. The potential consequences of this convergence are sweeping, and have already begun to take shape. One area in particular that has drawn our attention is enterprise storage, which benefits directly from the increasing utilization and retention of data that has come with network video surveillance. As a result, revenues in this segment are forecast to grow by 14.8% per annum between 2013 and 2018; a rate more than double that of the IT hardware market during the same period.
What’s driving the need for enterprise storage?
In order to better understand the drivers behind video storage consumption, IHS compared the storage intensity ratios of 17 end-user verticals that comprise the video surveillance market. What we found was quite striking; three end-users in particular—Government, City Surveillance, and Transportation—accounted for more than half of the total storage spend for the entire market in 2013. Upon further examination, we realized that these verticals share rigorous requirements for features and functionality that differ from other forms of video surveillance. Chief among these characteristics are an elevated risk of terrorist attacks, high camera counts, and a greater desire to analyze and store video data.
Given their unique requirements, these storage-intensive verticals increasingly rely upon edge-to-core architecture that combines centralized storage and compute capabilities (“core”) with distributed video feeds (“edges”). In addition, the system infrastructure must be both open and flexible to allow for scalability and rapid adaptation. Change is constant in these settings, as is the need for ever-greater insights concerning potential threats and other risks. By acting as repository for data mining and analytics, the core enables powerful video content analysis (VCA) applications to be run—often on a streaming, real-time basis—that would not be feasible at the edge. These capabilities are particularly important to governments and law enforcement agencies given their strong interest in applications such as license plate recognition (LPR), facial recognition, and intelligent scene analysis.
Shifting business models
As video surveillance systems grow in scale and complexity, the market has come to rely more on IT practitioners to manage implementations. This is causing significant changes to the way that security systems are conceived, built, and even managed. To be sure, IT providers are gaining considerable influence in procurement decisions, and with it, a greater share of the video surveillance market. At the same time however, there is a growing degree of collaboration and interdependence between IT and physical security integrators, particularly as a means of bridging the knowledge gap between these two disciplines. We have also found that integrators of all types are coming to rely on manufacturers to provide product certifications, validation, and general guidance with respect to sourcing decisions. Realizing that these forces are here to stay, the most nimble and progressive suppliers have already begun to adapt their business models to the shifting marketplace. While this may cause some temporary discomfort, we believe such changes will lead to unprecedented business opportunities in video surveillance—for both physical security and IT providers—over the next five to ten years.