The nine-percent solution
That’s a Sherlock Holmes reference, the title (I actually had to look up what I was referencing - looks like a killer movie).
Which is apt, since I’m referring to the IMS Research release of yesterday (or whenever) that predicts a nine-percent market growth for the global video surveillance market in 2010, and you have to be a bit of a sleuth to figure out exactly what they’re saying in the release.
Bare bones, they’re saying 2010 will, globally, be nine percent better than 2009. Sounds great, right? What could be better than “A short and sharp recovery for the total market for video surveillance equipment”?
But it’s kind of important how crap 2009 was, right? Many people tell me that 2009 was an abomination. And IMS says analog was down 5 percent, while IP was up 18 percent. So, can we figure out if that means the market as a whole was down last year, in their opinion?
Well, say the market was $1 billion in 2008 (I’m using a round number for purposes of illustration). Also say the analog market was 85 percent of that number, and the IP market was 15 percent of that number, which I think is the general average of what people tell me, and maybe a little liberal.
That would mean analog fell from $850 million to $807.5 million, while IP grew from $150 million to $177 million. For a new total in 2009 of $984.5 million. Which would mean the market as a whole fell by 1.55 percent (I believe this works no matter what the actual size of the market was, but someone please correct me if I’m being dumb).
In order for the market to have stayed flat last year, using IMS’ numbers for analog and IP, IP would have had to have represented at least 21 percent of the market in 2008.
Was IP at least 21 percent of the market in 2008?
I guess if I consider that every major consultant or significant integrator now tells me that every single new greenfield, enterprise-level surveillance installation is all IP, it probably must have been.
But everybody keeps telling me there’s no way it was more than 20 percent in 2008. No. Way. Maybe they don’t know what they’re talking about.
Anyway. Let’s continue the thought experiment. For 2010, we get this prediction from IMS:
A short and sharp recovery for the total market for video surveillance equipment is forecast for 2010, bolstered by strong network video surveillance growth. The introduction of high definition (HD) network cameras and the increasing adoption of open standards (e.g. ONVIF/PSIA) are expected to further accelerate the migration towards network video surveillance.
Conversely, the market for analogue video surveillance equipment, with the exception of China, is forecast to recover more slowly and to remain challenging for vendors, particularly as the enterprise market segment continues to transition quickly towards network video surveillance solutions and the low-end market becomes increasingly price competitive. That said, analogue video surveillance equipment still represents the majority of annual unit shipments and demand shows no signs of disappearing in the foreseeable future; however, the market for analogue video surveillance products is expected to become increasingly commoditised.
Note the bolded parts. So we’re going to grow by nine percent this year, but analog is going to remain pretty stagnant, while IP grows quickly, but analog is still “the majority” of the market.
So, let’s run my little exercise using the 15/85 market split that supposedly existed in 2008 to see how fast IP has to grow to create this 9 percent growth overall.
In my new mythical 2009, IP now represents 18 percent ($177 million) of the market, and analog 82 percent ($807.5 million), for a total market of $984.5 million.
Analog is going to be pretty stagnant, but will grow, I guess, according to IMS (thanks China!), so let’s give analog 3 percent growth (an eight percent turnaround) to $831.725.
But we’re going to get to $1073.105 million with our nine percent overall growth, so that means IP is going to have to be $241.38 million in my mythical 2010, which represents a growth of 36 percent.
This would also leave IP with 22.5 percent of the overall market.
Hey IMS is the one talking to all the vendors and the component makers, etc. There’s no doubt they would know better than me, but I’m curious what people think: Is IP growing at a near-40-percent rate in 2010? Is anyone in North America growing significantly in 2010? Is analog still growing at all?
Just felt like doing some math on a Tuesday afternoon, I guess, but it helped me crystallize the prediction a little. Or confused me. One or the other.