It is sort of a good thing and a bad thing.
Right now we will only reach the customers who want to use the clear benefit of network video: that is, getting beyond the image quality that could be achieved by analog because the transmission standard of analog limits the resolution that can be transmitted.
If you want to leverage high-resolution sensors, HDTV [high-definition television] standards, you need to go to network video.
If you want to include intelligence at the edge of the product, adding digital analytics in the product that can recognise movements in the picture or lost/left luggage or any other application, if you want to run that at the camera level you will also need to go to network cables.
There are still clear benefits but if you are okay with image quality, you could just integrate your existing analog systems with the video encoder.
What have been the top drivers of network video adoption among your customers?
Up until recently, the main driver has actually been a very technical feature power over Ethernet. The fact that you can power cameras over communication cables has brought down installation costs and made installation very flexible and straightforward.
When we made some ROI comparisons for instance, we found that we were quite successful in the education business selling to schools in the UK and US. If we take a typical school installation and compare network video on an ROI level with an analog solution based one, as soon as you get up to the range of 20-30 cameras in an installation, you will save on the infrastructure so that the network-based solution will be cheaper in terms of ROI or total cost of ownership. We have several examples of that.
Let's look at another customer vertical, retail, which is the biggest segment for video surveillance. Twenty-five per cent of the world's surveillance cameras are in the retail environment. Some big retailers that we have been successful in selling to, they have had a challenge that they are always rearranging [the placement of their cameras]. For example, a big shopping mall or a big outlet, they are likely to constantly change their arrangements. They move their goods around and so they need to move the cameras. After a while, above the false ceiling, it's a mess with all the analog cables and they find that they have to pull new cables each time they move the camera.
However, when they start doing a structured network solution with some outlets here and there, all of a sudden, without any cost, more or less, for rewiring, they can very flexibly move the cameras freely to suit their needs at different points in time. That is also a very important factor affecting the buying decision of some customers. Up until now, that has been a main driver. I think what we're starting to see now is that the image quality from the new megapixel sensors, the high resolution and HDTV quality that you can get out of cameras will continue to drive this shift because you can't achieve that with analog.
Sign up for MIS Asia eNewsletters.