Video Surveillance Forecast Down, But Storage To Soar

Jun 17, 2008 3:42 PM

According to a recent report from IMS Research, the U.S. market for network cameras, video servers and NVRs this year will not likely grow as fast as it did in 2007, where it is estimated to have increased by 45 percent. A second report says that the external storage used for video surveillance market will be worth more than $750 million by 2012.

The first report says that the main reason for the video surveillance market slow-down is the struggling economy, which narrowly avoided entering a recession in the first quarter of the year. 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 country, has been particularly hit hard. 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 percent, the slowest since the second quarter of 2001, when the country was suffering its last recession. As a result, many retailers are scaling back new store expansion plans that will impact sales of video surveillance equipment.

Simon Harris, senior research director at IMS Research, says, “In spite of the stagnant economy, the U.S. market for network video surveillance products is still growing strongly, albeit at a reduced rate from 2007. We anticipate that the market will grow well above 30 percent in 2008 and may even top 40 percent, particularly if the economy picks-up in the second half of the year.”

While 2008 may prove a more challenging year for suppliers of network video surveillance equipment, the long-term outlook for the market is very positive. The trend from analog CCTV to network video surveillance is still in the early stages and last year network video surveillance products accounted for less than 20 percent of total video surveillance equipment sales. IMS Research anticipates that the trend to network video surveillance will be ongoing over a number of years, ensuring high growth for the long term.

In the storage market, a second study from IMS Research forecasts that in 2012, 3.3 exabytes of storage will be needed to store video from new surveillance deployments. This is a phenomenal amount of data, and external storage will play a key role in managing this information.

“As more and more video surveillance move onto the network and end-users specify higher resolution cameras and longer retention times, the need for additional storage capacity is sky-rocketing” says Market Analyst Alastair Hayfield.

DVRs provided a step change in terms of capacity and recording quality when compared to analog recording systems. However, even some modest projects today require more storage capacity than can be provided by a DVR. This is particularly noticeable where end-users want to significantly expand their systems or upgrade to higher resolution cameras.

External storage appliances, and in particular Storage Area Networks (SANs), are likely to be the next step forward in the evolution of video surveillance storage. IP SANs offer improved scalability, storage reliability and storage retention. Each time more capacity is required, a storage appliance can simply be plugged into the network. Furthermore, end-users can scale performance and capacity separately. Since the processing power needed to manage the storage is no longer carried out by the NVR or DVR, fewer NVRs or DVRs are required to manage the same number of cameras.

Currently, this market is served by a handful of companies from the video surveillance and IT industries. With the rapid growth seen in the network video surveillance market, it is likely that more storage companies will move into this space either by themselves or by partnering with existing video surveillance equipment vendors.

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© 2008 Penton Media Inc.

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