2016 was a year of fast-paced changes in the market for video surveillance, especially for higher-resolution and panoramic cameras. We spoke with Scott Schafer, Arecont Vision’s Executive Vice President, for his thoughts on 2016 and the year ahead.

 

SourceSecurity.com: Did your predictions for 2016 match up with what you thought back at the end of 2015? How has the intervening year changed the thoughts?

Scott Schafer: Looking back on our predictions for industry trends and directions for 2016, we anticipated most of the technology announcements but some were a little faster than we thought.  Several more firms have entered the multi-sensor panoramic and multi-directional product sets that Arecont Vision pioneered 10 years ago. These copies may look similar to Arecont Vision designs but they are still first-generation offerings from these vendors. These firms have not done the product hardware, firmware, and software design and integration work that takes time and outstanding engineers to do. This has resulted in products that are much bulkier and harder to install from competitors in this market space. New 4K products will make a substantial impact going forward for the industry, but the volume purchases are still in the 1080-5MP, and 10MP platforms.

Pricing continues to be interesting. Many new entrants and established firms continue to release new low cost products and lower the prices of their legacy products. This was expected.

On the channel changes that happened this year, we did not expect major combinations to happen, for example Tyco and JCI. The great thing about it is that we enjoy very good relationships with both firms and are enthusiastic about our future partnerships. Similarly, Convergint made strategic acquisitions that will benefit their organisation and the industry.

SourceSecurity.com: How did the overall economy impact the security marketplace? What important trends did you see developing?

Schafer: The economy and currency changes had their biggest impact in Europe and the Middle East. I think both these regions will rebound in 2017-18. Pent-up demand for security systems by retailers, banks and governments will cause these markets to expand over the next three years.

Companies that depend on third party platform designs and a low-cost price point for their success will not flourish
Pent-up demand for security systems by retailers, banks and governments will cause these markets to expand over the next three years

SourceSecurity.com: What notable trends do you see playing out in the new year and what will be their impact?  Who will be the “winners’ and who will be the “losers”?

Schafer: For manufacturers, companies with great, valuable technology will be the winners. Companies that depend on third party platform designs and a low-cost price point for their success will not flourish.  Low-price product providers have played an important role throughout the history of the security industry, but that position is not sustainable long-term. And their channel partners may get some upside in the short term, but they will be relegated to low-margin dollars and percentages on the low-price products. Selling low-price, low-margin products can cause firms to think they can make it up in volume, which of course only works in the short term. Low-price product selling can also diminish brand equity.

SourceSecurity.com: What have been Arecont Vision’s successes and challenges in 2016 and looking ahead to 2017?

Schafer: Arecont Vision continues to grow as a company. Our people have developed even faster than we predicted in sales, marketing, customer service, engineering, quality, and operations. It is truly amazing to see how far we have progressed as an organisation. Our product line has matured as we released several unique, first-to-market, highly awarded products. In addition, we made strong moves to improve the performance (image quality, low light performance, compression, noise reduction) of our new products, and those improvements in technology can be pushed to many of our past-generation platforms. That’s right. Our new technology is capable of being downloaded to many of our earlier generation products. This is a value that many of our customers use to add additional performance in the form of software/firmware updates that are unique to Arecont Vision’s Field Programmable Gate Array (FPGA) architecture. That is real investment protection, the Arecont Vision way.

And “Made-in-the-USA” will continue to be a unique position that resonates globally, not just in the United States.

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Enhance traditional security systems within your smart home
Enhance traditional security systems within your smart home

Market dynamics are changing the U.S. residential security market, creating new business models that better appeal to the approximately 70% of households without a security system. Smart home adjacencies have helped revitalise the traditional security industry, and alternative approaches to systems and monitoring for the security industry are emerging, including a new batch of DIY systems. Growth in the residential security market and its position as the channel for smart home solutions have attracted numerous new entrants. Telecoms, cable operators, and CE (consumer electronics) manufacturers are joining traditional security players as they compete to fulfill consumer demand for safety and security. Connected products also provide a layer of competition as consumers must decide whether having category devices such as doorbell video cameras, networked cameras, and other products suffice for their security. Increasingly competitive landscape Smart home services can provide additional revenue streams for the security industry For instance, IP cameras are a highly popular smart home device rooted in security, and Parks Associates estimates 7.7 million standalone and all-in-one networked/IP cameras will be sold in the U.S. in 2018, with $889M in revenues. Product owners may feel their security needs are fulfilled with this single purchase, as such dealers and service providers are under increasing pressure to communicate their value proposition to consumers. Categorically, each type of player is facing competition uniquely—national, regional, and local dealers all have a different strategy for overcoming the increasingly competitive landscape. Smart home services can provide additional revenue streams for the security industry. In Parks Associates’ 2017 survey of U.S. security dealers, 58% report that smart home service capabilities enable extra monthly revenue. 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In response, many security system providers now offer IP cameras as optional enhancements for their systems. Smart home devices and features, while posing a threat to some security companies, are a potential way forward to increased market growth. Security dealers have an opportunity to become more than a security provider but a smart home solutions provider rooted in safety. Provide status updates Comcast has entered both the professionally monitored security market and the market for smart home services The alternative is to position as a provider of basic security with low price as the key differentiator. Comcast has entered both the professionally monitored security market and the market for smart home services independent of security. It has discovered that monetising smart home value propositions through recurring revenue becomes increasingly challenging as the value extends further away from life safety. Since the security industry remains the main channel for smart home services, security dealers are in a unique position to leverage that strength. Value propositions must shift from the traditional arming and disarming of a system to peace-of-mind experiences that builds off the benefits of smart devices in the home to provide status updates (e.g., if the kids arrived home safely) and monitoring at will (e.g., checking home status at any time to see a pet or monitor a package delivery). These types of clear value propositions and compelling use cases, which resonate with consumer and motivate them to expand beyond standalone products, will help expand the home security market.

What is the value of "free" video management systems?
What is the value of "free" video management systems?

They say that every choice has a cost. It's a basic principle that, economically speaking, nothing is free. If it doesn't cost actual money, it may be expensive in terms of time, attention and/or effort. These are interesting observations to keep in mind as one peruses the various "free" video management system (VMS) offerings available on the market. Some are provided by camera companies to unify their products into a "system", even if it's a small one. Other free VMS offerings are entry-level versions offered by software companies with the intent of the customer upgrading later to a paid version. For more insights, we asked this week's Expert Panel Roundtable: What is the value of “free” video management systems (VMSs) and how can a customer decide whether “free” is the right price for them?

State of counter-drone regulation for public safety and physical security
State of counter-drone regulation for public safety and physical security

In 1901 New York state made a pioneering regulation move and became the first US state to require automobile owners to register their vehicles. This marked the beginning of regulation on modern traffic, which - following decades of development - resulted in a multi-layer concept of regulation relating to vehicles and driver’s licenses, traffic signs and insurance mechanisms that we are all familiar with nowadays. While certain parallels can be drawn between the early days of cars and our contemporary experience with quadcopters, we are facing a new challenging era that is far more complex to organise and regulate. Integrating drones in existing regulatory ecosystem Similar to other pioneering technologies in the past, drones need to integrate into a long existing and well-balanced ecosystem, the rules of which have first been drafted some one hundred years ago and have evolved without taking vehicles such as drones into account. Yet the safety risks related to aviation hinder the quick integration of drones into that ecosystem, broadening the gap between existing regulatory landscape and the exponentially growing popularity and ever-advancing technology of drones. The safety risks related to aviation hinder the quick integration of drones into the legislative ecosystem For the past several years, governments and legislators have been trying to tackle this problem by trying to answer two questions: how to properly integrate drones into the airspace without creating a hazardous impact on existing airborne operations, and how to enforce regulations in order to prevent the side-effects related to careless or malicious drone flights, taking into consideration public safety and physical security. Counter-UAS measures and regulations Up until 2018, legislators tried to tackle these two questions as a whole by introducing bundled legislation drafts covering the entire landscape of gaps they needed to address, which resulted in multi-parliamentary committee efforts both in the US and abroad to review and approve each bill - a process that is very slow by design. It was only in the beginning of this year that the issues were starting to be addressed separately: legislation related to limitations and counter-drone measures on the one hand, and legislation related to integration into airspace on the other. Let’s take a closer look at Counter-UAS (unmanned aerial systems) measures and what makes them challenging in terms of regulation. Over the past years, various counter-drone technologies have been introduced to enable control over rogue drones in order to either stop them from achieving their flight purpose or prevent them from creating safety hazards to people or property. These measures can be grouped into 3 types of technologies: Military grade solutions - including lasers and surface-air missiles Kinetic solutions - including net-guns and autonomous drones set out to catch the rogue drone and disable it airborne Non-kinetic RF-based solutions - aimed at either disabling, disrupting or accessing the drone’s communications channels in order to trigger a return-to-home function, or guide the drone into a safe landing route Aside from combat military operations, the legality of using the above technologies is questionable as they tamper with an airborne aircraft, might be considered as wiretapping and/or violate computer fraud laws. Therefore, one can conclude that unless changes to regulation are made, non-military facilities will continue to be defenceless from and vulnerable to rogue drones.  One can conclude that unless changes to regulation are made, non-military facilities will continue to be defenceless from and vulnerable to rogue drones European c-UAS legislation Next, let’s look at the state of c-UAS legislation in both Europe and US to better understand different legislative ecosystems and how they affect the possibilities of using counter drone measures. In the European Union, there is currently no uniform legislation, and the member countries rely on their own existing legal infrastructures. Roughly speaking, most countries use a method of exemptions to the communications and aviation laws to allow the use of counter drone measures after a close examination by the relevant authorities. Such exemptions are approved under scrutiny to particular sites, which provide some relief, but they do not allow broad use of countermeasures. Further discussion regarding a broader regulation change, on a country level or EU-wide, is only preliminary. US c-UAS legislation Preventing Emerging Threats - provides an initial infrastructure for counter drone measures to be used by various DoJ and DHS agenciesUnlike the EU, in the US exemptions are not possible within the existing legal framework, and the possible violation of US code title 18 means that the hands of both the government or private entities are tied when attempting to protect mass public gatherings, sports venues, or critical infrastructure. Therefore, it was more urgent to introduce legislation that would allow countermeasures to some extent. In September, US Congress approved the FAA-reauthorisation act for the next 5 years (H.R. 302), which was shortly after signed by the President and came into effect. Division H of the act - Preventing Emerging Threats - provides an initial infrastructure for counter drone measures to be used by various DoJ (Department of Justice) and DHS (Department of Homeland Security) agencies under strict limitations. However, the act avoids determining which technology the agencies should use, yet it requires minimal impact on privacy and overall safety in order to strike the necessary balance. This is the first profound counter-drone legislation and is expected to be followed by additional measures both in the US and in other countries. Updating counter-drone legal infrastructure In summary, 2018 has been a pioneering year for counter-drone legislation, and while technology already allows taking action when necessary, legal infrastructure needs further updates in order to close the existing gaps: covering additional federal assets, state-level governments, and private facilities of high importance, such as critical infrastructure sites. 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