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Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innov...
Over the last ten years, a technological shift      has come into motion in the video           surveillance industry…
Analogue CCTV is increasingly substituted…
… by digital cameras, thatare connected over the internet.
Starting off at very small volumes, DigitalCCTV has grown at an annual pace of 30-40       percent over the last years…
It is striking towhat extent thisshift has so farbeen driven bycompanies that     have no    previous experience in    the...
While several analogue players have entered the  realm of digital  CCTV now, theyhave continued tolose market share  to en...
Market shares for           Market shares for security cameras             digital cameras1.   Panasonic              1. A...
Why has this happened?
I would like to point out a couple of reasons.
1. Big companies look for big markets.
Basically – if your company has a turnover of 1 Bn   USD you need to find a new market worth 100 million USD in order to g...
But if you have a turnover of 100 million USD, you  only need to find a new market worth 10 million         USD if you wan...
But hey, digital CCTV is a huge market now?!
True. But it wasn’t. It started off as a small market,    much smaller than the annual growth of the     analogue CCTV mar...
The analogue players had a very high opportunity cost that made it irrational for them to invest at an early point. And if...
2. Competence = Incompetence
Theargument is  basically   that theknowledgebase of the industry is  shifting.
Digital CCTV is all about electronics, network         technology and programming.
The oldtechnology was more   aboutmechanics.
Hence, the old competence islosing its value.
This competence is not only related to R&D. It goes   for manufacturing, supplier relations, and well,    most the resourc...
The Swedish company Facit used to produce mechanical calculators and collapsed in the early 1970s with the shift to electr...
One of the best explanations for this decline         was formulated as follows:
”The coggwheels in the mechanical calculators   were the soul of the company” // Gert Persson, used to work at Facit Elect...
The soul of analogue   CCTVcompaniesis about to    be rendered obsolete.
The fact that entrant firms like Axis have a background as an IT company would alsosuggest that the entire competence base...
3. Analoguecompanies donot master the  new sales   channel.
With the shift todigital cameras, a   shift is also   taking place     inside the    customer’s   organization      where ...
The new technology is sold to a new actor, and with  a new value proposition that differs largely from    what the analogu...
The analogue companies sold their products to    security departments and they have little   experience of approaching IT ...
Business is after all to a large extent about relations. It seems that yet another competitive advantage of       the esta...
Does all this mean thatthe game is  lost for analoguecompanies?
Not at all. Rather, it would indicate that companies   like Pelco, Bosch, Siemens etc. have to renew  their competence bas...
There are some examples of how companies  have broken out of their box and mastered          technological revolutions.
But it is a huge challenge we’re talking about.
Some of the analogue players have made  losses and laid off people recently…
Which means that they have even less resources   and focus to invest in the new technology.
Well, we’ll seewhat happensin the future, but history  does not  speak infavour of the  analoguecompanies…
Image attributions
Find out more:www.christiansandstrom.org
IP CCTV Why new firms dominate the new technology
IP CCTV Why new firms dominate the new technology
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IP CCTV Why new firms dominate the new technology

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Some explanations to why the established firms have up until now lost ground to entrant firms like Axis, Mobotix, Acti, D-Link, etc...

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Transcript of "IP CCTV Why new firms dominate the new technology"

  1. 1. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  2. 2. Over the last ten years, a technological shift has come into motion in the video surveillance industry…
  3. 3. Analogue CCTV is increasingly substituted…
  4. 4. … by digital cameras, thatare connected over the internet.
  5. 5. Starting off at very small volumes, DigitalCCTV has grown at an annual pace of 30-40 percent over the last years…
  6. 6. It is striking towhat extent thisshift has so farbeen driven bycompanies that have no previous experience in the CCTV industry.
  7. 7. While several analogue players have entered the realm of digital CCTV now, theyhave continued tolose market share to entrant firms such as Axis, Mobotix, D-Link, Acti, Indigo Vision etc.
  8. 8. Market shares for Market shares for security cameras digital cameras1. Panasonic 1. Axis2. Pelco 2. Sony3. Bosch 3. Panasonic4. Axis 4. Mobotix5. Sony 5. D-Link This is for 2006 (Source: IMS Research).
  9. 9. Why has this happened?
  10. 10. I would like to point out a couple of reasons.
  11. 11. 1. Big companies look for big markets.
  12. 12. Basically – if your company has a turnover of 1 Bn USD you need to find a new market worth 100 million USD in order to grow at rate of 10 percent.
  13. 13. But if you have a turnover of 100 million USD, you only need to find a new market worth 10 million USD if you want to grow 10 percent.
  14. 14. But hey, digital CCTV is a huge market now?!
  15. 15. True. But it wasn’t. It started off as a small market, much smaller than the annual growth of the analogue CCTV market in the early 2000s.
  16. 16. The analogue players had a very high opportunity cost that made it irrational for them to invest at an early point. And if youdon’t enter at an early point, you may be left behind once you offer the new technology.
  17. 17. 2. Competence = Incompetence
  18. 18. Theargument is basically that theknowledgebase of the industry is shifting.
  19. 19. Digital CCTV is all about electronics, network technology and programming.
  20. 20. The oldtechnology was more aboutmechanics.
  21. 21. Hence, the old competence islosing its value.
  22. 22. This competence is not only related to R&D. It goes for manufacturing, supplier relations, and well, most the resource base of these companies.
  23. 23. The Swedish company Facit used to produce mechanical calculators and collapsed in the early 1970s with the shift to electronics.
  24. 24. One of the best explanations for this decline was formulated as follows:
  25. 25. ”The coggwheels in the mechanical calculators were the soul of the company” // Gert Persson, used to work at Facit Electronics
  26. 26. The soul of analogue CCTVcompaniesis about to be rendered obsolete.
  27. 27. The fact that entrant firms like Axis have a background as an IT company would alsosuggest that the entire competence base of the industry is changing.
  28. 28. 3. Analoguecompanies donot master the new sales channel.
  29. 29. With the shift todigital cameras, a shift is also taking place inside the customer’s organization where ITdepartments play an increasinglyimportant role in purchasing asecurity system.
  30. 30. The new technology is sold to a new actor, and with a new value proposition that differs largely from what the analogue players offered previously.
  31. 31. The analogue companies sold their products to security departments and they have little experience of approaching IT departments.
  32. 32. Business is after all to a large extent about relations. It seems that yet another competitive advantage of the established firms is being lost here.
  33. 33. Does all this mean thatthe game is lost for analoguecompanies?
  34. 34. Not at all. Rather, it would indicate that companies like Pelco, Bosch, Siemens etc. have to renew their competence base, and that this is urgent.
  35. 35. There are some examples of how companies have broken out of their box and mastered technological revolutions.
  36. 36. But it is a huge challenge we’re talking about.
  37. 37. Some of the analogue players have made losses and laid off people recently…
  38. 38. Which means that they have even less resources and focus to invest in the new technology.
  39. 39. Well, we’ll seewhat happensin the future, but history does not speak infavour of the analoguecompanies…
  40. 40. Image attributions
  41. 41. Find out more:www.christiansandstrom.org
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