IP Video Surveillance - Predictions of Future Growth

History has shown that new technologies and products tend to be diffused at an initially low pace… The Future Growth of IP Video Surveillance

The growth of digital, IP-based video surveillance has slowed down significantly since the recession set in.

Prior to the financial crisis, it showed an annual growth of up to 40 percent.

While growth has gone down in the short term, the long term prospects remain positive.

IMS Research estimates that about 50 percent of the surveillance market will be digital in 2013.

IMS Research estimates that about 50 percent of the surveillance market will be digital in 2013. This figure indicates that the growth will take off again once the recession is over.

IMS Research estimates that about 50 percent of the surveillance market will be digital in 2013. This figure indicates that the growth will take off again once the recession is over. In this presentation I will argue that IP may be adopted at a higher pace than IMS suggests.

Why? Isn’t the technology still too expensive? Isn’t the security industry too conservative?

I’ll approach this issue by drawing upon research into innovation diffusion and the work by Everett M. Rogers (1962).

Rogers studied a wide range of different innovations.

Rogers studied a wide range of different innovations. He tried to explain how and why innovations are adopted.

Rogers studied a wide range of different innovations. He tried to explain how and why innovations are adopted. The models he came up with are generic and have turned out to be applicable in surprisingly many and diverse settings.

His research basically showed that the adoption tends to follow an S-shaped pattern…

History has shown that new technologies and products tend to be diffused at an initially low pace… The pace is initially low…

As the technology becomes more widely known and the performance reaches sufficient levels the pace increases…

… And eventually the growth slows down as the market starts to mature.

The S-curve idea has been tested in many different settings.

The S-curve idea has been tested in many different settings. It has rarely been contested.

The S-curve idea has been tested in many different settings. It has rarely been contested. Among diffusion researchers, it is more or less taken for granted today.

There are several reasons why such a pattern is often identified.

The main assumption behind this model is that individual properties are normally distributed across a population.

The main assumption behind this model is that individual properties are normally distributed across a population. And therefore, the willingness to adopt something new is also normally distributed.

The rate of adoption is considered to be affected by the amount of social pressure to do so:

The rate of adoption is considered to be affected by the amount of social pressure to do so: ”Be not the first by whom the new is tried, Nor the last to lay the old aside.” // Alexander Pope, An Essay on criticism

Hence, the initial diffusion is quite slow.

Hence, the initial diffusion is quite slow. But if adoption is a social process where information and knowledge is spread by people, it should have an epidemic pattern.

You are the first person to adopt a new idea.

You are the first person to adopt a new idea. You talk to two friends and they also choose to adopt it.

You are the first person to adopt a new idea. You talk to two friends and they also choose to adopt it. Those two persons talk to two persons each and suddenly, four more persons have changed!

The S-curve now reaches its steep phase due to this binomial diffusion.

After a while, it becomes increasingly difficult to find ’two more’ persons who haven’t changed yet.

After a while, it becomes increasingly difficult to find ’two more’ persons who haven’t changed yet. The rate of adoption therefore slows down again as the market becomes saturated…

… And the S-curve levels off.

The adoption curve therefore becomes a Bell curve:

The Technology Adoptors Number of individuals 2.5% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Number of individuals 2.5% 13.5% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Number of individuals 2.5% 13.5% 34% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Number of individuals 2.5% 13.5% 34% 34% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Number of individuals 2.5% 13.5% 34% 34% 16% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Number of individuals Late Majority Early Majority Early Adopters Laggards Innovators 2.5% 13.5% 34% 34% 16% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

No let’s turn back to IP video surveillance!

About 15-20 percent of the market has now adopted it…

… Which means that we are about here on the Bell curve… Number of individuals 2.5% 13.5% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

… And on our way to this… Number of individuals 2.5% 13.5% 34% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

… And this. Number of individuals 2.5% 13.5% 34% 34% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Diffusion theory would tell us that IP video surveillance is just about to enter the steep phase.

Rogers stated:

Rogers stated: “The heart of the innovation diffusion can be found somewhere between 10 and 20 percent … After that point, it is often impossible to stop the further diffusion of a new idea, even if one wished to do so.”

Pretty interesting.

I guess one objection to this would be:

I guess one objection to this would be: “That’s just academic mambo jambo!”

So let’s see if this mambo has what academics call ’face validity’ (whether the theory makes sense if you take a glance at reality from your ivory tower).

More and more companies are offering IP cameras…

… Pelco and many other analogue players are talking about IP…

One person talks to two persons

One person talks to two persons Who talk to two persons

One person talks to two persons Who talk to two persons Who talk to two persons

Moreover, while growth has slowed down IP firms have continued to invest in marketing activities.

Even though these efforts haven’t generated amazing results in the short term, they play a very important role…

… in shaping the perceptions of the market.

Once the recession is over, more people than ever before know about and want to buy an IP system…

… And they will create an even larger pressure to switch over to IP surveillance.

The early majority will therefore buy IP in the near future, and be followed by the late majority. Number of individuals Late Majority Early Majority Early Adopters Laggards Innovators 2.5% 13.5% 34% 34% 16% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Here’s an example from another industry:

In 2000, Daniel Carp became the new CEO of Kodak…

In a speech in 2000 he said: "Kodak is convinced that there has never been a better time to be in the picture business…. Digital can change the way people take and use pictures. Suddenly there are no boundaries to how often you can take pictures because cost and availability are no longer issues."

Carp also said: ”… It will take more than one company to change a century of consumer habits and perception. With the participation of the entire industry, I am confident that we can lead the way toward a more picture-rich era, and that, together, we can break through the technical and marketing challenges facing our industry.”

In fact, Kodak used the S-curve logic to predict the future of digital imaging. The resulting forecast from 1994 suggested that 50 percent of the market would be digital in 2004. The prediction was very accurate, it actually happened in 2003 (Read more here).

Well, we know what happened to the film business in the coming years…

Well, we know what happened to the film business in the coming years… In retrospective, the quote seems a bit puzzling, given how fast digital cameras became so popular.

But back then, the technology had only reached the early adopters… Number of individuals 2.5% 13.5% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

… And it must have been hard to imagine… Number of individuals 2.5% 13.5% 34% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

… That the avalanche would come into motion so rapidly. Number of individuals 2.5% 13.5% 34% 34% Visionary ability Sceptic ability Everett Rogers Innovation/Adoption curve

Based upon these arguments, I would therefore say that current predictions suffer from a too linear view of market growth.

Adoption is not linear, it is epidemic and the full implications of this effect have not been witnessed yet.

Who knows, maybe 50 percent of the market is digital by 2011 and not by 2013.

Before concluding, a few delimitations of this argument should be mentioned:

This way of reasoning has disregarded the supply side completely.

This way of reasoning has disregarded the supply side completely. And it hasn’t really addressed one of the key issues in the interaction between supply and demand, namely the fact that IP surveillance is in many ways incompatible with the established way of buying, installing and using analogue CCTV (more about this here).

Nevertheless, the basic argument here is pretty solid and should not be underestimated:

Diffusion follows an epidemic pattern and not a linear one.

A slow advance in the beginning, followed by rapid and uniformly accellerated progress, followed again by progress that continues to slacken until it finally stops: These are the three ages of … invention … If taken as a guide by the statistician and by the socoilogists, they would save many illusions. // Gabriel Tarde, The Laws of Imitation, p. 127

Sources Rogers, E.M. Diffusion of Innovations, The Free Press, 1962. Bell Curve slide from Bengt Järrehult.

Christian Sandström is a PhD student at Chalmers University of Technology in Gothenburg, Sweden. He writes and speaks about disruptive innovation and technological change. www.christiansandstrom.org christian.sandstrom at chalmers.se

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IP Video Surveillance - Predictions of Future Growth

by Chris Sandström on Oct 06, 2009

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IP Video Surveillance - Predictions of Future Growth — Presentation Transcript