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