Why IP Surveillance Could Be The Channel's Next Big Thing

The surveillance market was never really considered a major cash cow for the IT channel. But as more and more organizations adopt IP- rather than traditional analog-based cameras -- and those cameras, as a result, become more intertwined with corporate networks than ever before -- all of that is starting to change, according to network camera manufacturer Axis Communications.

"When you look at the surveillance market, in general, it's kind of the last to the party in terms of going digital," said James Marcella, director of technical services at Axis. "We had Voice-over-IP, our telephones have moved over to the network, and just about every other aspect of our corporate and personal lives are on the network. Surveillance was really late to that party."

But now, Marcella said, Axis is seeing an uptick in IP or network camera adoption, thanks largely to these cameras having better resolution, built-in analytics engines and other next-generation features their analog-based counterparts can't deliver.

[Related: Emerging Vendors 2013: Networking And VoIP ]

Industry numbers support that claim. According to analyst firm Research and Markets, the IP or network video surveillance market is projected to grow nearly fourfold in terms of overall revenue by the end of 2018, representing a CAGR of around 25 percent throughout the next five years.

Axis itself said the IP video surveillance market today represents a $12.5 billion opportunity, with that figure expected to double by 2017.

And as this transition from analog to IP continues to crash over the surveillance market, Marcella said many organizations are looking to the IT channel, rather than legacy physical security providers, to help install and provide services around these next-generation devices. This, he said, is because IP cameras are essentially another node on the network, meaning the expertise of IT solution providers, especially those with roots in infrastructure, is more valuable than ever.

Marcella likened this transition, and the opportunities it presents to the channel, to the widespread emergence of VoIP.

"The early integrators who jumped onto that [VoIP] bandwagon made a lot of money off of it, just like the early integrators jumping on this [transition] are doing very well," Marcella told CRN.

Axis, headquartered in Sweden, sells 100 percent through the channel with roughly 55,000 partners worldwide. Marcella said Axis' channel is starting to employ a greater mix of IT solution providers in light of this IP adoption, and that he hopes the trend continues. Not only do IT resellers have the networking know-how needed to install and maintain IP cameras, Marcella said, but they are more familiar with things like recurring revenue streams and annual service contracts -- two items that come with most IP camera sales -- than legacy security installers.

"We are really starting to embrace the IT channel to drive this transition," Marcella said.

NEXT: Channel Cashing In On IP Camera Growth

Ned Fasullo, chief marketing officer at Global Data Systems, a Lafayette, La.-based solution provider and Axis partner, said he is seeing "enormous growth" in his IP video surveillance business.

"We think in the next two to four years, we are going to probably see our own security sales grow at least 20 to 30 percent," Fasullo told CRN. "And that's an easy, easy target, because now so many people are faced with either having to implement [IP surveillance], or are understanding that they need to implement it to differentiate themselves."

Fasullo said vertical markets like retail and education are especially hot spots for IP surveillance sales, particularly as these markets start to view surveillance as a "big, big piece" of their overall IT deployments.

Global Data Systems, like many of the IT solution providers jumping on the IP video surveillance trend, has roots in the infrastructure and networking space. In fact, Fasullo said Global Data Systems is one of "the oldest" Cisco Gold partners, with that networking DNA fueling much of its success in the surveillance market today.

"That's the beauty of IP," Fasullo said. "The network doesn’t care what it is. As long as it has an IP address, it's good to go."

Fasullo said that, in addition to basic installation services, Global Data Systems often wraps remote monitoring, analysis and other services around its IP surveillance sales. "It's been a huge differentiator for us," he said.

Brian Thomas, president of A3 Communications, a Columbia, S.C.-based solution provider and Axis partner, also said selling IP video surveillance has been a major differentiator for A3, which, like Global Data Systems, also specializes in network infrastructure.

"We are seeing a huge increase in requests for IP surveillance," Thomas said. "We've seen an increase this year of approximately 150 percent over last year in sales."

Thomas, who also compared the transition to IP surveillance to the transition to VoIP, agreed that vertical markets, like retail, are the biggest adopters of IP surveillance technologies, not only for security reasons, but to leverage the analytics capabilities now offered by these IP-based cameras. He said retail stores, for instance, will use IP camera heat maps to identify the parts of a store where customers spend the most time.

"People aren't necessarily using cameras for security at all times now, and we are starting to see more of a demand for the analytics," Thomas said.

NEXT: Traditional Security Players, VARs Team Up

Jason Schmitt, CEO of Technology Resource Advisors, a Milwaukee-based solution provider and Axis partner, said his company formed a dedicated physical security practice in 2010, after realizing the significant opportunities stemming from the IP surveillance market.

Today, Schmitt said, Technology Resource Advisors sees major demand for IP-based cameras, particularly among local government, higher education and K-12 organizations. He said he expects to see "triple-digit percentage growth" in sales, year-over-year, in 2013.

In addition to helping customers migrate from analog- to IP-based video systems, Schmitt said a lot of the growth Technology Resource Advisors sees in this space stems from its ability to wrap managed services around these IP systems.

"We've taken the blueprints that we're using to deliver managed services to small business, and we've replicated that for physical security," Schmitt told CRN. "Last year, we didn't really have any recurring revenue when it comes to physical security clients, but now, in 2013, we have generated, I would say, probably close to $100,000 in annual recurring revenue around supporting these security systems."

Despite the growing number of IT solution providers entering the surveillance market, Axis emphasized that traditional security integrators are still seeing opportunities from the emergence of IP, as well. The ones who do, though, seem to boast a level of networking know-how similar to that of an IT solution provider.

"When we talk about deploying surveillance or access control, we are always talking about leveraging the infrastructure they already have in place. It always came back to their network," said Andrew Bowman, president of SiteSecure, a Sanford, Fla.-based security integrator. "We are always selling, to some degree, to the IT directors, not the security directors."

Craig Bowman, vice president at SiteSecure, said SiteSecure, which specializes in the design, construction and maintenance of IP-based security solutions, often partners with IT solution providers to help manage larger networking projects, as customers demand them.

"We have to be familiar with lots of different networks -- HP, Cisco, Brocade," Bowman said. "And we actually partner with a couple of Cisco VARs in the Tampa area to support large network deployments because we don't want to be the experts there."

PUBLISHED AUG. 30, 2013