New Life for Legacy DVR Manufacturers?

The most important strategic move of the year may have occurred last week when ObjectVideo announced the ability to add their analytics to DVRs by a simple software upgrade.

For 3 years, smart cameras and software only NVRs have dominated the industry discussion. Boxes were widely regarded as dead. However, this announcement could 'resurrect' the dead and place a major roadblock in the paths of recent entrants.

ObjectVideo is not the first to support doing analytics in a DVR. This is not news.

What is so important here is:

(1) ObjectVideo has distribution/partnership arrangements with almost every major legacy DVR manufacturer.

(2) ObjectVideo has complete software integration with almost every DVR manufacturer.

This means, the ability to distribute and actually implement this solution is relatively straightforward. OV might not have invented analytics in a DVR but they have a very strong shot at making it mainstream.

This is great news for security managers and potentially seriously trouble for software only / recent entrants.

This is not significant because of existing units. OV will probably not be able to add their analytics to existing boxes in the field, especially units deployed a few years ago. These boxes likely won't meet the minimum resources. It would be great for OV and legacy DVR manufacturers if they did but even without this, it's significant.

It is significant because it shifts the balance of power in purchasing decisions for second generations DVRs. Almost everyone has a DVR today so each account has an incumbent, usually Intellex, Kalatel, Verint, DM, Honeywell, March, Pelco, etc.

Customers have a strong incentive to continue with their existing DVR manufacturer. Not out of loyalty, but of basic economic pressure. The transaction costs of switching are high and to overcome them, a challenger needs to make a clear case for a significant advantage.

To date, this case was that adding analytics to existing DVRs was really expensive, making the switch to a new solution reasonable. Adding on a separate appliance to your DVR was very expensive. 4 years ago, you had to buy a separate box from ObjectVideo that could run $4,000 per channel. This was prohibitive for all but the most critical security scenarios. Alternatively you had to use smart cameras but those are expensive as well - commonly a few thousand dollars and requiring a swap out of existing cameras.

Now, customers can keep their existing cameras, not worry about switching client software and potentially lower their costs.

And, most of all, it does not really matter how well OV works relative to other analytics. As long as it is good enough, the ease of adding analytics and its distribution with your existing system will win most sales.

All in all, a major impact across our industry.

Note: The press release discuss support for Intel architecture, which is technically what this is. From a business perspective, the impact is clearly about DVR support since most DVRs use Intel chips.

Final disclaimer: I am assuming that this technically works, which I don't think is a major risk but until you see how well it works with first deployments, this should be tracked cautiously.

Read more: Security Systems News has good details on ObjectVideo's Intel announcement.