Post on 18-Jan-2015
description
History has shown that new technologies and products tend to be
diffused at an initially low pace…
The Future Growth of IP Video Surveillance
Christian Sandström holds a PhD from Chalmers University of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
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
Visionary ability Sceptic ability
2.5%
Everett Rogers Innovation/Adoption curve
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5%
Everett Rogers Innovation/Adoption curve
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34%
Everett Rogers Innovation/Adoption curve
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34% 34%
Everett Rogers Innovation/Adoption curve
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34% 34% 16%
Everett Rogers Innovation/Adoption curve
Number of individuals
Visionary ability Sceptic ability
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
2.5% 13.5% 34% 34% 16%
Everett Rogers Innovation/Adoption curve
About 15-20 percent of the market has now adopted it…
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5%
Everett Rogers Innovation/Adoption curve
… Which means that we are about here on the Bell curve…
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34%
Everett Rogers Innovation/Adoption curve
… And on our way to this…
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34% 34%
Everett Rogers Innovation/Adoption curve
… And this.
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.
Number of individuals
Visionary ability Sceptic ability
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
2.5% 13.5% 34% 34% 16%
Everett Rogers Innovation/Adoption curve
The early majority will therefore buy IP in the near future, and be followed by the late majority.
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.
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5%
Everett Rogers Innovation/Adoption curve
But back then, the technology had only reached the early adopters…
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34%
Everett Rogers Innovation/Adoption curve
… And it must have been hard to imagine…
Number of individuals
Visionary ability Sceptic ability
2.5% 13.5% 34% 34%
Everett Rogers Innovation/Adoption curve
… That the avalanche would come into motion so rapidly.
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.