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video surveillance
market trends
Trend 4:
New Chinese vendors eyeing fresh markets
By Harry Cai, Analyst, IHS Technology
Trend 5:
China takes the lead in H.265
By Harry Cai, Analyst, IHS Technology
Two years ago, looking forward
to 2013, IHS predicted that more
Chinese vendors would take ad-
vantage of the growth of markets
outside China; and that by the
end of 2014, there would be less
doubt that Chinese vendors were
becoming more important in the
global video surveillance market.
IHS research on this market has,
indeed, showed that the number
of Chinese suppliers among the
top 15 increased from two in
2011 to four in 2013, and that the
top two suppliers in 2013 were
both from China.
Much of the remarkable
growth of Chinese suppliers has
come from their success in the
local Chinese market. In the last
few years, heavy government
investment helped the Chinese
video surveillance market to grow
quickly and Chinese suppliers
to hone their technology. The
At the Security China Show
held in Beijing in October 2014,
H.265 was one of the most popu-
lar topics. Chinese-based Hisilicon
introduced its first chips specifi-
cally for network cameras and net-
work video recorders (NVR); and
many manufacturers, including
almost all tier-1 and -2 vendors,
followed, showing products based
on H.265 chips. Module makers
like Xiongmai and Topsee quickly
joined in, by developing H.265
network camera modules.
The H.265 coding standard has
drawn much attention since it was
officially released in early 2013. As
a higher-quality image is always a
priority, and with limits on band-
width and storage capacity, an
upgrade to the coding standard is
an effective way to reduce the cost
of the whole system. The objective
performance of, and subjective
feeling toward, H.265 are both
believed to surpass H.264 High
Profile, and the compression could
engineering teams recruited by
Chinese companies also expanded
quickly, thanks to the many
graduates from Chinese universi-
ties emerging every year. Some
leading Chinese companies now
have the world's largest teams on
video surveillance R&D. With
complete product portfolios and
cost-competitive qualified prod-
ucts, more Chinese suppliers are
seeking opportunities in the global
market.
There are many Chinese
manufacturers relying on the
original equipment manufacturer/
original design manufacturer
(OEM/ODM) business, as China
is the largest production base
for the global market. However,
Chinese suppliers are increasingly
promoting products of their own
brand to increase their profit
margin, and the more powerful
are even penetrating the developed
be more efficient when handling
higher-resolution video.
In recent years, Hisilicon has
had considerable success in the
video surveillance industry, so it
is no surprise it has planned for
the longer term, first by introduc-
ing specialised video surveillance
chips. Starting with cost-effective
H.264 ASIC processors for DVRs,
Hisilicon had success in the DVR
market with aggressive prices, fast
product release and an alliance with
the Chinese manufacturers that
became leaders in the embedded
DVR production market. Follow-
ing this, Hisilicon has won a share
of the market for network cameras,
with economical application- spe-
cific integrated circuit (ASIC) chips
that have helped to drive the com-
mercialisation of network cameras.
Will this advanced technology
transform the market? Based on
the early experience of H.264,
it takes time for the market to
adopt a new coding standard.
markets, building their own local
service and logistic teams. Some
public companies are also trying
to expand through acquisition, as
a shortcut to expand their market
reach.
With the "Silk Road Economic
Belt" and "Maritime Silk Road"
blueprints proposed by China's
new leadership, the country is
increasing its capital investment
to neighbouring and third-world
countries. These investments will
focus on infrastructure construc-
tion; security products could ben-
Considering that MJPEG, MP4
and SVAC in China are still
preferred in some projects some
10 years after H.264 was released
and upgrades since then, maybe
the more realistic question to ask
is from where H.265 should start.
IHS believes that even if 4K/8K
is more suitable for H.265, a
better plan now would be to use a
lower-cost H.265 chip to enlarge
the 1080p or 3-megapixel camera
market. There is also much room
efit from this. Some companies,
like Huawei and ZNV (split from
ZTE), could leverage the resource
of their global partners and pro-
vide security solutions for many
developing countries. It is quite
likely, too, that more Chinese sup-
pliers would follow.
The success of the brands of
Chinese vendors of video surveil-
lance products will thus be deter-
mined not only by the industry,
but also by the general economic
and political power of China.
Nonetheless, there still remains a
clear gap between the global giants
in the market and Chinese vendors,
in their ability to provide solutions
outside China itself. Yet following
the growth of the Chinese electron-
ics industry in general, the gap is
narrowing, and more companies
will hope to export products "Cre-
ated in China" rather than simply
"Made in China."
for the H.265 coding standard to
be optimised, reducing calculation
complexity and enhancing coding
efficiency work that is best done
by the whole electronics value
chain, not just the video surveil-
lance industry alone.
With help from better 3G/4G
wireless infrastructure and with
more display devices supporting
H.265 decoding, adoption should
be quicker and wider than what
was seen in H.264.
Harry Cai, Analyst,
IHS Technology.
The H.265 coding standard has
drawn much attention since it was
officially released in early 2013.