"We are going to come out of the financial crisis with a greater market share"

Oliver Vellacott, CEO, IndigoVision

Edinburgh based IndigoVision, a pioneer within IP video security solutions, was founded by CEO Oliver Vellacott in 1994, when IP video was not much more than an emerging niche technology. Now, some 15 years later, IP video is the dominating solutions category at the world's security shows. Detektor sat down with Oliver Vellacott at this year's Ifsec to talk about the past, present and future.
When the security industry gathered at Ifsec in Birmingham in May, 670 security businesses displayed their offerings. Video surveillance products were presented in 300 of these, which clearly illustrates where the focus of the industry is.

There are fewer exhibitors at the show this year, and some of the big names stayed at home or considered to do so. Did you ever hesitate about exhibiting at Ifsec this year?

"Not really, even though it's twice as expensive as other shows we do. It's almost like a tax, we need to do it, people would wonder if we didn't show up. But it's interesting that Norbain got so much PR from announcing that they were pulling out, it was a good move for them. Ifsec is an important show for us, along with ASIS and a few others."

What is it that IndigoVision do?

"We provide end-to-end IP security solutions, with video surveillance as the starting point, adding access control and perimeter security. It´s logical to combine video, access, and alarms, the separate systems are bound to consolidate. IP is the natural platform for it to come together.

We have added alarm management, and we considered to acquire an access control developer but decided not to. Now we support about 80 percent of the market's access control systems.

Most of the times there is an existing access control system when we enter a project, so it makes sense to integrate with that. Qatar airport for instance, where we have a 1,400 camera system integrated with an 800 doors GE Security access control system.

We bring the video and add whatever it is they use. It really adds value to integrate, to be able to bookmark images of doors that are opened to see what actually happened. Let's say they have GE for access control, we let them continue to use that, write a piece of software, and all events can be controlled from one interface.

We work with a distributed architecture. Whereas our competitors copied the analogue central box into the digital world, meaning that if a central server goes down then the whole system goes down, instead we use a distributed database - every single piece is independent. If one piece is knocked out, all other units continue to operate.

We offer about 50 products, even though they're much the same. You can compare it to network equipment - the pieces are what they are, you design and implement it into a system and you can do it in so many different ways."

How as the global downturn of the economy affected IndigoVision?

"We've noticed it. We're a public company, anybody can study our numbers. In our first half - the six months leading up to end January 2009 - we did only 16% growth, which is a bit hard to take coming from having doubled each year for three years in a row. (Since this interview IndigoVision has released its results for the year to end July 2009, which show revenues up 43% for the full year and up 70% for the 2nd half.) But there's been a gradual improvement over the last 12 months. Because we focus on providing medium to high-end solutions the sales processes are quite long, which evens out the swings of the cycle. We have 16 installations with more than 1,000 cameras, handling massive amounts of data, and we have several larger coming, which are all made possible with IP."

What are the advantages of IP technology for video surveillance?

"The scalability is one of the main advantages, the system cost per camera is basically flat no matter what size of installation it is. That is why we compete on the large projects."

Isn't there any upper limit?

"No, a lot of people think that the networks eventually will run out of capacity, but they don't, you just split them. The bottleneck of IP systems is getting the data from the camera to the storage, so what you do is you cluster the storage near the cameras and that bandwidth bottleneck goes away. That's why you can have a 10,000 camera system."

What is your take on the standardisation initiatives for IP video?

"It's a good thing, it's going to turn our business upside down in a good way. We are backing both, because we don't know who's going to win. We have staff working in two of the groups within Onvif so we are very involved there, and we have to implement the PSIA one as well. It could take quite a long before one of them dies, if ever, we could end up much like the situation with PAL and NTSC. Onvif is shaping up to be more of a European standard, even with Sony as one of its founding members, and PSIA is very much North American, also in the way they communicate. Onvif tends to be a bit techie, and could perhaps be better at getting the word out, where as PSIA says 'we've done it already, and it's fantastic' ".

PSIA has a broader perspective on IP security.

"Onvif is now also bringing things like access control in to the equation, they need to, it's crazy not to bring them together. It would make our lives much easier - every time we integrate one of these access control systems we have to write interfaces and drivers. This will probably change the world of companies like Genetec and Milestone who have made it their business to integrate how many cameras as possible, what is it, 250 different cameras that Milestone support? I believe they have 70 engineers just writing drivers for all the cameras. Onvif is going to change their business.

I also think we are going to see a lot of new companies entering the market when the products are easier to develop, you know a couple of university students in a garage kind of entrepreneurs."

What was it that you set out to do when you founded Indigo-Vision 15 years ago?

"I was quite financially driven when I started to be honest, looking for the fame and fortune. That has changed more and more, into looking for the satisfaction of creating something, building something together with good people. IP video is what we have been doing all the time. The first eight years we had a different business model, which was licensing with the likes of Panasonic and Honeywell, and we thought we were doing really well. They paid us a nice license fee, they developed products, and then they just sat on them. In hindsight, it was way too early to work with the licensing model, because the market was just not ready for IP. So in 2002, we rebuilt the company from scratch: new business model, new way to market, new products, new people, new everything really. In that sense, we are really a six year old company, because we started again with our successful business model in 2003."

How many people are you now?
"Something like 135. We have got our own people in 21 countries and have invested a lot in building a worldwide sales force. We want to be one of the big guys, we want to be the size of Pelco, and for that you need global reach. So the goal was to go globally from very early on, even if we have been spreading very thinly, one guy in Australia, three in China, two in India, and so on. But it is working - we've got reference sites all over the world, fantastic references that our competitors would die for.

You've got to start slowly, and get established. Another way would have been to first become established here in the UK and then go to America and do it there, but it's like with a baby, you can't force it to walk, you can't make it go faster than it can. In each region you have got to get some customers, get yourself known, and do it bit by bit.

It has been quite a challenge for a small company to put guys out all over the place. Now we have got three hubs, in APAC, North America, and the UK, and we hold quite a lot of stock in each one which is part of the process to build a local presence."

How do you see the company develop in the coming years?

"We are going to come out of the financial crisis stronger than we went in, with a greater market share. We have got a bigger market share now than a year ago, we went through three years with doubling each year, growing two and a half times the market rate. Some say that the IP video market now is static or showing only 10-15% growth and we are still growingmuch faster than that. We've also seen some smaller competitors disappear.

We recently established a development team in Vietnam that has given us a 50 percent increase in software capacity, apart from that all development is made in Edinburgh. We now need the same kind of capacity increase when it comes to hardware, because we have started to invest heavily in cameras. Up until now our business has been more about transmitters, converting analogue cameras and codecs, and now it's becoming more a camera game so we are positioning ourselves very strongly for that."

Have you been doing any company acquisitions?

"No, we haven't, it's not that we are opposed to it, but there is no logic to do it at the moment. We have the technology so we don't need to acquire that, and I think it's very difficult to acquire channels because they disappear."

Which are your strong markets?

"Vertically we are very strong in casinos, by far the strongest IP player in casinos. We are the only IP company that has been approved by the Nevada Gaming Commission, and we have two casinos on the Las Vegas strip, and 10,000 cameras in 30 casinos worldwide, which no other IP company has. We have got a lot of big railway systems as customers, and within transportation generally, airports, ports.

Typically we are strong where there's a lot of area to cover, and also where there is a need for evidential quality video, such as within law enforcement.

Looking at regions, America has been doing very well. APAC is coming up nicely, it used to be a weak spot for us. Europe has been suffering in some areas, with the exception of Eastern Europe, and the Middle East has been doing very well."

Do you sell cameras separately or more as an add-on to the system?

"We have got a unique pricing model - when they buy our hardware, the software is included with an unrestricted license, even though the software is worth two thirds of the value of the system which means that they can install it on how many PCs they want and add as many operators they want. We've done that quite deliberately of course, it's not only because it's simpler to handle. Our quotation is two lines long; cameras and storage, that's it.

When you think of analogue you have got a lot of cameras going through to a few operators, many to few. The whole point about IP is that it can go many to many. Your first analogue monitoring room can cost you a 100,000 Euros, the second one is going to cost you 95,000 Euros, so is the third, and so on. Whereas with an IP system, it's just a PC. So we deliberately don't charge for that extra stuff, to encourage people to watch it from as many places as possible.

We did a police station recently, where the end-user said they only needed one monitoring station, but when we came back six months later they had 13 monitoring stations, and they're using it for all sorts of stuff. And no money comes to us, probably missing a trick there aren't we, but they wouldn't have 13 stations if we were charging them and we wouldn't sell more cameras. They realize that they can use the system for something else, and we allow them to grow the system in any way they want."

Who do you see as your main competitor?

"Our number one competitor I would say is Bosch. But the real competition is analogue. More than 90 percent of the market is still analogue - it is dying, but it's dying slowly. And the thing that is going to kill analogue is HD, high definition," Oliver Vellacott concludes.

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