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Axis

IP- based networked security surveillance has come a long way in a short period of time. Although IT and Security is pretty new and the technology is still in its infancy, early market leaders have already become apparent among rapidly growing number of suppliers. There is a player who is especially strong on the IP camera side: Axis Communications. As network camera share is expected to surpass analog camera share in the U.S. by 2009 (source: IDC), the future of Axis with up to 60% market share looks quite rosy. SecurityWorld INTL takes a look at whats behind their success.

Edited by Jeanny Lim

 Axis headquarters in Lund, Sweden  (Photo by Axis Communications)        



PACE SETTER FOR HIGH-GROWTH INDUSTRY

 

As the pioneer in the network video field, Axis Communications is riding the tornado of growth.  Forecasts for the IP-based video industry show a dramatic upward trend continuing into the next decade.  The demand for enhanced security and video surveillance has paved the way for compounded growth rates well over 40% per year.   This prognosis is affirmed by analysts such as Frost & Sullivan, J.P. Freeman and IMS, who closely track this significant field bridging IT and Security.  Recent corporate reports show Axis is outpacing the industry growth indicators in significant regions like the Americas.  Axis aims to stay ahead of the field where 90% of the projected overall market is still yet to be converted to digital and IP -- the proverbial tip of the iceberg.   

With the position as the de facto global market share leader in network cameras and video servers, Axis is poised to further reap the benefits by continuing to be the best and biggest in this business.  Retaining market leadership for the long-haul dictates that innovation and strategic execution must remain as core competencies, for this 22 year old networking company.  The success formula is not necessarily so magical, as compared to a consistent and persistent focus in the area which Axis founded.  Examining the companys humble beginnings reveals some keys as to why this "dare-to-win" mentality is so ingrained in the corporate culture. 

 

HISTORICAL BUILDING BLOCKS

 

Axis Communications was founded in 1984 by Mikael Karlsson and Martin Gren.  Mikael was a recent graduate with a degree in International Business from the Stockholm School of Economics.  Martin was studying advanced Computer Science and Electronics at the University of Lund, Sweden.  Both saw tremendous opportunities in the world of network connectivity, and together they started the business, initially working out of Martins fraternity room.  This was a true "start-up" before the term was even a buzz word.  

While Axis has come a long way since then, one thing hasnt changed -- its business concept of adding value to the network.  Axis has been and continues to be a "connectivity" company, providing specialized hardware and software solutions that enable people with different operating systems to easily, efficiently and securely access all kinds of resources on a network.  With the emergence of wireless technologies in the late 1990s and the growing importance of network accessibility, the company broadened its scope of connectivity to include both wired and wireless means.

Today, Axiss product and solutions portfolio encompasses network video products such as network cameras and video servers for security surveillance, remote monitoring.  Axis is also still a global leader in print servers and scanners servers. Through a history of firsts in the industry, Axis continues to take the lead in enabling people to access everything on a network from anywhere and at any time.  From the power of two bright minds stems the Axis of today, one of the hot companies which is listed on the prestigious O-list (Attract 40) of Stockholmsbro..sen (XSSE:AXIS).

 

FINANCIAL FACTS

 

Sales have been growing from strength to strength.  The 3rd quarter report of 2005 is proof positive of this.  Axiss overall net sales during the January - September period of 2005 amounted to SEK 636 M (492), an increase of 29 percent, compared with the corresponding period in the preceding year.  The video product area, which increased by 55 percent, compared with the year-earlier period, accounted for sales of SEK 512 M.  Currency effects had a negative effect of SEK 9 M on sales.

Net sales during the third quarter amounted to SEK 235 M (172), which was an increase of 36 percent, compared with the same quarter in the preceding year.  The video product area now accounts for 85 percent of Axiss total sales, while the print product area accounts for 13 percent.  Sales in the print product area continued to show a declining trend.  OEM sales accounted for 11 percent of Axiss total sales during the third quarter.

Sales growth was positive in all three main geographical regions during the third quarter of 2005.  The Americas region showed the strongest growth, reporting sales of SEK 100 M (57), corresponding to an increase of 77 percent.  The EMEA region reported sales of SEK 97 M (83), while the Asia region reported sales of SEK 38 M (33).

 

WHAT MAKES IT SO DIFFERENT?

 

Axis attributes being focused, as one of the key competitive differentiating factors in being able to distance itself from competitors.  This is applicable to both product development and the continuous effort targeted toward helping channel partners meet the requirements of market.  Being a pronounced and dedicated business enabler in the relatively new network video field creates advantages. 

Axis has the markets broadest product portfolio including network cameras, video servers, recording solutions and accessories.  The wealth of 21 years of networking experience and 10 year network video experience has generated the largest installed base for network video.  Axis has a growing base of more than 500,000 installed network video solutions globally.

Another key factor for Axis success is having worldwide presence.  Axis operates globally with offices in 16 countries and in cooperation with distributors, systems integrators and OEM partners in 70 countries.  Markets outside Sweden account for more than 95 percent of sales.  Axis has offices in Boston, London, Lund, Madrid, Melbourne, Munich, Paris, Rotterdam, San Diego, Seoul, Shanghai, Singapore, Taipei, Tokyo, Torino, Toronto.  All development is done in Sweden.

 

AXIS 225FD Fixed Dome

Network Camera

AXIS 210A Network Camera

AXIS 211A Network Camera

 

 

 

 

Albeit the Axis products are developed with open-system in mind, typified by the use of a LINUX platform, the core of the Axis product offering is its in-house-developed IP-based technology platform.  Axiss ETRAX and ARTPEC chips are regarded as industry-benchmark core components within the network-management and communications and image-compression areas.  The technology enables easy installationand provides compact and powerful solutions so that equipment can be rapidly and securely connected to virtually any wired or wireless network. 

Coupled to the hardware is Axis revolutionary API called AXIS VAPIX, which is considered a global standard interface for video.   The AXIS VAPIX has been the catalyst for the recruitment of over 260 Axis Development Partners worldwide.  These are independent software vendors who are creating network video applications designed to seamlessly work with Axis products and solutions.  

Anders Laurin, Executive Vice President of Corporate Strategy at Axis, notes the importance of leading initiatives with R&D, "Pioneering a technology shift has important effects on any market leading company.  Its imperative to continue producing network video products that present solutions to problems and are truly beneficial to the market.  Axis lives for making this possible."

 

CONSISTENT STRATEGY

 

Since inception, Axis strategy was to work with an indirect business model.  The two-tier approach utilizing major distributors has created a vast network of resellers and integrators at the second tier.  With this indirect business model, Axis achieves a geographical scope and reaches a significantly greater number of users than would be possible through direct sales to end users.

Axis also conducts an extensive channel outreach program called the Axis Channel Partner Program that is focused on building close relations with value-added resellers, security installers and systems integrators, who are closest to end users in the professional segment where growth of network video solutions is most rapid.  These partnerships give Axis a uniquely strong position in the market and provide excellent prerequisites for continued growth and to meet the customers needs.

Today there are more than 3,000 active and qualified partners in the Axis Channel Partner Program.  The increase in the number of partners reflects clear recognition of Axis technology, as well as the increasing importance of IP-based video systems for such application areas as security surveillance and remote monitoring.  With the rapid partner growth continuing, investments are made into teaching partners the "how and why to sell"  Knowledge of Axiss products and sales methods is assured through an ambitious training program called Axis Academy, which results in end users receiving the best conceivable help from the front-line partners.

AXIS 232D Network Dome Camera

AXIS 207 Network Camera

AXIS 241QA Video Server 

 

Another important Axis tool is the companys successful Application Development Partner (ADP) program.  This program is an initiative that brings application developers closer to Axis while ensuring that there is a broad range of applications that include the companys products.  In addition, the ADP program extends Axiss presence to new market segments and new language areas.   Honeywell, Tyco/American Dynamics and Lenel are just three of the more recognized global partners Axis works with. 

Axiss focused segments are: Education (universities, schools, education institutes), Banking & Finance (banks, post offices, insurance companies), Retail (stores, gas stations, supermarkets), Transportation (airports, railways, harbors, traffic surveillance, toll stations), Government (authorities, police, military, health care, prisons, museums, casinos), and Industrial (process industries, engineering, construction, pharmaceutical, energy and mining companies).

 

INNOVATION NEVER STOPS

 

Axis specializes in professional network video solutions for security surveillance, remote monitoring.  Its range of products includes network cameras, video servers, video decoders, video management software, and a full range of audio and video accessories.  Since 1996, when Axis launched the worlds first network camera for connection to an IP network, the company has been the leader in network video solutions.  Axis currently offers a broad range of network cameras and video servers for a large number of applications, the most prominent solutions being in the areas of security and remote surveillance.  Today, the portfolio comprises a broad range of video solutions, network cameras and video servers for installations ranging from entry level to professional level.

During the third quarter of 2005, Axis presented new products and solutions that were well-received in the market.  The AXIS 210A with bidirectional audio and PoE (Power over Ethernet) and the bandwidth-efficient AXIS 207 and AXIS 207W cameras were launched.  The latter is the worlds smallest wireless network camera for indoor surveillance and is well suited to video surveillance in small companies and home offices.

Axis continued to meet and surpass customer demands with the AXIS 225FD Fixed Dome Network Camera, designed for tough conditions -- inclement weather and rough physical environments.  By combining a very advanced network camera with Day and Night functions, dual MJPEG and MPEG-4 support, Power over Ethernet functionality and a built-in heater/blower all housed in a vandal-resistant housing, Axis has appealed to the request of the market for an out-of-the-box professional product. 

During 2005 alone, Axis launched a total of 20 new video products and solutions.  2006 looks set to be another successful year of new innovations in Network Video.  Axis aims to introduce even more ground-breaking technologies and products in the year to come.   

 

INHERENT ADVANTAGES OF NETWORK VIDEO

 

Supporting the natural demand for increased security and surveillance are the inherent benefits available to users of network video.  This has created a paradigm shift within the security and IT worlds, by providing solutions much more powerful than that of analog CCTV.  To adequately develop the positioning of Axis products, it is important to reiterate some of the key benefits of network video here:

 

Remote Accessibility

Access live video at anytime, from anywhere -- one can access real-time video at any time from any computer anywhere.  Axis network video products provide an easy way to capture and distribute high quality video over any kind of IP network or the Internet.  The video can be stored at remote locations for convenience and security, and the information can be transported over the LAN or Internet.  This means that even companies with several offices across the world can make effective use of a network video solution for security surveillance and remote monitoring purposes.

 

Easy, Future-proof Integration

Put the network cameras wherever you want, integrate applications, and leverage your investments.  There are almost no limitations as to where you can place Axis network video products.  They are not tied to physical inputs or frame grabbers and you can connect the product to a LAN, xDSL, modem, wireless adapter or cell phone.  Basically wherever you can receive a phone call on your cell phone, you can receive images from an Axis network video solution.  In addition, Axis network video has the capacity to provide a high level of integration with other equipment and functions, making it a continually developing system:

 

-Migrating your analog CCTV system into a network video solution : With an Axis network video solution, you can integrate your existing analog system with products that bring it up to speed with the latest IP technology.  The solution enables you to take advantage of numerous functionalities such as remote pan/tilt/zoom, Power over Ethernet, wireless, megapixel, audio, motion detection and many more, while meeting your requirements for image quality, recording capabilities and reliability.

-Integrating applications: A fully integrated Axis network video system can be used for a multitude of applications simultaneously: for instance, access control, building management, point-of-sales systems, ATMs, as well as fire, intruder and visitor management, and so forth.

 

Scalability and Flexibility

A system that grows with your needs -- an Axis network video system can be expanded by adding more network cameras.  This is just as easily done regardless of whether the new cameras are to be placed at the same site, or at a new location communicating over the Internet.  You can choose exactly what you need today, and scale the system at any time to meet your growing needs.  New technologies, additional cameras, and extra storage capacity are all easily added as required, thanks to strict adherence to industry standards.

 

Cost-effectiveness

Save money and lower total cost of ownership thanks to strict adherence to industry standards -- based on open standards, Axiss professional network video products run on Ethernet networking.  Using standard PC server hardware for video recording and storage rather than proprietary equipment such as DVRs radically reduces management and equipment costs, particularly for larger systems where storage and servers are a significant portion of the total solution cost.  Additional cost savings come from the infrastructure used.  IP-based networks such as the Internet, LANs and various connection methods such as wireless can be leveraged for other applications across the organization.  Axis network video products also support a number of advanced technologies such as Power over Ethernet, which provides power to the network camera using the same cable as that used for network connection.

 

Distributed Intelligence

Put the systems intelligence wherever you need it -- in todays network video systems, intelligence has been brought into the camera itself.  Advanced network cameras can have built-in motion detection and alarm management so the camera decides when to send video, at what frame rate and resolution, and when to alert a specific operator for monitoring and/or response.  More intelligent algorithms -- number plate recognition, people counting, face recognition -- are also being integrated into network cameras.  You obtain data in more manageable forms and with higher levels of accuracy.  Intelligence at the camera level implies a far more effective means of surveillance than is possible with a DVR or other centralized system.

 

Proven Technology

Safe investments that last well into the future -- network video started at Axis.  The company invented and launched the first network camera back in 1996, and it continues to lead this market.  Working with an extensive network of CCTV and IT industry partners, Axis can fit the ideal video solution around your needs now and in the future. Whatever your requirements the company has the expertise and the right partners to match them:

 

-More than 20 years of experience in network connectivity 

 -More than 10 years of experience in network video

-Recognized market leadership with over 500,000 professional network video installations worldwide

 

THE BRAND YOU CAN TRUST

 

Axiss market leadership is founded on more than two decades of success in developing core technologies and products for network connectivity, building strong sales channels, and forming key partnerships.  With more than 500,000 professional network video products and more than 3 million networking products installed, Axis has the experience to meet the markets needs.  Axis is recognized as one of the most trustworthy brands within the new IP-based video surveillance industry.  Research firms such as Frost & Sullivan and J.P. Freeman have recognized Axis as the leader in the global network video market, which is expected to reach a value of US$1.2 billion by 2010.  In addition, Axis is the leading independent provider of print servers, which simplify printing in multi-platform environments by supporting virtually all printer models and networks using wired or wireless media.

Aside from tracking pure revenue growth, market feedback is very important to Axis.  This involves both perspectives from key industry analysts as well as being able to receive information about key customer projects.  From a customer standpoint in 2005, Axis can list some major project wins in a variety of market verticals.  In general, customer satisfaction could be related closely to the benefits of network video presented earlier.

 

ONLY THE BEGINNING

 

Axiss overall goal is to further strengthen and develop the companys position as the market-leading supplier of network video solutions, as well as to retain its strong position in the Print product area.  Axis aims to drive the technology shift from analog to digital network-based security solutions and to continue to strengthen its position in this market.  This is an area that is expected to continue growing rapidly, with excellent growth opportunities for Axis as a logical consequence.  With more new products on the way, Axis is about to embark on the next stage of tornado growth.  

The objective of maintaining market leadership and to meet growing demand in the network video market is a consistent theme of Axis vision.  Into the future, the significant elements of Axis market and channel partner programs and leading product development will strive to outpace the market.   For a 22 year young company, this is just the tip of the iceberg in terms of potential.  What can be said of Axis nature is that it isnt enough to enjoy a world of potential, but that it must truly be realized.  Being never satisfied is a recurring impetus towards remaining in power.     

 

Jeanny Lim is editor-in-chief of SecurityWorld INTL.  Send your comments to swied@infothe.com.

 

 

 

 

Interview


"Use of network cameras is in all areas."

Its been ten years since Axis Communications introduced the first network camera to the market.  Since then, it has remained at the forefront of the fast growing network video market.  Anders Laurin, Executive VP of Axis talks about the company, its performance, and the network video market in an interview with Jeanny Lim, editor of SecurityWorld INTL.

 

Anders Laurin, Executive VP,  Axis Communications

 


 

 

How do you evaluate your companys performance in 2005 and what influenced this performance?

From Jan-Sep, 2005, Axis showed a total growth of 29% and a growth of 55%+ on the video market.

 

 

 

Looking back on the past few years, how do you think the culture of security has changed around the world? 

The traditional CCTV worlds are slowly moving onto the IP world.  More and more of the old CCTV installers are converting into the IP world.  Some of the analog products are disappearing from the market: for example, multiplexer, access control system, etc.

 

 

 

How do you see the IP surveillance market this year?  How much growth do you expect for the market? 

Axis believes that there is great potential in the IP surveillance market since there are still a great amount of the overall market yet to be converted to digital and IP.  As analysts from Frost & Sullivan, J.P. Freeman and IMS have shared, "The demand for enhanced security and video surveillance has paved the way for compounded growth rates well over 40% per year.  This prognosis is affirmed by analysts such as Frost & Sullivan, J.P. Freeman and IMS, who closely track this significant field bridging IT and Security."

 

 

 

Do you think time for IP surveillance has already come? 

More than 90% is still old analog system, so the paradigm shift to digital will take a couple more years.  But, we can also see different level of activities in different markets.  Some markets are moving very fast into the IP surveillance arena.

 

 

 

When it comes to using the network for video surveillance, questions arise on what to do about all the network viruses and worms.  Please comment on this.

Most of the virus and worms are attacking systems based on Windows operating systems.  Axis doesnt use Windows in our products.  But we are very concerned about security issues and are proactively working hard in the following areas: One, stability (in both normal and abnormal conditions: e.g. denial of service attacks), security features (e.g. protocols, authentication, cryptographic, etc.), and intrusion resilience and damage limitations.  Two, we are testing all our products for 24/7 uptime, functionality flaws and general security weaknesses (security test suits).  Three, we are also conducting discussion groups; mailing lists and other general security news in order to respond quickly and make changes.  And finally, on reported security issues, Axis will quickly respond to produce service releases and notify our registered customers

 

 

 

In terms of improving business performance and functionality, what other applications does IP surveillance have than security?

We split the market into 3 parts: IP surveillance, remote monitoring and Web attraction.  We are facing new applications every day, so use of network cameras is in all areas.  Other new areas are applications for people counting, people behavior and plate recognition.

 

 

 

What is your no. 1 priority?

Our top priority now is to continue to have a complete range of high quality products.  Today Axis is the market leader and we will still be no. 1 in the future.  Other important thing is to hold on to our "Go to Market"model.  We have today more than 3,000 active partners, who market and sell Axis products.  Our goal is to educate existing and new partners on networking video.  We are using our own developed program "Axis Academy."


 

For more information, please send your e-mails to swm@infothe.com.

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