Q: You have been with Axis Communications since 1996. As far as IP video is concerned, 1996 is the beginning of everything. What was it like being the first IP video manufacturer?

A: I remember my first Christmas at Axis Communications was 1995 and we had a Christmas tree connected to the first prototype Axis IP camera so you could turn on the light of the Christmas tree everywhere in the building so the lights were blinking all the time. At that point the camera could refresh 1 image every 60 seconds. It shows in the 15 years enormous changes have taken place. Now we can deliver 60 images per second at in broadcast quality HD – the differences are huge. I do remember that at first, it seemed we were telling the market the same things over and over and not going anywhere but we saw the business take off in 2004 and 2005 – that was when we really started to believe in IP Video. Before this we did not doubt the business – we were an IT company selling IT products and from the beginning the surveillance business has steadily grown – but in 04/05 the numbers came and we really knew we had been correct about the future of video. When I look back at the changes of the past 15 years I remember IFSEC in 1997 when we were the only company showing an IP-based surveillance product and other companies were laughing at us. Much has changed.

Q: What would you put that spike in sales and acceptance in 04/05 down to? Was it improvements in networks? Product maturity?

A: We are in our fifth generation of IP surveillance products today and in 04/05 we were in our third generation. Before that time many IP cameras were being used for web applications and we had an encoder product to bring analogue cameras onto networks. But with our third generation camera and chipset released in 2004, quality was good enough for serious security applications. We do our own chipsets – and we are good at it. It’s interesting that in 2004 a chipset had a lifecycle of 3 years but now we are down to 18 months. And while it happened at the end of 2001, September 11 changed things for us as well. Security became a serious business after September 11.

Q: The H.264 standard is really a set of guidelines – it’s not a strict specification. Not every company invests as much in developing H.264. Is it frustrating to have compete with companies that tell the market they have H.264 but who you know are doing an inadequate job with their compression technology?

A: It’s a good question. H.264 which is the first standard in video compression in this industry and standards are good. It’s the same with HD – there’s the SMPTE HD standard and we are the only ones following it. Often when you are quoting a job there is frustration because the industry compares datasheet to datasheet on things like compression, image quality and lux with no standards behind these numbers. So yes, it is sometimes difficult to get this message across. That’s why these standards are so important. We feel the big change in the industry now is the combination of 2 standards, SMPTE’s 720p broadcast quality HD standard and the H.264 compression standard. One gives you excellent image quality while H.264 compression reduces the demand for bandwidth and storage.

Q: Would you say that 720p HD is the sweet spot and that the SMPTE is a perfect guarantee for end users?

A: Yes – I think 720p HD is the sweet spot. If you use 10MP there will be issues relating to enormous image size and questions are asked over how many megapixels makes sense.

Q: ONVIF – the Open Network Video Interface Forum – that’s obviously important to you given Axis Communications is a founding member? How important is ONVIF to the wider market?

A: ONVIF is important – there are now more than 200 members. We at Axis are an open company and this is reflected in our corporate culture. We believe that through open standards customers will get the benefits of network video. We also believe in partnerships and our software program, the so-called ADP partner program, has 845 partners and this means we can bring our customers many different device applications using the SDK in Axis cameras, with all of this inspired by open standards. Open standards are important to Axis as a company and to its customers. We have our own chipset and it’s very powerful and has many onboard components. And this means in the future there will be a lot of development on the intelligence side – a development we think will be very important on the edge of networks. That does not mean we will be doing these applications ourselves but because we have a lot of power in the camera there is a platform for others to undertake these developments. For me ONVIF is a way of driving the market forward – driving convergence.

Q: You have a significant R&D spend – what’s next in areas like compression and resolution – or are we looking at a proliferation of H.264 and SMPTE standard 720p HD?

A: With H.264 we will see optimisation but I think we will see HD everywhere – in all parts of our range from the least to the most expensive cameras. There will also be the development of intelligence at the edge. In terms of other investment we have been focusing on ease of installation – things like the P iris – we’re focusing on making things easier for the installer – faster. Having installations up and running as quick as possible has been our focus. We also have a thermal camera and are getting a lot of traction in markets you would not expect – in markets education. Those are our innovations. You will also see differences in systems above 16 cameras and below 16. I think that below 16 cameras you will see surveillance as a service – something we have been working on – we have the software for it called the AVHS (Axis Video Hosting System) which we currently only promote in the US. With AVHS if you hook a camera to a network, the system and the camera will find each other. It makes sense for small shops monitored remotely.

Q: In terms of intelligent cameras, are there standout analytics capabilities end users and installers should look out for?

A: The areas we will see analytics used will not be mission critical situations. But intelligent functions are ideal for things like retail – people counting, heat mapping – we are seeing more and more of those functionalities and retail is the area we see this. It’s business intelligence functionality, excellent for merchandising in the retail space.

Q: Do you see significant amounts of storage on camera in the future?

A: Yes, I think so. When you are getting chips up to 128GB then onboard storage is a good assumption – this will be an alternative to DVRs.

Q: Do you think your integration partners will be dealing with IT managers rather than security managers moving forward?

A: I think we will continue to see both. You will see the IT manager handling the back end but the security manager will be involved in the security operation and choosing the cameras – that’s the trend we are seeing. The new thing is the learning curve of IT and security working together – that’s not happened before – that may be why the overall process has been slow.

Q: I still see installation companies that are entirely dedicated to analogue surveillance, a technology that most manufacturers have stopped seriously developing. These companies are not investing in IT skills. Are these video surveillance installers who have not got their heads around IP video and networking essentially old school?

 A: It’s a sensitive question but yes – there is an investment to make in IP. If you believe network video will be everything in the long run – which of course is what we believe – then you need to make this investment. The IT professionals working in the surveillance industry are younger and we are starting to see security and IT companies merging together. This is common in Europe and it makes sense given you need both competences. You can’t say one competence is an advantage over the other one – you need both. You need physical installation and you need back end. To get both you might buy a company or hire the right people. We see quite a few people working in the surveillance industry who have a background in IT companies. It’s taking a long time. Training is a big thing to assist our customers in the security industry. The Axis Communications’ Training Academy has trained 20,000 people since 2005.

Q: In terms of the APAC region, we all know China’s surveillance industry is growing hugely but the interesting thing about it is the predominance of analogue cameras. What would you put that down to?

A: IMS Research suggests the world video surveillance market was 8 billion in 2008 and will be 13 billion in 2013. Of this 25 per cent is network video and this is predicted to reach 40 per cent in 2013. The market is also predicted to be equally spread over Asia Pacific, Europe and North and South America. China is mainly analogue but I think IP will come. I have spent a lot of time in China and they are using analogue cameras with encoders – more than network cameras – it’s a question of education. The 2 biggest analogue markets are China and the UK. Another market that is very network video oriented is the Middle East. It will come, I see changes, I see big network video applications in airports, healthcare, utilities, industry, seaports and roadways, railways. In 2012 China will have more rail passengers than the rest of the world combined.

Q: There have been predictions from IP industry commentators of 200 per cent growth in IP surveillance over the next 2-3 years. Is that realistic?

A: I think we have seen over the past few years an average of 35 per cent per year – that figure is reflected in our business growth. Since Q4 we have been on those growth rates, while Asia as a whole grew at 59 per cent in Q2. So while I’m not sure of those exact numbers, growth in IP video is significant and there is still 75 per cent market penetration to go – in Asia this figure is even more. The size of the market is there – it’s a matter of the speed of convergence. The market is definitely positive. We see that in the project pipeline – there is a lot of activity out there and there will be much more. I used to say ignorance was our biggest competitor and at the moment IP is still only 25 per cent of the world market. This means 75 per cent of the cameras sold today are analogue.

Q: The economic downturn has had an impact on the surveillance market in general but it doesn’t seem to have had a huge impact on Axis. What would you put that down to?

A: A year ago I was feeling in a positive mood but Q2 last year was a bit difficult. We still had growth but because we are in an investment mode and you don’t want your bottom line looking bad when your focus is on development, it was challenging. The downturn may have a wider impact, too. I looked at a comparison between the analogue and networking surveillance market and before the GFC the analogue market was still growing as was digital. Both then went down and analogue started to restructure and its focus went internal instead of external. Then when the market began to recover they were not positioned to take advantage. For us the focus of the last year has to keep the business in a positive mode, which we have succeeded with. Our R&D spend is up 31 per cent and this is in a tough economic situation. As a reflection of this growth, we have never employed as many people in a quarter as we did in Q2, 2010.

Q: How does the sales performance in this part of the world compare to the rest of the world?

A: This area is only ten per cent of our total world revenue but growth should be quicker going forward. The APAC region had 59 per cent growth in Q2, which is very good, we have good growth everywhere in the world but Asia is growing the fastest and Australia is doing well.

Q: This is a big projection but given the slow pace of change, what do you think the video surveillance market will look like in 10 years time?

A: We will be busy for the next ten years to make sure that the remaining 75 per cent of the market becomes network video, but in addition to that. I think alarms and video will be combined more than today in remote hosting solutions. I think intelligent video will work to prevent incidents, not for investigation. Things like cameras with audio detection – not only volume threshold but the sound of an argument.There’s also a lot of hassle with security measures so making things more automatic will be important. As well, there will be more integrated solutions than we see today, really making use of convergence. We will also see penetration of surveillance into the consumer market with cameras called up on TV screens over home networks. In France for instance, video surveillance is subsidised by the government – 50 per cent – that’s in domestic applications.

Q: Which Video Management System works best with Axis cameras?

A: The software that does the best job with Axis cameras is Axis Camera Station because it is made to work with Axis cameras. Of course, there are good software solutions out there – there are 5-6 global solutions that are good and there are a lot of local and regional ones around the world. If I could challenge the manufacturers of video management software with something it would be this – we often develop camera functionality that our customers can’t use because the video management system is not able to support it. As an example, it took too long for the VMS makers to develop support for H.264 for example. I think it might be that the developers focusing on fewer camera manufacturers have better integration. If VMS developers want to manage everyone it is going to be difficult for them to keep up. We try to be as easy as we can be and developers say our API is the easiest to integrate but we have bought out 20 new products this year and we are just one company.