Chinese video recorders: technological leadership in the budget segment is a reality of our days.
Chinese video recorders: technological leadership in the budget segment is a reality of our days.
For a long time, Chinese manufacturers of budget DVRs were in a catch-up position in relation to their Korean and Taiwanese competitors. This was due to several factors. Chinese manufacturers entered the world equipment market much later than their Taiwanese and Korean competitors. The lack of necessary experience in creating technological and competitive solutions initially oriented manufacturers to create, first of all, cheap solutions, which were often perceived by consumers as low-functional copies of products from Korean and Taiwanese manufacturers. Traditionally, the weak points of products from the Celestial Empire were the low quality of software, problems with Russification, insufficient level or complete absence of technical support for the product and a short life cycle. In fact, when a new product was launched on the conveyor, work on supporting the old one (eliminating errors, adding new functions) completely stopped. This was largely due to technological reasons. In fact, during the formation of production, the products of Chinese manufacturers were created on the same hardware basis as the products of overseas competitors. In the budget segment, these were mainly DSP and SoC/ASIC solutions produced in Korea and Taiwan. Chinese manufacturers received components at higher prices and did not have access to the level of technical support that, for example, the Korean Nextchip or Taiwanese FaradayTechnology provide to their «local» customers. Actually, Chinese manufacturers of integrated components, such as HiSiliconTechnologies, JadeTechnologies and RockchipElectronics, were focused on creating solutions for the telecommunications and multimedia markets, and for a long time bypassed the specialized market of video surveillance equipment. In this situation, Chinese manufacturers, being in conditions of tough price competition, reduced costs for development and software, secondary electronic components, product support. Nevertheless, up until the end of 2009, many Korean and Taiwanese companies managed to successfully compete with Chinese manufacturers even in the budget segment. At comparable prices, they offered more functional products with full technical support.
The situation changed radically after the global financial crisis. This is primarily due to the changes that occurred in the market. As is known, the crisis hit developers and manufacturers of high-tech products hard. The global demand for computer, telecommunications, and multimedia products fell by tens of percent. Accordingly, the demand for semiconductors also fell. In this situation, many Korean and Taiwanese manufacturers of semiconductor products were put on the brink of survival (some ultimately did not survive the crisis 1) and were forced to focus on creating solutions for the main, most popular and profitable segments. The development of solutions for secondary and specialized segments, including video surveillance equipment, was frozen. This is precisely why most Korean and Taiwanese manufacturers lagged behind in terms of launching budget video recorders with H.264 protocol support in 2009, D1 resolution support, and high-resolution monitors in 2010. In China, events developed according to a fundamentally different scenario. Firstly, the crisis affected the Chinese economy, which had strengthened over decades of economic growth and had a reserve in the form of a 1.5 billion domestic market, to a much lesser extent than South Korea and Taiwan, whose economies fatally depend on exports (up to 80%). Secondly, a feature of Chinese manufacturers of semiconductor components is that almost all of them are not independent enterprises, but subsidiaries and divisions of large Chinese holdings. The main consumers of their products are often the parent companies, which also provide the investments necessary for the development of new products.
Thirdly, large Chinese companies offering products to the world market at competitive prices used the price sensitivity of the crisis market to their advantage and only strengthened their position in the world market. For example, the telecommunications giant Huawei, the parent company of the semiconductor manufacturer HiSiliconTechnologies, rose from 4th to second place in the world telecommunications market in 2009-2010. This also affected the provision of Chinese semiconductor companies with stable demand for products and investments for further development.
The Shenzhen company HiSiliconTechnologies has achieved the greatest success in the video surveillance equipment market. The former processor division of Huawei, which was spun off into a separate company in 2004, HiSilicon is currently one of the largest manufacturers of ASIC solutions in China and has its own branches in Beijing, Shanghai, Stockholm and Silicon Valley in the United States. The company's main field of activity is chips for telecommunications equipment produced by both the parent company Huawei and third-party manufacturers around the world. However, in the last few years, the company's engineers have turned their attention to the video surveillance equipment market. Over the past few years, a number of ASIC processors have been released that have found application in budget models of video recorders and IP video cameras. And if, at the initial stages, HiSilicon processors were on par with analogs produced by Korean and Taiwanese companies, then from the end of 2009 — beginning of 2010, the H15Shso products surpassed their competitors in terms of cost/functionality. Competitors — Faraday Technologies and Next Chip did not have similar solutions at the time of release and for quite a long time after.
In fact, the entire 2010 in the budget segment was held under the banner of HiSilicon. The successful Hi3510, Hi3511, Hi351 were replaced by new models Hi3515 and Hi3520. These processors became real bestsellers, practically displacing both outdated solutions of competitors and their own products of previous series from the market. Many Korean and Taiwanese companies producing equipment in the budget segment are currently forced to use Chinese ASIC processors HiSilicon, not having a worthy alternative from «their own» manufacturers. In this situation, Chinese manufacturers have received competitive advantages that they lacked at the initial stage of formation: low cost, high level of integration of components into the ASIC processor and full technical support for the development, reducing the manufacturer's costs for developing the hardware and software of the video recorder.