Analysis of the Development Status and Competition of DVR in China

For the security industry, the application and development of DVR makes video applications become the most dynamic growth point after IT communication. Besides application in professional security, it will play an increasingly important role in the management field and even ordinary life in the future. The role. Through 10 years of development, a group of outstanding national enterprises have been experienced in the DVR field, such as Hikvision, Dahua, and Hanbang Gaoke. Their DVR products not only firmly occupy most of the domestic market, but also go out of the country. The international market occupies a considerable market share. It can be said that Chinese DVR manufacturers have picked up the banner of “national brand”.

DVR market development status

In China, the development of DVR has only gone through a short period of ten years, but it has undergone several important changes and completed the process of turning into a butterfly. For example, in 2000-2002, PC-based DVRs and embedded DVRs competed. In 2003, the transition from MPEG compression algorithm to MPEG-4, H264; In 2006, from the local video as a core device on the network; 2009-2010 began to do hybrid, high-definition, intelligent DVR. Every transition; whether from analog to digital, or from PC to embedded, has epoch-making technological innovations, which has prompted rapid progress in the industry.

With the expansion of the market size of DVRs, the number of new players in the market has increased. This has made the DVR market extremely fierce competition and serious product homogeneity. With the advent of high-definition smart cameras, traditional DVR products are facing a new challenge. Many people think that IPC+NVR will immediately replace DVRs. Although this fear is not unreasonable, the application of IPC is a peaceful evolution. A long process. Although IPC may grow even faster than DVR, the number of IPC channels exceeds DVR for a long time, and replacing DVR requires a longer path. Therefore, DVR will continue to develop in a certain period of time, but the competition will also become more intense. Enterprises need to work hard to make the traditional DVR better, such as better picture quality, lower cost, stronger network function and better stability. In addition, on the basis of doing some other product forms, such as hybrid, high-definition, etc., otherwise in the market elimination, DVR or will face a passive situation.

DVR Competition

Due to the continuous development of DVR, its competition has also been continuously upgraded, especially price competition is more common. Looking at the history of domestic DVR development, we can see that since the introduction of DVR into the Chinese market, price competition has never stopped. For example, the current market leading embedded DVR can be said to be the product of a price war. In 2001, along with the emergence of the "card + software" model, the market began to shift from "technological competition" to "price competition" in PC-DVR products that still belonged to "a single show." One

The price competition “to the end of the price” dragged down the development of PC-DVR products. Thus, in the price war, a new development idea was born - stable performance and cheap prices. Based on the successful experience of the civilian market recorder, the market has emerged as a solution to replace the “disc” carrier with a “hard disk” carrier, and evolved into a new design logic. As a result, embedded DVR products in the Chinese market were created in technological advancement and price competition.

At first, embedded DVRs also experienced a lot of setbacks. However, it is the “card battle” in the PC-DVR field that precisely supports the development of the embedded DVR. At that time, as the PC-DVR price war focus quickly passed to the field of video compression cards, the fierce competitive environment forced these board manufacturers to make strategic transitions. As a result, board manufacturers that have expanded into the downstream industry have gradually transformed themselves into embedded DVR manufacturers. This transformation has brought about an expansion of the market for embedded DVRs. By 2007, embedded DVRs have become more mature regardless of technology or functionality. Since then, the speed of replacement of products has slowed down, and DVR quality has become the focus of attention of users and manufacturers. After several years of development, the performance and stability of products have become increasingly mature, and the cost of products has also been declining.

In May 2011, Dahua announced that it would reduce the price of the CIF 4-way DVR by as much as 40%. Hikvision immediately followed up, its 4-way OVR prices from the original more than 700 yuan fell to less than 300 yuan, the decline is even climbing to 60%; this move has received a lot of attention. The author believes that the reasons for the price reduction are:

The inevitable trend of technological progress

Although the DVR's replacement rate has slowed down in recent years, manufacturers have been making efforts based on the original platform, such as developing new DVRs for certain industries, or strengthening certain functions, or improving certain performances, etc. moving forward. We know that technological progress will often make the product's cost-effectiveness a lot of room for improvement. So is this price competition also closely related to this kind of technological progress? Let's look at the UOB company that cuts prices. On June 17th, which was only about a month after the announcement of a substantial price reduction, Daewoo launched a high-profile launch of the N6 new series of DVR products, and put forward the slogan of “subversive breakthrough product performance”. Dahua is determined to promote the N6 series in large scale. It has developed more than 30 kinds of products, and also announced that it will trigger a new round of revolution in the industry - "establishing a new benchmark for high-definition DVR." Looking back at the Haikang company, Haikang, which almost took a step back with Dahua to take a price cut, even released a new generation of DVR products on June 13th even earlier than Dahua. Haikang also emphasized the "revolutionary breakthrough" of the product and emphasized the "processing performance, high-definition and stability" of new products. Obviously, the two DVR giants have made substantial price cuts, and they have been able to separate new products from their well-proven mature products.

From the point of view of the technological development trend of the entire industry, the current mainstream DVRs that monitor storage products also tend to be replaced by NVRs and HVRs. Of course, this kind of substitution process cannot be completed overnight. However, the overall trend of technological progress will not change. For this reason, price competition in the DVR field still exists.

The Inevitable Result of Industrial Structure Adjustment and Enterprise Strategic Adjustment

It must be pointed out that the current price turmoil does not stop at technological advancement, and the adjustment of the industrial structure at the macro level and the adjustment of the corporate strategy in the micro field have also played an important role. From past experience, it can be seen that often a price competition arises, which is often closely related to the participants, especially the business strategy that initiates the company. Michael Porter summarized three basic strategies for enterprises to gain competitive advantage: cost leadership, innovation and goal agglomeration. He also summarized the competitive advantages into two basic types: cost leadership and standardization (or differentiation). . In the actual market, companies with different conditions will often achieve their own strategic goals by adopting different paths.

For a long time, the Chinese DVR market has formed two well-discussed camps: high-end brand camps including Haikang, Dahua, and Hanbang; and mid-to-low end formed by a large number of small and medium-sized enterprises based in Shenzhen and other places. Product camp. The former often rely on its own technology, capital and organizational advantages, through continuous research and development and introduction of new products and new strategic path; to achieve their own high-end goals. The latter is often used to take advantage of the cost advantage to occupy a place in the market, and even some no-name DVR manufacturers or Shanzhai cargo suppliers through the "cottage model" to achieve its product upgrades and progress. Just as the principle of “bad money drives out good money” in economics, usually the latter is constantly eroding the market and exerting great pressure on the former. Obviously, at this time, these big companies will not turn a blind eye and the market may need a "knock-out match" where the survival of the fittest is the best. Those who can survive this "war" must be those companies that have a certain competitive advantage.

As the hub of video surveillance system, DVR occupies an important position in the video surveillance system. Dahua and Haikang, the sponsors of this sharp decline, are representatives of China's DVR production. With their own technology capital and organizational advantages, Haikang, Dahua, etc. take the initiative to adopt price cuts, a move that has led them to a large number of SMEs. A large number of low-end and mid-end product markets will have more say, and will continue to consolidate their own market share, thus gaining a competitive advantage in the market. The author believes that this core enterprise-driven price reduction will have a profound impact on the industry: First, the industry competition landscape may change, along with fierce price competition, low-end companies will be forced to choose the path of differentiation or eliminated Outgoing: Second, it will promote technological progress. With the enhancement of the core enterprise's strength, it will increase the concentration of the industry and increase the investment in technology research and development. Third, it will promote the upgrading of industrial standards. The expansion of the core enterprise's market share will gradually promote the industry. The upgrading of technical standards; Fourth, the industry will gradually expand the scale of the market, accompanied by lower prices, will be able to expand the security market more extensively, so that the entire industry grows.

As mentioned above, price competition may have a positive effect on the industry. However, if it is used improperly or out of time, it will also have a negative impact on the development of the industry: First, the overall industry profits will decline. Because price competition is related to the interests of all parties in the market, it is easy to create a vicious circle, and companies that cause price competition will lose both. In the competition, even if the winners increase their market share and increase their income through economies of scale, they make up for the losses caused by price cuts. However, from the overall perspective of the entire industry, most companies’ sales revenues decrease, and profits decline. In the long run, the price war will make the company profitable. The long-term low level is not conducive to the development of the enterprise and has no benefit to the fundamental interests of consumers. Second, price competition may be detrimental to the maintenance of corporate image. The price of enterprise products is an integral part of the corporate market image, with high quality, low price and low quality. If the company’s products are highly priced and consumers are easily accepted, it shows that the company’s market image is better. If companies blindly reduce their prices and promotions, they will create doubts for consumers. Does the company have problems with product quality or other aspects? Even a part of consumers who have already purchased products at higher prices may feel deceived, which is detrimental to the image of the company.

Conclusion

The increasingly fierce competition in the security industry market makes it difficult for companies to get rid of price competition. How do companies respond and create a virtuous competitive environment? The author believes that first of all, we should soberly realize that any enterprise that wants to dominate the market is impossible, and the cake of the market needs everyone to share it. In addition, the security industry is a high-tech industry, which has a vast space for continuous innovation, the higher the added value of products, the stronger the competitiveness, so it is appropriate to carry out value competition, do not really fight the price war. Security product technology is updated and upgraded rapidly. As the technology matures and consumer demand changes, the cycle will be further shortened. Therefore, companies must constantly increase new product development efforts, and only the leading technology can lead the market. Only by following the market trend and constantly innovating in order to maintain the vitality of the security market, companies can always be a heater for consumer hot spots. A company, if it always runs behind others, will never be able to get rid of passive attacks, and there will be no profit at all.

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