Few weeks ago, I saw a presentation on YouTube called "The Hidden cost of h.264". posted by The IP Academy/MxInstaller, a group describing themself as Mobotix Evangelist. Mobotix uses a specialized video compression called MxPEG, which is an improved and proprietary evolution of MJPEG.
The presentation argues that H.264 solutions are more expensive because it requires more Video Surveillance server than traditional MJPEG solutions based on the fact that decoding a H.264 stream is a lot more expensive than Motion JPEG.
It's entirely true that decoding H.264 requires more CPU than MJPEG. But with Omnicast it's not requiring more servers, because well architect products do not require decoding the video stream in order to record. For Omnicast, the main limiting factor on the server isn't the CPU but the number of random IOs/seconds supported by your disks.
Assuming your build a system that can record 100 Mbit/sec with Omnicast; it means 100 cameras @ 1 Mbits/sec in H.264 instead of 20 cameras in MJPEG (According to Axis MJPEG stream are 5x to 6x bigger for the same quality)
But this presentation forget the most important piece of video recording system; the storage. The real value of H.264 is the huge saving on storage.
Here's a quick example just for the cost of hard drives:
Recording 100 H.264 cameras, D1,15 FPS @ 500 Kbit/sec for 20 days 24/7 around 12 000$
Recording 100 Motion JPEG, D1, 15 FPS @ 2.5 Mbit/sec for 20 days 24/7 around 70 000$
With Omnicast, H.264 is always the most cost effective solution and for other solutions it might still be cheaper to use H.264 even if you need more servers.
I wrote another post to understand the differences between H.264 and MPEG-4.
Comparison of MJPEG, MPEG-4 and H.264 http://www.axis.com/products/video/about_networkvideo/compression_compare.htm
Very good white paper from Axis on H.264 video compression standard http://www.axis.com/files/whitepaper/wp_h264_31669_en_0803_lo.pdf