Canon Acquires Axis Communications

The impact depends on the future market strategy and policy that Canon will undertake for the vast portfolio they will acquire. The impact on Milestone from their acquisition is yet to be seen, and while there were many predictions for market disturbance and general policy change in Milestone nothing has happened yet (at least judging from distributor's point of view in Europe)

For Axis shareholders the outcome should be extremely positive. The company's growth and innovation potential is declining, and although they are not admitting it, the fierce price competition from China manufacturers will be smashing them gradually in the longer term. Once a technological leader and innovator, now Axis is one of the many camera suppliers (the IP camera now being more and more a regular commodity product). With this offer I think the outcome is very lucky for the shareholders, they will hardly get any better option in the near future...

Wow didnt see this on coming. Canon are agressively expanding into the market in style!

I suspect there is a element of patents etc being bought here. Will be interesting to see how its going to play.

Sony to buy Genetec?

I guess this answers the question from the other day about when Axis will have a full blown VMS. Looks like the answer is right now.

I think the VMS Software and Camera Manufacture should be independents.

It sounds to me a step back, like it were with Verint, Vicon and others how adote the same strategy of market.

The world is opened, and Canon should keep the companies totaly independents, altough we as Integrator could not trust works with the Canon brands, if its work with a cameras Axis and other VMS or VMS Milestone and other cameras.

Very interesting move. The only thing missing from Canon's portfolio now is a good marketing firm. They have never had good marketing, in part because of product line. They have fixed that. They now need a very clear vision for the future, and someone to trumpet what that vision is.

It imposes a number of interesting questions. Will Axis products be manufactured in the Pacific Rim? Will that lower the cost and/or quality? Will they start to limit the availability of the cameras; one problem Axis always had was that end-users could buy it anywhere. Integrators could not earn respectable mark-ups.

They (Canon) have become, again with proper marketing and strategy, a clear break-away player. Milestone has recently introduced an recording appliance along with their "famous" software. True end-to-end.

I have remarked on this board and in other places that the market is just too fragmented. That appears to be quickly fixing itself. Integrators can make longer term decisions on whom to partner with.

If Genetec doesn't do something, and soon, they run the risk of becoming irrelevant.

Who will buy Aimetis?

I very nearly retired (early) two years ago. Man am I glad I stayed. John this must have you excited. Your job just got very interesting indeed!!

Cisco to buy Avigilon?

Today is a good day. Free round of drinks on me if Canon picks up S2 next.

Question raised: Who, if anyone, could counterbid and pay more for Axis than Canon? In other words, who will pay more than $3 billion for Axis?

Cisco makes the most sense, if they can / choose to pull the trigger.

For security / surveillance companies, that is an immense / almost impossible sum.

For large consumer electronic companies, like Sony and Panasonic, they already have well-established surveillance camera offerings, so it would be hard for them to justify paying such a sum (by contrast to Canon, who is not strong in surveillance cameras).

Cisco is the one company who it makes sense strategically, is in the market, and could afford it. They have struggled in video surveillance for years and their camera offering is really weak. If they were serious in rectifying that, Cisco makes sense.

Wholly conservative beavers, Batman! The Mayan calender was 2 years late. The world started shaking last year and continuing this year.

Sony just might be the next one to buy a VMS, but who's left? I agree if they were, Und A and John's speculation on Genetec may be next logical choice. Sony's NSR's and Real Shot Manager software was never well executed.

Whoever Cisco buys, you can probably count that company out as they'll most likely screw it up.

Congrats to Axis shareholders, I would take that offer too!

In my opinion Canon paid a foolishly high price unless they have a plan to greatly grow the business. By my calculations they paid 3.4x revenue and 26x profits on a company whose growth is slowing and competitive pressures are rapidly increasing.

Perhaps Canon can help cost out Axis manufacturing. Given the rapid downward trend in IP camera prices, I see that as a defensive move to sustain the business not one that can grow the business. Maybe Canon will share their high end imaging technology to increase image quality. Some will pay that premium, but I believe the market is reaching a performance saturation point where (at least for a while) the performance is good enough so price becomes the decision maker.

When you're stitting on $20B USD you can afford to overpay by a billion and not lose your job, huh?

Wow - what a time to be in this industry. Do you think that we'll soon see a change in ONVIF?

I wonder exactly what is so lucrative about video surveillance that Canon sees?

10 years ago, the profit opportunities were very different. Now the entire market is under commodity pressure. Now Canon has essentially paid ~$3B USD for two companies to compete in a market with margins narrowing every day. It just seems like better returns could be found elsewhere?

Overall, this is a sad day. The wild west is over. The carpetbaggers are moving in!

Good move. Nothing wrong with a big company buying another big company that is going to be profitable. Same with the Milestone buy. It happens all the time in other industries.....buying up profitable competition which adds to your product portfolio.

As a small Gold Axis partner, and a small software developer, I'm glad to see it. Axis was getting stale in conversation and we have been pretty disappointed with responses from the staff since they changed (or scaled down to prepare for sale?) the structure of sales and support.

It will be interesting to see what happens with the various Axis and Milestone regional sales reps. Do they integrate the two and have a mammoth sales force pushing their respective products? Or, do they cross train and trim back? Probably the better option is to cross train and make use of the larger sales force to establish dominance.

The news is spectacular because the market leader has been aquired but Canon brings nothing to the party and, more than likely, will slow innovation when the current environment is really pressing Axis to be nimble. I am sure Axis' competitors are very happy today. Now if Hikvision bought Axis and combined there low cost manufacturing with the Axis brand that would be something that would really shake things up.

Certainly in the short term, Axis the company, its employees and partners lose here, as they have to deal with the end of being an independent industry leader.

Axis seems like a progressive employer and most likely has loaded up its top management/performers employees with significant equity.

Would those employees even consider fighting the tender offer, to squash the deal and and look to IPO far in future, to have a longshot (1 in 5?) to make more?

Nah. Take the 5 million. (Or $500,000 or $50,000 or $5,000). :)

I'm just amazed that the majority of poll respondents think this is good for the industry.

These are some great comments.

What happens after you get to undisclosed Z? Does it go to double digits?

People who are probably not happy today:

Canon Engineers, Surveillance Imaging Division

Axis Engineers, Recording Software Division

What will Canon do with Axis' access control panel, yes they have integration to milestone but only for a very limited number of doors after which you need 3rd party access control software.

Is anyone aware of Canon owning an access control company? If sales have been as slow to take off as we have been hearing, I wonder if the Axis panel will wither on the vine now.

I wasnt around for it, but does any of this feel like Schneider buying Integral and then Pelco?

Could it be that Canon wants the patents in order to use the technologies of the two companies to combine with their already considerable patent portfolio?

This would allow Canon to create numerous new products for the consumer market that is ready to explode with DIY home / small business self-monitored whole-home monitoring solutions.

I love how the general perception is the days of the "wild west" are over... As though the companies being discussed were the ones actually driving all of what little innovation there is in this industry. Do people really think Axis and Milestone were the big drivers of innovation or am I mistaking sales drivers?

I'd be very curious to see if people mean these things in terms of R&D or in terms of just sales channel changes.

Good luck to Canon and I think they will need a lot of luck to get a payback from this deal.

Have Milestone or Axis ever actually produced anything really innovative? Maybe that's why they are being traded and I don't count marketing bs as innovation so don't quote any of that.

Seems to me (as an IP Video engineering veteran of 14 years) that here we have a company with no idea about IP Video simply buying up available companies with good market share to try and cobble together an End-to-End IP Video solution to attempt to get into the market that they missed 10 years ago.

Lucky me as I am employed by an independant company with a genuine End-to-End IP Video solution that we 100% designed, we own all the Intellectual Property rights to our products and because we understand our market and our benefits we are growing and we actually make a profit.

Cheers

<not bothered> Steve

I don't think there's really any question that both companies innovated and were successful. This is really the natural cycle of business, startup->rapid growth->mature->cash cow. Canon bought them for one reason only, no matter what they say, and that's to put available capital to work making their shareholders more money than they could otherwise (or at least that's the expectation, but look at how that turned out for Schneider with Pelco.).

As a cash cow and large company, the primary focus will be on managing growth and not damaging the financial contribution those companies make. Of course this means that this leaves a vacuum for other smaller companies still in the 'rapid growth' phase to grow into, and the cycle goes on.

Congratulations to them for their success, but it smells like opportunity to me!

Lot of great comments and assessments here. Cisco and IBM have tried to invade the security world for many years now. Their decisions on products and approach have fallen short in every case. I'd be surprised if they suddenly take a leap that works.

If Schneider/Pelco isn't the best example of how these acqusitions affect the companies, customers, integrators, and most of all, the dedicated people who work for them, I don't know what is.

I don't see this helping anyone except the few who will take home a check.

It's funny how history gets written, Schneider will forever be blamed for ruining Pelco, but that's just not the case. Companies have mass and momentum and big companies have lots of momentum. The paradigm shift to IP was already happening in 2007, Pelco was behind on IP with plans that continued to put them ever further behind. If you dig into it, Pelco was traditionally a fantastic company in the small to upper medium market, they OEM'd all their DVR's, did a lot of metal bending to turn out great cameras based on guts from others and supported their integrators to no end. But by 2007, they viewed themselves as an enterprise company, engineered an incredibly niche product at massive expense in Endura with no consideration for the larger market. By that time as well, Pelco was starting to live more on a past reputation for customer service than delivering on it day in and out.

So, Schneider's mistake (and they don't screw up very often) was to believe that the ride would continue on a foundation that was already sinking, but in the history books they'll take the hit because the decline of Pelco happened on their watch. If Pelco had stayed private, I believe you would have seen a more dramatic implosion.

Consumers create market demand and therefore influence manufactures. Therefore, in my mind regardless if Cannon decides to package Axis and Milestones solutions at a discount, the Pansonics, Sonys, Boschs, and Hik Visions, etc of the world will still want to write the drivers to integrate their products with Milestone becuase the customers will demand thier products to be compatible, and the Genetecs, Video Insights, ONSSIs, etc, will still seek to provide integration with the Axis cameras, as the customer will demand their products to be compatible. If they don't they will lose market share.

I am not sure how a company that is solely committed to providing an end-to-end fits into the consumer demand for interoperatbility.

John,

I agree, through consolidation there will be less motiviation to dedicate time to third party integrations, and therefore will most likely slow the pace of innovation, as if you ever attended a MIPS confrence, Milestone had a beautiful thing going on, it was a platform for innovation, where manaufactuers with synergeries would discover each other and work together to make their products compatible and manufacuters would debate their philosphies and learn new perspectives. My concern is this will change.

However, I do not see this merger negatively impacting Canon's ability to complete in the market as it seems like they might be postioned to have the best of worlds in meeting consumer demand with industry leading product lines, end-to-end and interoperaility.

Zeroizes Axis' rep with other VMS players. Vertical consolidation looks good to the vendor but is bad for customers due to lack of diversity. This does not improve anyone's position in terms of technology maturity since there's less and less motivation to create interoperable products that work. So now Canon becomes the Digital Equipment Corporation of the security video world. Is that supposed to be a good thing?

I believe - based on past conversations with Canon and memory - that Canon and Axis had an OEM relationship.

From that perspective Canon acquiring Axis is simply a move upstream - similar to HTC buying Dopod. Make sense?