Pivot3 Pivots Away from Video Surveillance

Multiple IPVM sources indicate that Pivot3 is pivoting away from video surveillance to focus its core resources on the IT / cloud services market. However, Pivot3 denies this, saying that they are 100% committed to the video surveillance market. In this note, we examine the issues involved and the potential ramifications.

To start with let's review what multiple sources, both verbally and with documents, have shared with us:

• Pivot3 sees the IT market as a much larger and valuable overall opportunity than surveillance
• Pivot3 sales are growing well in IT 
• Pivot3 surveillance shipments are slowing
• Restructuring of sales positions, retraining and refocusing of the sales team is occurring
• Pivot3 is shifting resources to areas where it projects higher value - namely the IT market

We do not know how significant the shift will be nor what changes will specifically occur within the video surveillance market. Indeed, we would expect this situation to be fluid even within Pivot3 as they gain feedback about their progress in both markets.

In a response to our inquiry, Pivot3 said that they were "100% committed to the video surveillance market" and that "It would be a gross misstatement to convey to any of our customers and partners that our new products and normal sales planning somehow suggests a retreat from the surveillance market which represents the bulk of our business and investment."

Our Analysis

That noted, we do believe that the steps Pivot3 are not normal planning and do represent a major shift in the company's overall strategy that are likely to have a material impact on surveillance users in the future.

From a general strategic perspective, a shift toward the IT market is understandable. Relative to the video surveillance market, Pivot3's investment total ($75+ Million) is massive and nearly impossible to justify given the limited number of potential buyers in the surveillance space for large scale storage. To meet the company's valuation and associated revenue targets, expanding beyond surveillance is essential.

While Pivot3 has made a significant investment in sales and marketing efforts in the surveillance segment, we see questions about how far Pivot3 can grow in surveillance and how they can compete against lower cost, simpler mainstream options.

What this means and how sharply they pivot away from video surveillance remains to be seen. However, we have seen enough credible signs to recommend users and integrators to carefully examine and consider the risks of Pivot3's long term commitment to developing video surveillance products.