Subscriber Discussion

Definitely Marketing/Sales Reasons For Genetec To Expel Hikvision

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Murat Altu
Nov 11, 2016
AxxonSoft

I don't think that there are political reasons...only if Genetec's owner want to become Canadian president :)

And, of course, not technical, because Hik is not worse than any other in this regard.

It is definitely marketing/sales reasons. Genetec is still commercial company and operate to get more market share and profit.

I assume one main reason: Genetec's SIs are mostly selling higher brand's cameras and suffer from Hik cameras sales. They sell Genetec, but big money comes from cameras. Hik's margin is very low in compare with higher brands, so they want to compensate this lost from software license price.

Simple!

But this is very big strategical mistake.

Huge cameras projects are not high price brand's projects anymore. Huge cameras projects become possible because of low price of cameras, so Genetec is going to loose them.

Interesting to see when they step back and return Hik in list. I predict very soon :)

NOTICE: This comment was moved from an existing discussion: Genetec Expels Hikvision

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JH
John Honovich
Nov 11, 2016
IPVM

I assume one main reason: Genetec's SIs are mostly selling higher brand's cameras and suffer from Hik cameras sales. They sell Genetec, but big money comes from cameras. Hik's margin is very low in compare with higher brands, so they want to compensate this lost from software license price.

I am not sure what this means: "they want to compensate this lost from software license price." Can you clarify?

You think Genetec thinks this move will help their dealers? Please elaborate.

Avatar
Murat Altu
Nov 11, 2016
AxxonSoft

Yes! I don't believe in political or technical reasons.

Political:

Some years ago, when western countries introduced sanctions against Iran, Milestone followed them and restricted sales in Iran, so major distributor of Axis/Milestone switched to Genetec and Genetec was just happy. So, they didn't follow real political situation with Iran, why now they do against China without any true political reason ? Hik is public company, managed by board of directors, not by government. Any government decision against Hik business will kill capitalization and company, so they must be independent!

Technical:

In every installation IP cameras installed in private network and not big deal to restrict access from outside, so cyber security threat is exaggerated. But most important to say, that Genetec's speech about additional expenses for testing, integration and support of such "dangerous" cameras is bullshit. VMS have precisely determined interface to integrate cameras and there is no any additional work in any specific case. VMS can't improve or mitigate any camera's flaws. So, this is pure "marketing" speech to have a feeling how great is Genetec caring about users!

So, we should look for other reasons and first of all, of course, marketing/sales reasons which can help Genetec to increase their sales. I assumed one of the reason. If someone have any other idea how this decision can help Genetec to grow business, than this reason can be valid. Others definitely not!

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JH
John Honovich
Nov 11, 2016
IPVM

Hik is public company, managed by board of directors, not by government. Any government decision against Hik business will kill capitalization and company, so they must be independent!

Hik is controlled by the government and Hik's chairman is a government official. We can disagree on impact but those are facts. Source: Hikvision Chinese Government Origin

Avatar
Murat Altu
Nov 11, 2016
AxxonSoft

Regarding my assumption:

For example: dealer is selling Axis and Genetec. So, they get money for cameras with good price and good margin and for the Genetec software license.

If they sell Hik and Genetec, they get much less money for cameras (lower price and lower margin in compare with Axis) and same for software. But in general much less profit from the deal. So, why not to push Axis telling that Hik has flaws, or get more for software if customer insist on Hik ?

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JH
John Honovich
Nov 11, 2016
IPVM

Ok, I understand your logic now. I do think it makes sense as a theory / tactic.

However, knowing how Genetec operates, I don't think that is there approach here. This is pretty clearly coming from Genetec's CEO who (1) focuses on engineering arguably at the expense of business and (2) who has been complaining about China / Hikvision cybersecurity for some time now.

Genetec's CEO could be wrong or overreacting to the cybersecurity risks but I think that is his genuine position. I also think he has exposed Genetec to some business risk, as you described in your original comment.

Btw, while we are on the topic of US cybersecurity fears, the whole Wikileaks / Putin 'thing' may make it harder for US critical infrastructure to choose Axxon (fairly or not). A lot of Americans are on high alert now about cybersecurity.

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Avatar
Murat Altu
Nov 11, 2016
AxxonSoft

All this worries about "unsafe" equipment from Asia is actually worries about low price of this equipment.

Getting 300$ for VMS license is easier when camera price is 500-1000$. Now it is 100$ and getting 3 times more for software becoming a challenge.

The reality is that all top brands (in the past) are loosing market, while Hik is gaining it and Genetec can't change this. They just can choose the side and looks like they are choosing wrong one.

Regaring US critical infrastructure...what is the market share of such projects in the whole security market ? There is always place for the best technologies regardless from country of origin.

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JH
John Honovich
Nov 11, 2016
IPVM

All this worries about "unsafe" equipment from Asia is actually worries about low price of this equipment.

What proof do you have that this is Genetec's position?

I understand this might be the position of some people (perhaps yours personally) but what makes you think this is Genetec's secret motive?

Regaring US critical infrastructure...what is the market share of such projects in the whole security market ? There is always place for the best technologies regardless from country of origin.

Ok, if the US market is not that important to you, so be it but it's obviously extremely important to Hikvision and their #1 overseas market.

Avatar
Murat Altu
Nov 11, 2016
AxxonSoft

US market is very important for every manufacturer with global ambitions and for Axxon, of course. I just think that "critical infrastructure" part of US market is not major. I really hope that the part of market and people who thinks that China and Russia are controlling technological companies and pushing them to somehow help goverments to fight each other, is vanishingly small.

What I can see is that US market is really very technologically advanced and competitive. It is the market where technologies wins...not politics.

Regarding proof of Genetec's position...you've asked them to give any proof regarding Hik cameras flaws and what they've answered ? Do you really believe that Hik cameras are less protected than any others ? I just can't believe in this. And another my thinking is that even if it is true (Hik has technical problems regarding cybersecurity) why Genetec reacts in this way ? In daily operations we often have technical problems with cameras and fixing them in cooperation with camera vendors (upgrading firmware). It is normal technical cooperation. If Genetec found some bug in Hik camera, why not to report and allow Hik to fix ? You know, that Axxon is similar organized to Genetec...also owned by CEO with technical background (me). I'm sure that if Hik really has a problem, CEO of Genetec knows that they can fix it quickly...in few days or a week if the problem is in firmware. If they think that problem is on hardware side, than this is an issue of HiSilicon and in this case Genetec must exclude all vendors except few. So, my proof is just technical.

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JH
John Honovich
Nov 11, 2016
IPVM

I just think that "critical infrastructure" part of US market is not major.

For Genetec, it clearly is. I'd bet 80% of Genetec's US revenue comes from Fortune 500 companies and US government entities (whether city, state, federal). Those people care far more about cyber security than the US mass market.

If Genetec found some bug in Hik camera, why not to report and allow Hik to fix ?

The bug is that Hikvision is owned by the Chinese government. The report has surely been filed but it is not clear what the 'fix' is. And I am being serious about that. This is the issue in the US, same reason for prohibiting Huawei in US telecoms. It is not simply one minor technical issue but a fundamental lack of trust of network devices owned / controlled by the Chinese government.

Avatar
Murat Altu
Nov 11, 2016
AxxonSoft

In this case, just because of the fact that Hik owned by China government, Genetec is rising false statements about cyber security flaws of Hik cameras.

Must be a strong reason for this lie :)

U
Undisclosed #1
Nov 12, 2016
IPVMU Certified

The bug is that Hikvision is owned by the Chinese government. The report has surely been filed but it is not clear what the 'fix' is.

It may not be clear what the fix is, but it is quickly remedied by a few extra buck thrown Genetec's way.

That's the disconnect I see.

Also, in the only semi-official statements from Genetec, I see no mention of SOE concerns.

JH
John Honovich
Nov 12, 2016
IPVM

it is quickly remedied by a few extra buck thrown Genetec's way.

It's not because it will be ONVIF only; surely, given you track record on ONVIF, you understand the limitations with that.

And you have to get your lawyers to approve the special license. Think about it, you are a large organization and a vendor says you need to sign a special hold harmless waiver to use a certain device with that vendor. Chances are high you either refuse the vendor (i.e., Genetec) or the device (i.e., Hikvision). Net/net, the point here is not about making money but about making it so painful to get the user to not do it (and yes, I agree that they have risk in that approach).

in the only semi-official statements from Genetec, I see no mention of SOE concerns

You surely read the original article. We interviewed Genetec and that was a direct report of what they told us, i.e., on the Chinese government / control issue.

U
Undisclosed #1
Nov 12, 2016
IPVMU Certified

I think the message is muddled.

Is it the Chinese Government ownership alone that is causing this action?

Why do they need to make it any more painful than the waiver?

Do you really think that they are going to get sued because some camera that can connect to Genetec, phones home on its own or other nefarious deed? When they have a express release of liability?

What does a rogue camera doing DDOS on its own have to do with Genetec???

What will they get sued for, not charging enough to make someone not buy a camera??? The same camera, on the same network is the same threat if it has a license to Genetec or not.

It seems unlikely that they are financially at risk with a signed waiver. So whats really going on?

Maybe its a just a moral statement? No company should be owned by the state or subsidized?

And since we know they drop support on leading manfacturers for business reasons, e.g. Avigilon, why should it be dismissed out of hand that could be playing a part here?

We interviewed Genetec and that was a direct report f what they told us.

I'm sure it was, but that does not obviate an official communication on the matter in any way.

The fact that they would pull the company off the supported list before they could issue a statement is crazy.

That they still have not is arrogant.

JH
John Honovich
Nov 12, 2016
IPVM

that does not obviate an official communication on the matter in any way....

That they still have not is arrogant.

Knowing how Genetec operates, this is less arrogance than trying to figure out how to handle it. The two of you seem to think this is some form of super stealthy sales move here but that's not how Genetec operates. Again, I am not saying they are right or they are going to do well here (they may, they may not) but I am quite confident that what they stated is their genuine belief here.

At this point, I do think they need to say more. The level of attention it has received has been extreme.

U
Undisclosed #1
Nov 12, 2016
IPVMU Certified

...it will be ONVIF only...

How do you know that?

What about the "Genetec Protocol"?

U
Undisclosed #1
Nov 11, 2016
IPVMU Certified

Btw, while we are on the topic of US cybersecurity fears, the whole Wikileaks / Putin 'thing' may make it harder for US critical infrastructure to choose Axxon (fairly or not).

But Trump and Putin have nothing but respect and admiration for each other, and Wikileaks helped Trump, so China might be out, but Russia's position and therefore Axxons, is greatly improved.

btw, look for pardons of Assange, Snowden, Manning, esp. if H.C. gets one.

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Murat Altu
Nov 11, 2016
AxxonSoft

Funny :)

I still hope that only technological superiority matters!

Avatar
Murat Altu
Nov 12, 2016
AxxonSoft

BTW, they did it already for Avigilon, I don't remember what was the reason in that case. May be we can find similar benefits for Genetec ?

May be Hik is promoting now their VMS and this is the threat for Genetec ?

I still think, that reason is dealers support. They have few selected and this can be a strategy.

U
Undisclosed #1
Nov 12, 2016
IPVMU Certified

BTW, they did it already for Avigilon...

Yes, I mentioned this above. But one difference is that Avigilon cameras though not supported, are not actively denied from even connecting.

And yes, I think that the iVMS 5200 threat is real. Not that it necessarily is on a par with Genetec, (and by most accounts its still far behind), but you don't wait until it is on a par to do something about it.

Genetec saw the carnage that resulted from the Chinese Invasion in the hardware arena, they would be negligent not to have a plan in place against the next phases of Hik plan.

A better one than "they'll never write anything decent, so we don't have to worry about it"...

Avatar
Murat Altu
Nov 12, 2016
AxxonSoft

I agree that Chinese invasion in software arena is real. But right decision will be to fight (compete) effectively inside China market to control the situation.

JH
John Honovich
Nov 12, 2016
IPVM

But right decision will be to fight (compete) effectively inside China market to control the situation.

Murat, can you elaborate on that?

Avatar
Murat Altu
Nov 13, 2016
AxxonSoft

I'm trying to understand why global software leaders can't compete with Hik and others in China. And looks like they all surrender (I didn't see any booth in Beijing Security show). For me it is clear sign, that local software in China is good enough or even better.

JH
John Honovich
Nov 14, 2016
IPVM
And looks like they all surrender (I didn't see any booth in Beijing Security show). For me it is clear sign, that local software in China is good enough or even better.

Really? That's your conclusion?

Have you examined local software in China? Tell us how it is better than Axxon, please.

And evidently you have ruled out that Hikvision's government ownership has no impact on their ability to win China government deals?

Avatar
Murat Altu
Nov 14, 2016
AxxonSoft

I'm not telling about software which is translated to english and available for us. We just don't know what software they use for government projects. But I know that this software is very powerfull. They manage hundreds thousands cameras and they use forensic search analytics which Axxon is promoting hardly. When we tell that we have TimeCompressor, their answer - we also have. When I tell about forensic search by face or LPR or color and tracking information which is going to "change the world", their answer is "our world is already changed". In Asia we compete in tenders with Chinese companies who offer face recognition across 100 000 cameras. This is not possible with global brands, or price is just impossible for face recognition across 100 000 channels. Our luck is that this companies progressing slowly because still China customers doesn't want to pay for software. For example, even Hik provided software for such projects for free, but this is changing (support cost is too high) and for me it is quite obvious, that if Axxon can't compete now in China, than tomorrow local companies become stronger and come to compete on our territory. We must grow in China together with that market and local competitors. This is the only chance to control situation.

Regarding ability to win government projects. When we talk about huge projects, efficiency of such investments become very important. We have story when 100 000 channel system is not efficient enough for police...and costs 50M USD yearly...and government will be happy to pay more, but to increase efficiency. If you can prove that the only way to increase efficiency is to buy your software, I don't think that anything can prevent this. But I'm not saying here, that it is easy...I'm just saying that it is possible and this is the only way in our global world.

JH
John Honovich
Nov 14, 2016
IPVM

When I tell about forensic search by face or LPR or color and tracking information which is going to "change the world", their answer is "our world is already changed". In Asia we compete in tenders with Chinese companies who offer face recognition across 100 000 cameras.

I am sure they say they have it but how good is it? Lots of Western companies exaggerate their performance here but we just assume the Chinese have totally solved this.

And if the Chinese companies had rock solid, super cheap analytics, why are they not selling it in the West? Why do they rather fight to the death over $40 cameras?

Avatar
Murat Altu
Nov 14, 2016
AxxonSoft

We all waiting for your test of free face search in Axxon. It is really good. Neural networks and machine learning helps very much.

Why they not selling software in the West ? Because their software evolutioned on exact government projects requests and supported by vendor directly. So, it has 2 major flaws:

1. Configuring of such system is possible only by developers of vendor. So, product is inalienable! Company can have 500 developers because of 500 projects, and they all work to solve exact issues and requests from different sites in different development branches. They don't have one version for all.

2. Usability is hardly oriented for exact scenarios of use by police or other government projects. As a result, product is absolutely unacceptable by West from usability point of view.

Axxon had same problem when we start international business and we realized, that our product (Intellect) looks strange for West, so we start development from scratch and now we have AxxonNext.

So, it is matter of time to adopt product for West. I heard numbers like 2-3 years from some Chinese companies, but it will take longer, I think.

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Avatar
Jon Dillabaugh
Nov 12, 2016
Pro Focus LLC

It would seem that this move would be to snub out fears of a lawsuit due to an attack from Hik botnet farms or a similar threat that originates at the Hik camera. I don't know how Genetec would be liable here, other than if they percieve an unknown attack vector into their software in the future that is exploited by the Hik cameras. Is this just cover your ass tactics?

If so, why allow the usage of Hik with a fee? What does this fee cover? After paying this fee, could I safely assume this payment assures me now that this Hik exploit vector is being covered? Wouldn't that now put Genetec ON THE HOOK more so than before? I get that their is a waiver involved, and it probably addresses this, but why else would a payment be needed?

JH
John Honovich
Nov 12, 2016
IPVM

What does this fee cover? After paying this fee, could I safely assume this payment assures me now that this Hik exploit vector is being covered?

Genetec said specifically that the fee would not cover 'Hik exploit vector'. You still need to sign the waiver and the waiver still excludes that.

As for the rationale for the charge, Genetec said:

we will pass on the high cost of testing, integrating and supporting these devices, instead of absorbing it or spreading it over our entire customer base.

Avatar
Jon Dillabaugh
Nov 12, 2016
Pro Focus LLC

But they already work, no? They are just disabling support, unless you pay the ransom? So what additional work are they performing? Why don't they charge to test for Dahua cameras, which are by far less secure?

U
Undisclosed #1
Nov 12, 2016
IPVMU Certified

As for the rationale for the charge, Genetec said:

"we will pass on the high cost of testing, integrating and supporting these devices, instead of absorbing it or spreading it over our entire customer base."

So the high cost is due to what they feel is the unusually lax security features of Hik or are they saying because of state ownership they have to look extra hard?

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U
Undisclosed #1
Nov 14, 2016
IPVMU Certified

Genetec may want to bring their eco-system up-to-date...

UI
Undisclosed Integrator #2
Nov 21, 2016

We sold some Hikvision cameras for a project. Within the first month, 3 out of 40 had a hardware failure.

We sold hundreds of Bosch cameras for different project. We didn't have a single one failed since years.

That makes difference for me, not the security threat, which is negligible as we use closed networks for video surveillance.

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U
Undisclosed #1
Nov 21, 2016
IPVMU Certified

We sold some Hikvision cameras for a project. Within the first month, 3 out of 40 had a hardware failure.

We sold hundreds of Bosch cameras for different project. We didn't have a single one failed since years.

What costs you more 40 Bosch cameras or 43 Hiks?

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UI
Undisclosed Integrator #2
Nov 21, 2016

Tell it to the Customer when they need some recordings but the camera was not working...

MC
Marty Calhoun
Nov 21, 2016
IPVMU Certified

We have sold 1000's of Hikvision cameras and can count on one hand how many have been deemed 'bad' on one hand. We have never had a camera not work right out of the box, it has never happened to this company. I disagree with your conclusion.

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U
Undisclosed #1
Nov 21, 2016
IPVMU Certified

I disagree with your conclusion.

I'm not sure you do. Maybe you meant to reply to #2?

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