Subscriber Discussion

Is Now The Time For Manufacturers To Become Integrators?

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Brian Karas
Jan 05, 2017
IPVM

Some industry people are suggesting that being an integrator is becoming more attractive with the race to the bottom. Which raises the question - which is better?

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SB
Steve Bukoski
Jan 05, 2017

I'm not sure one is actually better than the other.   With the race to the bottom, security integrators need to increase sales to compensate for the drop in equipment prices or find more niche solution to cover overhead.  

 

Add to that, areas such as Boston are already saturated with integrators (some good and some bad) with many smaller to mid-sized companies driving down margins.   

 

It's an exciting but tough industry.  One really need to stay on top of technology and constantly look for creative solutions to separate yourself, add value to your company and increase margins.

(1)
UD
Undisclosed Distributor #5
Jan 05, 2017

Well as we need more jobs for all the humans the answer is manufacturers stick to manufacturing. This would also allow for them to innovate more often if they're not focused on integrating.

Manufacturers can make money, distributors can make money, and integrators can make money. It's a beautiful arrangement when one nation doesn't get too greedy (or the host nation protects it's citizens and jobs).

Could you imagine how many towns and jobs would be devastated if Coca-Cola screwed over their loyal distributors the same way Dahua and Hik have?

(3)
UM
Undisclosed Manufacturer #1
Jan 05, 2017

It's not about Manufacturer vs. Integrator, it's about Innovator. There are innovators on both sides, go work for them.  Personally, I like the manufacturing side better, but there are a lot of stagnant manufacturers out there, and their work life sucks.  

(2)
UD
Undisclosed Distributor #5
Jan 05, 2017

I think HiSilicon innovates and the rest of the market merely uses those innovations. It's a problem when one company is making all of the features of CCTV. Too bad T.I. and Motorola aren't players in the game anymore. To be honest I haven't seen much innovation come from manufacturers lately.

UNV has the Cloud Firmware upgrade, which is excellent and I'm sure all the hundreds of thousands of Mirai infected users wish they had that feature. Their Block Storage is nice too for avoiding disk fragmentation.

Other than that any innovations that have been made to the industry's technology have been distributed to every manufacturer at the same time- when they buy the HiSilicon chip that has that feature.

JH
John Honovich
Jan 06, 2017
IPVM

I think HiSilicon innovates and the rest of the market merely uses those innovations

HiSilicon's main innovation appears to be low cost. In terms of new chip features, that is primarily from Ambarella (who is used in high end products from Western and Chinese manufacturers).

UI
Undisclosed Integrator #2
Jan 06, 2017

LOL, no.

Manufacturer salaries appear to be higher, margins appear to be higher, and (IMO) risks are relatively low except on mammoth bulk failures (e.g. Samsung Galaxy Note 7).  If all of the above are true, then sure, they could grow their revenue by jumping into integration at the risk of lower overall margin.  Right now if a manufacturer has an issue they have the ability to bury their heads in the sand and blame it on the network, integrator, or end user.  Once they control the total package they no longer have plausible deniability.

U
Undisclosed #3
Jan 06, 2017

In the early race for "most cynical post of 2017", I think this one has to be leading by a wide margin. :)

To your point ("...they could grow their revenue by jumping into integration at the risk of lower overall margin"), that's a solid thought, until you step back and look at what such a move would likely do to their existing channel. Building a nationwide integration force would take a considerable amount of time, effort, and energy unless you literally snapped up an entire existing operation, so there's no way that you can turn the "channel" spigot fully off and turn the "direct" spigot fully on. The problem there is that the channel spigot is going to turn itself off pretty quickly as soon as they realize what's happening, so your existing revenues are going to tank while you're in the process of building out that direct model across the board.

It's an interesting thought for sure. We've seen a few companies attempt it, at least in some ways (LenSec, et al) without what I would consider a whole lot of success. We haven't (or at least *I* haven't) yet seen a long-standing traditional manufacturer make the flip to doing integration work on their own, so it will be an interesting case study to see what happens to them when they do. I am a fan of those who disrupt the norm, but I just can't help but think that it will be an incredibly tough row to hoe for anyone who does it.

JH
John Honovich
Jan 06, 2017
IPVM

Btw, I realize that the title is misleading and that is my fault. The question was meant to say should manufacturer employees become integrator employees, but it definitely reads the way you are interpreting it. Sorry about that.

U
Undisclosed #3
Jan 06, 2017

Just don't let it happen again. :)

To answer that question, it's all a function of what you want.

Are you looking to make a little bit more money (if you're good) and have considerably less personal time? Then sure! Become an integrator!

If you're looking to coast for awhile and enjoy life while having a relatively consistent paycheck? I'd stick with being a manufacturer. :)

(2)
UI
Undisclosed Integrator #4
Jan 07, 2017

Spot on #3.

I've heard it was said recently from an executive at a large integrator that the success rate of mfr's that have shifted gears into integration over the past few years is just over 0%. Being an integrator is a frying pan unknown to most mfr's.

UI
Undisclosed Integrator #2
Jan 07, 2017

"In the early race for "most cynical post of 2017", I think this one has to be leading by a wide margin."

I win every year!

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