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Manufacturers Have No Choice But To Go Around Their Partners And Find Excuses To Do So

This is now an old story, in an industry where there are so many manufacturers out there making pretty much the same thing and when said manufacturer(s) can't get systems integrator to sell/lead with their solution (for what ever reason i.e. the product sucks, the integrator already has relationships/commitments etc.) and when everyone wants to rule the world (i.e. capitalism and the human condition) then the manufacturer has no choice but to go around their partners and find excuses to do so.

I have been in a former customer's office a while back that I was losing to find out why and on the floor in the guys office was an EXACQ server in an ADI box, no lie (but they don't sell direct I as told, hah!).

I have Avigilon sales people meeting with a Police Chief and somehow convincing this poor guy that their ACS solution is the best thing on the market and now he is demanding that his Architect make Avigilon proprietary - for access control, hah!

I had Axis management up my you know what, because they found out that I carried/substituted, on a public project, Samsung instead of the specified Axis PTZ cameras (this helped me win the project). They were upset because they had met with the end user to get Axis specified and couldn't comprehend why I used Samsung. They didn't meet the consultant, no - they met the end user and felt they earned the business...

We got an access control manufacturer (a real product that has been around for many years) that has their rep (he works for the man.) literally offering to perform the programming! He does what we do, hits the street looking for greenfield opportunities and calls on them no different than we do.

I have been to several ACCC conferences, I am always dumbfounded when they drag the same guy from some cruise line up to talk about how great Axis is, year after year. Where is he buying his cameras? Who is installing them? Wouldn't it make more sense if their partners were #1 to have the partner speak, not the end user? If Celebrity Cruise Line is using a real systems integrator - who set's the price or is the price dictated by Axis in a direct relationship with the Cruise Line.

This is fun, I could go on and on....

NOTICE: This comment was moved from an existing discussion: Axis Wins $20 Billion Retailer With End To End Solution

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Thanks for sharing. I have heard a number of similar stories / events.

Anyone else with similar concerns?

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I think a big reason for this is that the technology is maturing, and it is becoming a commodity. As this stuff becomes easier and more user friendly, the value of an integrator and distributor will continue to decline. Remember, there used to be a day that the telephone man had to come to your house to wire up your phone - the average person could not do it. In more recent memory, only the techiest of techies had computers, they were just too complicated and their process was so manual and specialized. Now, anyone can plug in a phone, and, for 90% of consumers, any laptop at Walmart will meet your needs.

There will always be integrators and distributors at the high end, but the world is a changin', my friends.

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There will always be integrators and distributors at the high end, but the world is a changin', my friends.

Contrary to your examples, where manufacturers like Axis and Avigilon are focusing the most direct marketing efforts is the high end. Hedgie Bartol at Axis is calling on the largest retailers, not going door to door for neighborhood pizzerias, etc.

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Very true. How long do you think it will take until this gets pushed down into the smaller deals, though?

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And how long before Hedgie Bartol is a thing of the past? I would think manufacturers would love nothing more than to get rid of their legions of sales reps.

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And how long before Hedgie Bartol is a thing of the past?

Once you get your own 'I am not even sure what to call this thing', your job security is in pretty good shape.

More seriously, my inclination is that big manufacturers want more like that. Senior salespeople having direct relationships with mega-users that can lead negotiations directly for the biggest deals to ensure maximum success against rival manufacturers, rival integrators, etc.

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I have no idea what that is but I need one in my life. Marty, get on it.

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Oh my god this needs to be a thing. like now. quick, someone set up an e-store. I soooo want one. How Ari is the only one that gets his own.... that thing?

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... that thing?

its called a "high-seven".

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Ill take two. One with Ari's face (with the new beard 2.0). One with mine and a shirt that says I HEART HIK. ;)

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I'm sorry, the entire Ari 2.0 Pro line is sold only to authorized dealers.

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I think Ari deserves his own platform.... since Hedgie is flat, I gave Ari another shape:

50 Round Ari's for $85

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If the manufacturer insists on seeing the end user, not the integrator, as the customer, there's nothing the integrator can do about it. And the way things are going, there aren't going to be a lot of manufacturers left who see the integrator, not the end user, and the customer.

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The integrator can flip the deal - the end user holds the checkbook. If you have the money man, the rest will follow.

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All the Integrators I talk to are having this same sentiment. Market size is shrinking for Western manufacturers so their reps are coming down stream direct to end users in an attempt to meet numbers and push deals through. Avigilon and Axis are probably the two largest offenders.

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Depends on your relationship with you rep but this can be an advantage. Rep is out hitting the street is a free saleman for you if you play your cards right.

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Rep is out hitting the street is a free saleman for you if you play your cards right.

'Play your cards right' includes being loyal to the rep / manufacturer, yes/no?

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Well, both sides have to get something out of the deal.

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Obviously on the deal itself, the integrator would be expected to be loyal.

I mean beyond that.

The manufacturer rep will be incented to reward dealers that lead with the manufacturers line on as many other projects as possible.

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Yes, I know, I'm agreeing with you. Some manufacturers and reps with short memories will only plan to the end of the sales quarter, some manufacturers will reward loyalty, and integrators will conduct themselves accordingly.

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some manufacturers will reward loyalty, and integrators will conduct themselves accordingly.

Agreed. The concern is what this does to the independence on the integrator. The stronger the manufacturer is at creating opportunities directly and funneling to their preferred integrators, the more the integrator is aligned to the manufacturer rather than the end user.

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This is something we struggle with because we view ourselves are fiercely independent. The market is definitely changing, and its hard to resist free sales people, but its definitely a fine line. At the same time, what Michael says below is ethically wrong as well. Usually, if the mfctr is bringing you the lead, they have already selected the products or atleast the product line, so that alignment shouldnt be a question. However, what happens if that is not the case? Our customer is the end-user regardless of where they came from.

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.....the more the integrator is aligned to the manufacturer rather than the end user....

Which, if an Integrator allows, can result in shoe-horning an end user into a less than ideal solution.

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Well if a manufacture gives you a lead and you flip it to another manufacturer that's not a good way to build a relationship right? Or your Rep does all the hard work bring you a lead that is basicly done deal then the integrator drops the ball and doesn't respond to the customer so the deal gets lost.

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Considering the manufacturer is paying the rep, I would think so.

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Agreed. The concern is what this does to the independence on the integrator. The stronger the manufacturer is at creating opportunities directly and funneling to their preferred integrators, the more the integrator is aligned to the manufacturer rather than the end user.

If the end user selected that VMS/camera/wireless whatever solution and the manufacture did all the leg work how is that not aligned with end user?

Also since the integrator focuses on one or two platforms you would think the end user would have a lower cost more reliable solution since the integrator has more hands on experience with the product compared to integrators that try to offer many different platforms.

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If the end user selected that VMS/camera/wireless whatever solution and the manufacture did all the leg work how is that not aligned with end user?

Depends. Is there a Manufacturer who would engage with an end user, learn the details about their operation/needs, and when realizing their own solution was not a good fit--be ethical enough to let the end user know they have other options?

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If the end user selected that VMS/camera/wireless whatever solution and the manufacture did all the leg work how is that not aligned with end user?

Depends. Is there a Manufacturer who would engage with an end user, learn the details about their operation/needs, and when realizing their own solution was not a good fit--be ethical enough to let the end user know they have other options?

U5 in my experience the customer already knows what they want.

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Yes, yes I would. It's a small world. Whoever I just pissed off is going to be somewhere else some day, and my solution may be perfect for them at that time.

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In terms of an other example/specifics...

Axis's MSRP discount is stupid, there is no margin in it. We do a considerable amount of of state contract business. The contract vehicle requires us to bid/state and guarantee a discount off of MSRP. Even if we bid MSRP, the margins are too low to cover all the things that are required in said contract vehicle. So when on a state contract opportunity comes up we stay away from recommending/talking about/selling Axis. I have brought this to their attention, nobody listens.

So I don't want Axis getting to any of my potential customers first, because I lose money. This is one example of a negative impact.

Another important dis-advantage is we are the systems integrator, we represent multiple manufacturers and we have the experience and knowledge that a salesperson from manufacturer XYZ, that can only sell their products, just in general typically doesn't have. Their focus is on only selling their products, not choosing the best fit to meet the customer's needs etc. (which we kind of pride ourselves on doing)

Take the Avigilon example I gave, now we have to use Aviglon's ACS solution for a police station! If I don't, now my relationship with Avigilon will suffer, even though I am suppose to put the customer's interest first, I can't. Let's say in the first year the Chief wants to interlock a set of three doors and we can't (but could with other systems we sell), they are just going to be looking at us as "why did you sell me this", not the old Avigilon salesperson that was there last year etc.

This concern/issue has nothing to do with a maturing industry or the commodification of IP cameras IMO. It has to do with too many manufacturers all basically making just variations of the same thing and their owners/stake holders hiring aggressive salespeople with probably high commission structure to get the sale at all costs and the integrator is just a vehicle to complete the transaction and make their numbers. Its capitalism at its finest made easier/difficult by the fact that everything is made in China and prices are dropping so therefore more cameras/things have to be sold to make a profit.

or I could be wrong....

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So when on a state contract opportunity comes up we stay away from recommending/talking about/selling Axis. I have brought this to their attention, nobody listens.

That's why Axis has a few hundred sales / biz dev people in the US. They just send those people out to deal with them direct.

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Exactly John. I don't have an MBA, just using common sense here, but Axis will never be able to compete with anyone on price when there is like 27 sales people in a region when in comparison their competitors have one or two. These people have to get paid and it is all baked into their price. Therefore just like my own company does, we sell quality/experience/features - the things that make us unique. Axis has been doing this for many years, the problem is what makes them unique, which was the product, is no longer a distinguishing factor. Another very important factor was the level of integration supported by the various VMS manufacturers with ALL of their products, again, no longer a distinguishing factor. But they continue to have 27 salespeople and they are not competitive on price (though getting better but too late). Some MBA kid should write a term paper on them.

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but Axis will never be able to compete with anyone on price when there is like 27 sales people in a region when in comparison their competitors have one or two.

To play devil's advocate, they certainly have far more people in a region (not 27 :) but they also have far more revenue per region (Axis does ~$400 million annually in the Americas). There is some economies of scale there. Because they have so much sales, they can spread out the cost of their sales team over the much bigger base.

I definitely agree though the product positioning (which is key) has been undermined but unless and until the product really goes downhill, they can support that sales team given their much greater revenue base.

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As an integrator, I see the future challenge of continuing to provide value to our customers as end users become more educated, technology becomes easier to implement, and products are purchased by the end user at very low margins (either directly from the manufacture, distributor, or integrator). As an entrepreneur, I embrace change, not resist it, and look to adapt to the market to find long term sustainable success. Even though I have yet to figure out the best ways that I will be able to provide value to all of my existing and potential customers for the foreseeable future in this fluid market, I do know one steady truth. There will always be customers that will value our services. We just have to find the right customers for us. The right customer for us is someone who values quality over cost, does not have the time and interest to design, implement, and manage their own systems, pays on time, and is a pleasure to work with. There may be fewer and fewer of these types of customers out there over time, but they will always be there. As an integrator we will just have to work harder to find them and keep them and we will have to offer them new and beneficial services to stay relevant. Cybersecurity anyone?

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Well said Thomas and I agree with you comments. I do think there is a perception in the market place that says surveillance camera systems are becoming a commodity and maybe in some ways they are. For me however, the most surprising thing i learned when taking the IPVM camera course earlier this year was the lack of camera testing standards. Its hard for me to think of the products being commoditized when there are so many differences in how the specifications for these cameras are developed by manufacturers. I think there is a need for integrator's in the market place to be consultants in that they must listen to their customers needs and develop a multi-vendor solution that meets those needs as opposed to selling just one line of cameras. I do not have it all sorted out myself yet, but I think various manufacturer's capabilities and pricing can be used to benefit the customer.

As a consulting engineer, I am not beholding to any specific manufacturer, I do have my favorites but the client's needs must come first.

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