Convergint is an interesting Group. it one of the few places where upper management actually believes the stuff that is printed on the V's&B's. they also are are trying to acquire all of the cream of the crop people in the Security industry in certain markets, sadly as there aren't that many left floating around they are starting to slow up on acquisitions. I will say one of the reasons they have slowed up is due to lack of employees to do the work that is coming their way, which is good thing in a way I guess.
They are in the process of making plans of going into other markets such as government, education, and military but nothing solid at this time other than trying to acquire the right people to help move into those markets.
JCI/Tyco isn't as solid as it appears on the surface or the numbers. they have acquired so much across the life safety market, fire, security, and alarms. problem is they are in the process of running all of their employees that can to the work away. Across several jobs I have been on this year from big to small all suffer from high turnover rates and inexperienced employees showing up having no clue what the guys did before or what they need to do till the "Area supervisor" shows up and holds their hand long enough to hold them over for a day or to so the supervisor can go to the next job . they are also slowly starting to burn bridges with national and global customers by making the point since they are sometime the only player in some areas in the country (fire mostly) that you don't have a choice and just have to deal with what they send out there. And a lot of those accounts have fire, security, and other life safety all rolled into one contract as it cuts down on who they have to call.
it one of the few places where upper management actually believes the stuff that is printed on the V's&B's
I can believe that. My main question, beyond Convergint, is can any huge services organization maintain those V&Bs while meeting the demands of a financial owner? Or, in other words, are all large integrators destined to turn into poor quality performers to meet financial performance drivers?
they also are are trying to acquire all of the cream of the crop people in the Security industry in certain markets
I can believe that as well, my question there is how do you keep those people long term? You've already paid these people millions or tens of millions, what is their motivation to stay there long term as a cog in any corporate machine? And it's not like acquiring tech, where even if the founders leave, you still have the tech which has a longer value.
JCI/Tyco isn't as solid as it appears on the surface or the numbers.
As for JCI/Tyco, to clarify, I am not saying things are great, just that JCI run Tyco security appears to be doing better than Tyco run security.
As a previous Convergint employee, I will say that most CTC's (offices) really do make a great effort at trying to maintain the V&B's. However, you are correct in that typically it requires a lot of work and everyone is stretched thin and it does end up in turnover and lots of changes. Like any integration business, it's typically very location dependent. Most Convergint acquisitions require the owner to stay for a certain number years.
As an unfortunate JCI customer.. YES. service has gone down quickly to nothing in the past few years, only a couple of regional sales office so the "trip charge" for anything is astronomical, up to $1,000 before they even touch it. I'm pretty rural but still. And it's never just one trip to fix it, as you noted you always get the new guy with no clue trying to dig into a 50+ year old system, then his boss, then some other tech from another, farther away office... I didn't love Tyco/American Dynamics before this buyout; glad I got away before this happened.
Although this is an older/smaller deal (May 2016 ), I noticed that Hikvision's acquisition of the UK's Pyronix for ~$24 million is now attracting scrutiny due to Hikvision's human rights record.
The entity list sanctions do not really affect Pyronix, unless it wants to transfer US origin technology to Hikvision HQ. But there is definitely a larger PR issue and the possibility of UK Hikvision restrictions in the long term.
Motorola is a system integrator and integrators (for many reasons) don't like to buy from the competition.
That's a fair point and definitely a risk for Motorola and Avigilon long-time integrators. To clarify, we are analyzing the deals mainly on how good or bad it has been for the acquirer.
At least for now, I have not seen any major issue with Motorola competing with security integrators but that's certainly a risk we raised when the deal occurred - Avigilon Acquired By Motorola Solutions and time will tell how Motorola evolves the sales of Avigilon products.
Milestone was sold at the best possible time as far as I can tell. They've always been trying to be "fast second", but execution wise it seems they're only capable of slow third. Regardless they are one of the safe choices, and I doubt they will "literally get lost in 2020". They were never innovative, and they never will be. But people may actually like that, so I don't see people ditching Milestone anytime soon.
In software there's an old saying - there's the software that people complain about, and software no-one uses. I think this is what we're seeing with Amazon/Ring. I thought that Google/Nest/DropCam was going to be what Ring is now. Instead, I don't hear anyone talking about Nest anymore. It just drowned in cheap alternatives, but Ring is a totally different player. They are deep with the PD's around the country (similar to Tasers strategy), and people seem to love their products. Amazon doesn't care much for ethics, never have, never will, I seriously doubt they care about a few SJW's complaining as long as people keep buying.
I'm surprised that Briefcam is considered a good deal, and perhaps I am just jaded from my bad experiences with them. Everyone was talking about it like it was some magical piece of software, but no-one was ever able to set it up to deliver the results we'd see in the demos. Instead, it was just a bunch of ROI's mashed together, sometimes several people layered on top of each other, sometimes, half the body was gone. I'm sure they've added a bunch more, but does it outperform (in terms of TCO) Avigilons appearance search.
Milestone was sold at the best possible time as far as I can tell.
Glad to see you giving Milestone credit! ;) Seriously, though, the timing was excellent.
and I doubt they will "literally get lost in 2020"
Agreed but that's not what I said. My full comment:
But Arcules is struggling and Milestone, without its own VSaaS offering, is literally going to be lost in the 2020s.
2020 could be painful for Milestone but things are going to get a lot worse in the next few years ("2020s") if they do not figure out what they are doing with Milestone / Arcules.
In software there's an old saying - there's the software that people complain about, and software no-one uses. I think this is what we're seeing with Amazon/Ring.
How about Axis? Outside of IPVM, who complains publicly about Axis? And we are not anti-Axis but Axis is a good counter that just because you are big does not mean you are destined to be mass criticized.
I'm surprised that Briefcam is considered a good deal, and perhaps I am just jaded from my bad experiences with them.
It is likely a good deal on a financial basis, they are growing in a hot market, they are significantly ahead of most of their competitors on functionality, etc. We are in the middle of testing it right now and our report will be released in early January.
Axis has stayed clear of any controversy - it's probably a Swedish thing. Swedes are known for trying to avoid any sort of open disagreement and arguments.
But it might also come down to opportunities.
Axis' hardware platform makes little sense (to me) and is probably costly to maintain. As far as I can tell they have an ARM chip in some custom silicon which can't be cheap to manufacture. This design made sense 20 years ago, but today it just seems strange. Other than this weird design choice I don't see them offering anything special. The sensors and optics are available to everyone else, so it comes down to the image processing software (or ASIC), the image processing depends on two things: how clever are the devs, and how much horsepower do they have? I am concerned that Axis is lacking in both areas. ASIC is a bad choice when the software and algos are moving as fast as they are. The customers may be left holding expensive, custom silicon that works well today, but is hopelessly outdated 6 months from now.
So, on the one hand, you can argue that Axis is a morally superior company, and that's why you don't see evil regimes using their cameras - or - if you're sitting in a basement, stabbing at the innards of an XProtect server extracting its secrets - you might think that it's simply down to a lack of capability:
We know that you can use any camera you want to do racial profiling, if you just do it on a dedicated server. So if you're going to do that, why pay a premium for a "dumb" camera? Just get the cheapest cameras, and Axis probably won't ever be on their ARTPEC platform.
Doing face detection (as opposed to facial recognition and profiling) are two very different tasks. Face detection almost always use the well known algos that can run on pretty low-spec hardware, but if you're running a NN to provide some parameters about that face, it's a different ballgame. Maybe Axis simply never had the capability to do the latter. I don't know. I don't even know how you'd create a training-set that could be used for the NN, and I am pretty sure that no-one at Axis would ever provide financing for R&D to create such a set.
TL;DR; Axis is too expensive, and technically inferior to Hikvision, which is why questionable regimes don't use them.
it's probably a Swedish thing. Swedes are known for trying to avoid any sort of open disagreement and arguments.
My aunt, who works in Copenhagen but does business with the Swedes, finds it infuriating to work with them. Meetings are apparently a nightmare, hah.
TL;DR; Axis is too expensive, and technically inferior to Hikvision, which is why questionable regimes don't use them.
I think most people don't dig that deep. In my own experience people seem to like Axis because it's widly known. It's a saying from before my time, but "No one gets fired for buying IBM." It seems sorta like that for Axis sometimes. They are big, well known, no real corporate issues. No major complaints of back doors, and "phoning home" and not made in China. In North America especially, that's been a big issue.
Of course once most people I deal with see the price difference, suddenly they don't care so much about Hikvision being made in china, when the image is the same.
I have personally always like Axis products. They seem well made, they work. I've rarely had any issues with them, but I could say the same about Hikvision. Especially the last few years, I hate to say it, their products got better, but the prices didn't really jump up that much. Of course now it's a different story, in light of recent activities from them and their owner.
Axis does seem to be slowing down in the last few years. Maybe it's because they were all I knew where I was exposed to the IP world. Now it seems like they don't really do anything different. Always re-active, instead of pro-active when it comes to new products or new offerings.
Does Axis sell their chip(wholesale)? You'd think they could make some money that way. Give the cheapo manufacturers a bit of a leg up by using a chip that's not Hilisilicon or what ever.
With that logic, Longse is technically superior to Axis as well.
no, of course, you’re absolutely right, but only absolutely :)
since as a practical matter, an integrator who’s business is somewhat constrained to using cameras roughly within the same price range, is likely to decide among those in that range which are superior to the others.
for instance, from the WDR test you mention where Axis does generally better, the prices are just not at a premium, they are literally 2x or 3x the price, putting them in a different class.
and in the case where the prices are close enough to make either a viable option, this was the result:
an integrator who’s business is somewhat constrained to using cameras roughly within the same price range
And you are describing the SMB where Hikvision does best :)
I am mainly objecting to your use of 'technically superior'. Axis is generally technically superior but to many buyers, the premium technical performance of Axis does not justify the premium price of Axis.
Quick, shoot from the hip thought on Axis. I like the product and the people, but at the end of the day people are in business to make money. If the dealers are continually forced to pay FAR more to buy and sell Axis, and thus make less profit for themselves, eventually thats going to impact their market performance, regardless of long term product loyalties. Right now most of the money being made on an Axis Camera is being made by Axis. Observationally, Ive always found it to be somewhat interesting that they retain a reasonably decent dealer base over the years that tolerates that type of one-sided relationship. In a highly competitive open market system, that type of manufacturer usually gets weeded out pretty quickly so I consider the Axis example to be somewhat of an anomaly in that regard. Just not sure how long that will last in the long run.
The global video surveillance market is NOT a highly competitive open market system. While I have many complaints about Axis, Axis is fundamentally and significantly hurt by the PRC's policies discriminating in favor of its own companies and against companies like Axis. If Axis had Hikvision's government backing and protection, it too could sell cameras at incredibly low prices. Fair/not fair?
Well, I guess we will have to (respectfully) agree to disagree on that point John. It is quite competitive. When was the last time you spent a full year, on the street, quoting or bidding jobs, meeting directly with end users and decisions makers, exclusively for the purpose of selling them a system? How many manufacturing competitors were there on each job and who were they? What was your closing ratio? On the projects that you lost, what percentage did the customer cite price as at least one of the reasons they didn't choose your system or Axis? I do it (virtually) all day every day and my daily experience tells me a different story. I suspect that if you start a separate string on this as a stand alone topic you will hear from others that, while all of the standard rules of sales apply - relationship building, ROI, ROA, product differentiating, etc etc, - its still really quite competitive out there. There's alot of "moving parts" in a system sale I agree. But I know that regardless of all other factors, when Im going after a job, I really haven't run into any customer, both technically sophisticated and not, that isn't considering price as one of the primary factors in their analysis. And so getting back to my original point, by selling Axis, (because we do like the product and the people), we, as a dealer will absolutely make less money on a project than if we sold another non- Chinese brand. So will every other dealer. And so I was making the simple observation that I was surprised that being the highest (or one of the highest) priced products in an environment where price selling and buying is common, thus leaving less room for profit for the dealers, hasn't caught up to them yet. We offer and up-sell Axis to all of our customers. Only a small percentage pay the premium. You pointing out the reasons why Chinese imports cost less than other non-Chinese imports was unrelated to my point about dealer behavior and motivations behind their selection of products to promote. We (most industry professionals) feed our families and put our kids through college with the money we earn out there. And that's a serious matter that cant be ignored by Axis or any other manufacturer when it comes down to getting an order, no matter whose product your selling.
Well, I guess we will have to (respectfully) agree to disagree on that point John. It is quite competitive. When was the last time you spent a full year, on the street, quoting or bidding jobs, meeting directly with end users and decisions makers, exclusively for the purpose of selling them a system?...
You pointing out the reasons why Chinese imports cost less than other non-Chinese imports was unrelated to my point about dealer behavior and motivations behind their selection of products to promote. We (most industry professionals) feed our families and put our kids through college with the money we earn out there.
I don't think we disagree here. For sure, selling video surveillance to end users is quite competitive. My point is that the video surveillance manufacturer side is not a highly competitive open market.
If it was truly an 'open' market, Axis would be far larger and Hikvision would be far smaller, e.g., and the price differential would be much less. So my point is more about the global market not being 'open' and therefore competitively distorted.
I'd go further and say that I totally understand and respect the position that you are in, especially since telling most end users "well the reason this other stuff is so much more expensive is because of PRC mercantile / anti-competitive tactics on the other side of the word" is generally not going to be a compelling sales tactic.
I took UD#8's comment about the competitive open market to mean "my market". I can tell you that in my market, he's spot on and it's proven by the numbers I see with Hanwha growing, Avigilon growing and AXIS sliding with us. That may not be the case globally, and I have only my market area to judge this by, but that's what I see as well.
Do people buy Avigilon cameras and pair them with a different VMS? I would expect that to be the exception, but I have zero info to back that. It's kind of understood that Avigilon SW would treat Avigilon HW as first class citizens, and everyone else as members of a (slightly) lower caste, but what about Milestone and Axis then?
Seems to me that Canon just lets Axis and Milestone do their thing as long as neither makes choices that moves the two further apart (e.g. Milestone investing heavily in supporting features in Avigilon cameras while ignoring features in Axis). This charade will probably continue as long as both Milestone and Axis can keep growing at a decent pace. Until then, it's business as usual (although, how independent can the spendthrift teenage daughter relying on daddy's cc really be?)
Samsung sold of their IP camera branch to Hanwha a while ago. Have people outside this industry ever heard of Hanwha or IDIS (who were located quite close Hanwha's offices when I was there). And do people appreciate the difference between getting a SK camera vs a Chinese one? Are the Koreans significantly cheaper than Axis?
I believe in the US that there is a real distinction between South Korea and China, and that's further emphasized by the marketing from folks like Hanwha since the entire China 'thing' has blown up here.
And yes, there is a significant difference in price between H and A when you line up the camera models, feature by feature. Now, that end-user may not see all of that, but the integrator definitely has better opportunities for margin with Hanwha, in my experience.
I agree Morton. But.....(See my comment to John above). I was simply contemplating that it was unusual and somewhat counter-intuitive for a manufacturer to grow at that rate and make a "handsome profit" (through a process that ultimately means their dealers will make less profit than they could otherwise make) and wondering why its gone unchecked by the dealers so far and whether or not it will last indefinitely. Im quite certain I have no explanation for it. But i doubt it will last forever.
There's a significant difference between comparative pricing and what you could call a customer's solution price tolerance, as in, how much a customer is willing pay for a video surveillance solution.
I think Axis can have a comparative price issue, as other manufacturers' cameras may fulfill needs closely enough (or better) at a lower cost. This can be particularly an issue with smaller customers (which certainly add up to a big part of the market) that really compare prices on the technology.
But I don't think they have nearly the problem with price tolerance, particularly on the high camera count / enterprise level, as there seems to be a lot of evidence that customers are comfortable paying the amounts they are paying to have a video surveillance solution. I haven't seen a study on this, but anecdotally it seems pretty clear many customers are paying more to have video surveillance than they ever have before - more cameras, more extras, more systems. It doesn't seem like there's a clearly established ceiling where customers are saying "oh, we can't possibly spend more on video surveillance."
And at that enterprise level, customers' decisions are driven by many many other concerns than just "what's the cost of each camera and its specific technical features versus a competitor." They think about brand size ("big companies buy from big companies") brand stability, wide dealer and technical support, track record, customer references... and in the non-proprietary surveillance camera market, Axis has a pretty wide lead on basically everyone in those metrics. (Very interesting to see if Avigilon actually wants to also be in the non-proprietary [i.e., the non-essentially-locked-to-their-own-VMS] camera market as Motorola's recent actions have indicated.)
And so Axis may be fine charging a premium for all these other things they bring to the table.
UD #8 I'd have to disagree with your comment about making less money with Axis. Do you take into account all aspects of the TCO? Axis has been in the past and continues to be today the best VALUE for us and our customers. Maybe the days of 40-50% margin on materials are gone, but as long as you are efficient at your installs and your estimates to the customers are true and fair, do you need to make that margin on the materials??? The biggest margin erosion in the industry is under bid installation labor and return trips. I don't have either with Axis products...
One of the largest enterprise buyers in the market is Federal & State Governments. The Feds are more inclined to spend more on an Axis Camera. But most of the States are either in serious financial trouble or flat broke so they’re gonna take low bidder every time and in most cases will recklessly ignore the Cyber Security threat and buy Chinese anyway. The Feds should force the restrictions downstream to the States or cut off aid in some non-essential areas to the States until they comply.
Many Avigilon Cameras are made in the US. US or Canada, I'm not sure how they break it out, if some models are US made and some are Canada made, or if it's just both and you may get a Canadian made one and a US made one in the same order?
But as you've said in another comment, generally people buying Avigilon Cameras, are buying the VMS as well, and vice versa.
Disclosing that I work for JCI. John, you might consider JCI acquiring Smartvue for the list. The first VSaaS player (now Tyco Cloud) has new integrated cloud mobile credential and access control offerings, is hiring cloud dedicated RSM team, and rolling out through JCI global channels - all coming early 2020. Note that all technical support is run through a dedicated cloud team in Nashville.