Avigilon has acquired video analytics developer VideoIQ, just like we predicted.
At the end of 2013, Avigilon raised $69 million 'for potential strategic acquisitions.' At that time, we observed:
"Analytics is the most sensible target [for acquisition]. They do not have any analytics of their own (specifically intrusion/tripwire) plus analytics are more important to larger enterprise accounts (with more cameras and more critical security concerns) and they are still poised to be a next big growth area (certainly with megapixel decelerating as the market becomes more saturated).
VideoIQ makes the most sense to us. They have a strong track record, works well (not a small achievement for analytics) plus they have extensive experience in edge storage (another important area that Avigilon lacks). VideoIQ seems to be doing reasonably well (for the weak analytics market) but they have been around for a long time, and VCs generally want an exit sooner rather than later."
The most surprising part is how little Avigilon is paying - just $32 million in cash compared to the estimated $11 million in revenue. This would be a modest, sub 3x, premium compared to the 7x valuation that Avigilon paid for access control provider RedCloud, a far less established company.
We think this is a strong move, at a good price, both because it adds a quality product and potentially restricts access / integration to rivals.
Avigilon's Partner FAQ on the acquisition contains some additional details:
- Avigilon says VideoIQ "enables end-users to prevent crime proactively" which is typical Avigilon mis-marketing - it's nearly BRS Labs style. Nonetheless, VideoIQ is strong at detecting crime in real time.
- "VideoIQ’s technology and business structure will eventually be transitioned to an Avigilon product to provide one single, end-to-end solution for our customers and partners." In other words, in the not too near future, you will need to be an Avigilon partner to get VideoIQ products, a very big deal for non Avigilon dealers / customers.
On the other hand, this is not a bullish sign for existing video analytic companies. VideoIQ was arguably the most successful analytics company and yet was only acquired for $32 million, compared to the tens of millions they raised over the past decade.
FLIR Security | 12/31/13 04:00pm
I'm going to miss BRKs posts on IPVM.... :(
Hold on, let me get my popcorn and a beer...
Hey, why no poll on whether or not this is a good thing for VideoIQ? [IPVM Response - Added]
IPVMU Certified | 12/31/13 04:14pm
Let's hope that this is as good a move for the VideoIQ product line as it is for Avigilon...
It's about time. Can't wait to see how tightly the analytics are integrated into the management side. That still leaves 39 million for another (few) acquisition(s).
The industry is truly shaping to be a two camp world, the end to end solution, Avigilon, or the best of breed solution, Milestone, Genetec etc. exacq will leave us soon folding into the Tyco world leaving us with less choice going forward. 3rd party companies will depart from Avigilon faster I think and look for better partners such as Milestone to counteract the Avigilon story.
These are just thoughts of mine.
Great product addition for Avigilon and great move for Video IQ. Video IQ has some great sales people but they will certainly benefit from the outstanding service provided by Avigilons Service Department.
Amazingly nobody picked VideoIQ in the IPVM "Who's going to be Acquired Next" $500 pool.
Would it be fair to say that best of breed shouldn't necessarily exclude end-to-end, judging by the acquisitions Avigilon has made recently?
No product is perfect and the true test will probably be how well they manage to integrate the various components, as this is usually the biggest challenge, wether you look at if from the provider's or the client's side - true of anything IT related which video surveillance seems to be leaning more and more towards - while continuing to perform the way they have in recent years.
Best of breed should be about getting the best products and putting them together so they work seemlessly. in addition it should be about choice and if one piece fails to measure up or ceases to be best of breed then it can be replaced with something else and the whole system continues forward. I agree that this is not always true in our business, but in the avigilon world they do not want this at all. they want you to lock into their solution and nothing else, you cannot take their software out for example and continue forward with their cameras as you can with Milestone talking to Axis for example. Take Milestone out and replace with Genetec, or Exacq etc and everything goes forward without issue.
IPVMU Certified | 12/31/13 05:11pm
I don't think the "prevent crime" quote is entirely off. I've seen it prevent theft (but only after tresspassing was already in progress). Obviously their statement over simplifies reality, but it does not rise to the level of some of their previous claims.
Avigilon is no different than Tyco or Verint - they want to sell the end to end solution which is just another way to say the customer is locked into their proprietary products.
IPVMU Certified | 12/31/13 06:40pm
I wonder what (if any) hardware redesign will happen as a result? Will the product builds change at all?
Merging Avigilon's offerings and devices like Rialto Analytic Bridges into the same portfolio has an odd twang.
The next step for avigilon would be a strategic move which means folding to Schneider or GE as these companies are pretty much the best choice to take over this dinosaur!
Does anyone see them making a play at the actual network switching infrustructure through an aquisition, using their remaining funding to have an even more complete closed end-to-end offering?