Avigilon CEO: Axis Model is Win - Lose

Since I'm not an integrator/installer, my view may be too simplistic, but I think it's okay for mfgrs to sell to the public. In commercial applications of multiple cameras, an integrator/installer will probably get the job anyway. As for the DIY-ers, they will try it themselves then call a company to correct their mistakes, so the installer stills gets involved and makes money in most jobs.

Paying less for something, when you're a consumer, is usually considered to be a good thing but, generally speaking, the only ones who really immediately benefit when selling a product online at a deep discount are the ones who are willing to do that.

I would say that for end users, it can create unrealistic expectations as to how much they should be paying for what will actually meet their needs.

When a user is shopping for, or trying to price, a security system online to get an idea of what he should expect to pay, that user may or may not have the required technical knowledge to evaluate what would actually work for his particular situation. When he comes accross a low-end PTZ that promises the moon for for about $100, that user will jump when a proposal comes in quoting what he perceives to be a similar product for $200-$300 or more, although that product might perform much better than the cheapo version he saw online. Right off the bat, it starts the relationship with the integrator on a bad footing and that user will most likely try to second guess everything the integrator tells him.

That in itself might not be a bad thing because it gives the integrator a great opportunity to educate the customer and potentially build a more lasting relationship, but it probably adds an extra level of complexity to what might have otherwise been a much more simple transaction.

The problem is that, like any transaction where technology is involved, buying the right IP Video system or component isn't as simple as buying a book online from Amazon VS getting exactly that same book from the brick-and-mortar shop at your local mall.

Competition is good for everyone. Consumers get better prices. Integrators get better products, because, unable to compete on price, manufacturers struggle to differentiate themselves on quality and features, driving substandard product out of the market (or, for those willing to accept substandard product, making the junk really, really cheap). Manufacturers benefit because increased availability of product causes the market to expand, moving surveillance from luxury to necessity. And, of course, the proliferation of good, cheap security cameras causes everyone to be more secure.

It does suck for those companies whose business model is based on high margins, though.

Of course, I'm horribly biased on the subject of whether selling surveillance direct to anybody with a credit card and an internet connection is a good idea, so, you know. Grain of salt.

Life is the book of changes.

I have been a DIYer for 3 years or so and have learned how to get them up and running but I have also learned the serious installs will always need a pro. Prices and product have improved dramatically over the past few years which is a good thing for everybody.

I think having the products available to all will weed out the integrator pool and the best will survive and do very well, even if their margins are cut.

We will always need the good professionals in every service field but the gravy trains are ending.

Many think that direct end-user purchases are primarily to consurmers and small businesses. But there is quite a large percentage of Fortume 1000, govt., and education markets that have their own installation capabilities and they will simply not consider using integrators. Integrators are not losing this business because of product pricing. It simply isn't available to them. So Avigilon's current policy of working only through integrators may be suitable for their current stage of growth. Once they get another $100 million in annual revenue under their belt and growing gets a little tougher I won't be surprised if this policy is reevaluated.

Using distribution and online sales channels is not a bad thing as long as a manufacturer has good channel structure and pricing policies and the ability to enforce them. Distribution provides a logistic and financing capablity that is much more robust than what the manufacturer can provide and allows the manufacturer to focus attention and resources where they should.

Almost six years ago, we found Avigilon, and after seeing and working with the product, we stopped selling every other product and focused exclusively on Avigilon. Years later, and many hundreds of cameras, we have had ZERO lockups, ZERO catastrophic Failures, the best tech support ever 24x7 on special requests and complex issues, many satisfied clients.

While margin is important, delivering the best possible solution, and selling yourself and your business as a service business, will trump low prices.

Having been in the IT/IP support business since before the Internet, I would consider our expertise unequalled by any traditional CCTV vendor, and the feature/functionality of the Avigilon platform allows of the accurately predict image quality, and comfortably provide an SLA based operations/support agreement.

It may/may not be necessarily true that Axis (or any manufacturer) is actually selling their products online. There are a number of websites hosted by either dealers/integrators where they resell products, wholesale distributors who hide behind an anonymous name to resell products, etc. As a manufacturer, we do not sell directly to end users on the internet, and sell to very few online resellers, yet our products are found on countless websites, from Amazon, to Sears, to dozens of others I have never seen or heard of! I think it's just a downside of the information era that we live in, and manufacturers and integrators have to work together to sell value to the end user, not just price.

We live in the age of the internet where people don't even have to leave their home to buy anything they want. We also live in an age where even Luddite's have technology in their palm that would have baffled technologists 20 years ago. To assume that only an integrator is smart enough to install and configure an IP camera is narrow thinking. Many times, people buy on brand recognition and the public has likely never heard of Avigilon and they like to keep it a secret from consumer. But consumers are not dumb and an integrator submits a bid a project, I bet the first thing someone does it Google it and not finding much on it to many is a red flag. Googling Axis would return a much larger result and being able to see what the cameras cost gives the customer a good idea what the cameras cost and if he's overpaying. We are talking thin margins anyway, so in the overall scheme of things, an integrator is not really making his money on cmaeras, but the entire job.

I take a different approach in the business and do consulting rather than intalls. I help the customer scope out a project and get meaningful bids at arms length from bidders. I would never recomend Avigilon to a large commercial customer because it limits their choice of integrator in as much as I would not recomend say Foscam or Dahua for the same reason. I warn them that getting a bid for say $100K from two integrators with different solutions, if you don't know the value or quality of the equipment they are bidding, how do you know which bid is better? I've seen bids for about the same amount of money and one integrator is bidding Axis, the other Speco, another analog.

Let's See, Avigilon provides their software on OEM Dell Equipment. Argueably the worlds largest computer company. And provides 24 x 7 4 hour onsite repair world wide.

Somebody please tell me what vendor providing an integrated OS appliance "Linux, DOS, Windows" or otherwise has the equivalent Support?

If integrators choose to provide their own hardware, the Avigilon Platform is available as BYOD for your servers.

Our IP expertise has come from 28 years as a traditional IT support company, and VoIP, and IP Security grew out of our clients asking for solutions. We sold other platforms such as Video Insight years ago, and did some open source work with ZoneMinder in it's early days... Circa 15 years ago.

We try to educate our prospective clients about Video, at whatever detail level they would like to know, including every aspect of compresssion, lens optics, etc... But more importantly, we're happy to help a client write a SOW that defines the outcome or expectation. Example, XZY, is has the need to install a suitable Camera system on or near the entrance to our facility that has the ability to optically resolve all characters of a license plate out to a distance of 150' regardless of the speed of the vehicle and the time of the day, with the exception of a heavy FOG, or other natural obstruction that may occur.

I've over simplified that, but lets add now assume this might be a "Civic Surveillance" solution and you want to optically resolve license plates in any of four directions at a given street corner, and agency would like the video sent via a wireless link 2.5 miles from the intersection back to the Agency.

We've invested a considerable sum of dollars and time to develop the tools to help us accurately predict pixels on target values across the entire camera line of Avigilon, and these same tools support the specs of most cameras.

Please don't think I am being condensending to any other sales / support model, as they all can work. We've simply chosen to focus on one product line, be the best we can be, and hold ourselves to a very high standard. We use the International "IEC 62676-4" CCTV video image testing methodology to evaluate image quality delivery. We either meet the agreed upon requirements, or we don't get paid, and we're happy to compete against any competitor and any product when the coverage area and a measurable objective result is accurately defined, supported by a subjective client review.

Out MSP IT clients have been measuring our results for 27+ years... We're just trying to do the same for our extended clients in the VoIP and IP based surveillance clients.

Seems to me, we need to find a way to move to the IT business model (e.g. little/no margin on equipment but make it up on skilled labor - $150 - $200/hr - in line with professional engineering services). Instead, we integrators are stuck in the model that says make some on equipment because you're just another construction contractor and should only charge rates similiar to an electrican or plumber. I don't know too many IT guys who pull cable and are on the project from rough thru trim and final. Just sayin..

In general, I think it's a good thing for the public. It may not be a good thing for some in the industry but most will find a way to add value to the products and survive.

We are in the same stage as when the Model T was popular. According to Henry Ford's autobiography, other manufacturers and dealers of higher priced cars sued Ford in an effort to reduce the number of cars being sold so they could make money. But he won, and that was good for the public as now know.

If you look at the short history of personal computers, it follows a similar path. The wider the distribution the more people bought. I remember the big manufacturers limiting their sales to the big stores but there were so many more little stores selling white box computers at cheaper prices that the big stores eventually faded away, and the company responsible for "standardizing and popularizing" the pc left the business long time ago. The consumer dictated the market.

And I'm sure radios and tv sets followed the same path in their heydays.

Which brings out a thought ... Aviglon may well become the Apple of the video surveillance industry.

Apple, That ain't all bad

If they were smart, integrators should adopt the mobile phone market model of subsidized cameras. Imagine, you go to a customer and say that Axis dome is $99 and you make it up in installation, consulting, maintenance subscription. Then they can't possibly go online and find it cheaper elsewehre.

Think of the alarm model, free system but make it up on subscription. Everyone likes free, just have to figure out how to charge for it.

Josh,

Having an SNMP layer on a device is a security risk and provided little in the way of health. You can make pretty traffic graphs, but little else. You can pull speed information from the supporting switch.

We use an unnamed product, that does statistical and moving average analysis on the ARP and UDP connections to the cameras and switches and provide alerting on the statiscal changes in the response times. This is a much more reliable method to manage, monitor, and alert on pending and real failures.

We all agree on so many things, but I learned years ago in sales, You don't have to like something, but you shouldn't act like you don't like something.

Disecting this industry, regardless of brand, you will find technical differences that ultimately have ZERO to do with the reasons someone will spend money on a CCTV system from Avigilon to Swann and everything in between. And to focus on these as a true selling point as opposed to verifiable, predictable image quality is like selling Bread, Milk, Eggs, salt, as opposed to Selling Cake. We sell Cake.

Let's face it, everything we buy is a result of compromizes, else we would all have Cray Computers and Ferrari's. Right?

This discussion reminds me of the Compaq vs. Dell days. (the more things change...) Compaq sold only through VARS/Dealers, Dell sold to anyone and everyone. On the Dell side you didn't have someone local to help you, on the Compaq side if your local VAR was terrible, you were out of luck. Both models were successful and I think can have their place, but I believe the Dell model serves the customer better in the long run.

Applying this to our industry, a dedicated model like Avigilon's helps build expertise and ensure a better typcial customer experience, but can cause a lot of friction with customers who can't go elsewhere if they have a bad experience and between the manufacturer and integrator when their expectations start to diverge signficantly (sell more or we fire you/how dare you all more integrators)

The open model can lead to frustrated customers working with an integrator who doesn't know the product very well.

Ultimately, the right answer progably depends on the sophistication of the customer/integrator and the complexity of the project. For manufacturers, the onus should be on making products that are simple to use and be successful with.

They are a niche player, does anyone else do this? When you have a niche so small nobody else wants to fit in, it makes you the king of the niche and their niche is for insecure integrators that want to lock in their customers so they can't go elsewhere.

I see the online selling model an inevitable path to trade products, being an ex-camera manufacturer myself, I agree with Avigilon CEO that manufacturers will win the game at the end of day. End Users may buy directly online or take the online pricing as a means to negotiate with integrators/ dealers on better pricing.

While this will be a painful process for integrators, it maybe become a positive catalyst for integrators to serious consider how to upgrade their value offerings to their target end users by means of more customer centric solution consulting, better professional and technical support capabilities or even create more differentiation by promoting vertical solution offerings.

Think about this: when IP penetration exceeds 60% market share, 2M IP cameras priced at less than USD150 online, End Users will be demanding for additional BENEFITS from IP investments!

I personally have been hearing constant comments from end users : "Nowadays, there is little differentiation amongst ip camera selections -- To See & To Get good quality video is easy, BUT To Use/ Apply or Manage Video is still a puzzle...."

I believe everyone should have the opportunity to purchase products online if they choose. Most companys will go through an integrator anyway. I look at it like my car...I would never go through a dealer as they have to jack up the prices to cover they're overhead. In this case, better to buy private.

IF we're talking a small installation, there are a number of NVR software packages out there you can run virtualized, so you can be using your MAC (or PC) all day long and have a windows VM running your NVR software on the same machine. (with all the usual disclaimers that someone's PC is not the place to run a security solution).

So you can have your apple and eat it too.

It IS the way nearly all business seems to be accomlished these days.

Plus, someone is going to make a buck or two installing whatever equipment the customer buys.

Besides, the customer will probably end up spending more money to "fix" their initial purchases....

it is a good thing for buying camera boxes online - but for solutions , no, it is not .

the integrators work force that provides these solutions has to be protected as integrators have invested in developing the skills of their team to deliver a better working solution .

So for solution based vendors - MSRP should not be published .

but for box moving cameras - not big of a deal.

i think the market has already shapped itself around my note.

If you form a mutually beneficial relationship with your Suppliers (Vendors) then you don’t have to worry about any of the above. I have found that when you build a rock solid business relationship with a valued and ethical company they will always have your best interest at heart.

We write rigid standards in our SOW’s with the help of our partners and manufactures. Additionally we also demand that our Suppliers possess industry certifications from the manufactures that they represent at the highest level. All of our Suppliers must also have separate service and installation departments as we have found the two to be very different in how they function. These standards help keep out the companies that don’t invest in the training and allow us to receive a better product.

We have a decent size Enterprise system of approximately 3,000 cameras. I would never purchase equipment from the internet – especially cameras and NVR’s. Software patches, recalls and other issues make this a bad decision. We have competitively bid our components and labor rates in advance with reputable companies that invest in their personal so we know we are getting value for our dollar.