Avigilon CEO: Axis Model is Win - Lose

Author: John Honovich, Published on Feb 12, 2014

Are manufacturers winning at the expense of their integrators?

That is the claim Avigilon's CEO makes, calling the channel model most, and most notably Axis, use a 'win lose situation'.

Here is what he said:

"The vast majority of our competitors sell through distribution and on the Internet and basically it is a free for all where everybody can access the products and the end result is their products are essentially commoditized, end users can bypass integrators and get dealer pricing and so it's very difficult for them to maintain a margin and that creates a win lose situation."

Watch the video segment itself:

However, there are multiple tiers of dealer pricing for the vast majority of manufacturers and rarely do end users get the largest discounts reserved for preferred / top dealers but....

The Upsides

No doubt, most products are available for sale online and almost always notably below MSRP. One can use Google products to get pricing and purchase products from the clear majority of surveillance manufacturers. To that end, not only can end users go around integrators, they can and do use the existence of such avenues to push down integrator pricing.

Certainly, many integrators disdain this availability and bemoan being 'price shopped' and 'haggled' with.

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A model like Avigilon's, which is a distinct minority in this industry, makes it hard for end users to buy Avigilon outside of local authorized dealers and even difficult to find pricing (though not impossible as Avigilon price lists are found here, here and here, e.g.). The outcome is that margins are much better protected, maximizing the chances of dealers profiting as much as possible. 

This approach is certainly a key component of Avigilon building a legion of fanatical dealers.

The Risks

On the other hand, integrators become more allied and dependent on promoting that manufacturer's products. Selling a rival's product in key deals, criticizing the company or not selling enough of their products are all reasons to terminate a dealership, which can lead to major issues with existing customers who they have already sold those products.

Also, end users face integrators who are driven to sell those restricted products, even if those are not the best choice for their needs. End users also have restricted options for buying and support as well as greater difficulty for ensuring the best price is obtained.

The Balance

Many, if not most, integrators would likely prefer a restricted channel model, where as few competitors as possible, and no users, have access to purchasing products. The opposite is likely true for most end users.

What Do You Think?

Industry Divided

Our poll results show an industry divided on selling products online to the public:

  • 70% of integrators and 60% of manufacturers think this is a bad thing
  • But 90% of end users and 75% of consultants think this is a good thing

The Future

Will the future see more manufacturers with tightly restricted sales? Should the industry go in this direction? Discuss. 

2 reports cite this report:

Avigilon Tightens Channel on Oct 03, 2014
Avigilon is tightening their channel structure, according to multiple independent sources discussing this at ASIS 2014. In the note, we examine...
Falling Down: The 2014 Mid-Year Guide on Jun 02, 2014
Falling down - the theme of the 2014 video surveillance industry. This is the toughest stretch for the industry overall, since at least the...

Comments (72)

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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...

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"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."

Cynthia - That ties in to what I was just saying. The end result is that this customer probably ends up paying even more than if he had gone straight to the integrator and had chosen the right...

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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...

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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...

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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...

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I struggle with Avigilon model because dealers sole focus is to move that product. You lose the consulting part of the business. Integrators need to be more willing to charge for design and consulting services and than pull from what product makes the most sense for design. We are so focused on moving the box in our industry that we do not sell the management or service to end users....

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I'm not sure I agree with the idea that sticking to one line or group of products impedes an integrator's ability to offer quality consulting and design services.

If anything, wouldn't working with the same products day in and day out, wether they are from one source or multiple sources, allow for building better expertise about those products and allow more time for quality...

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A day in the life of an Avigilon integrator:

  • Meet with a utility company - Solution: use Avigilon
  • Meet with a bank - Solution: use Avigilon
  • Lunch at the neighborhood pizzeria - Solution: use Avigilon
  • Meet with an international airport - Solution: use Avigilon
  • Meet with a school with 100 new Pelco DVRs - Solution: switch to...

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Hopefully, the prospect will be smart enough to request quotes from multiple vendors.

That's the whole idea of having competition. Avigilon, Axis, and all of the other manufacturers don't operate in a vacuum.

The idea of an integrator, to many, is a company / individual / professional who recommends the best solution, whatever the product manufacturer might be, not the one that makes them the most money. The saying, "Putting the customer first"

The reality is that if businesses don't make, or don't make enough, money, they tend not to stay in business.

On that same line of thought, companies who don't provide decent pay and working conditions to their employees see them leave to go work for someone else at some point.

I'm also not sure I understand the relationship you're implying between offering the best solution,...

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Does Avigilon have a rack mounted encoder? Do the support Coaxatron? This is one tiny reason to go beyond the manufacture and look for a solution that matches the need. Does Avigilon sell anything besides Cisco and Dell in their solution offerings? Not that any of these solutions are bad but blindly supporting a single model and install without stepping above it all and acting as an...

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I definitely agree that if you don't look outside your little box often enough, the world will run you over like a steamroller.

I also don't see too many of the key players in the industry doing that and I'm sure they expect their partners who do consulting, integration and installations to keep up.

"Does Avigilon have a rack mounted encoder?"

From their product documentation on p. 3, their encoders are rack-mountable.

"Do the support Coaxatron?"

I can't...

This is my point-- why home brew it with Avigilon when Sony supports out of box ? ( if that is what your job requires). You are making my point -- you are looking solely to Aviglilon to fit every hole and it is just not the case.. They fit some nicely others ok and some its a terrible fit.

I don't think they are trying to fit every hole, but what I am saying is that it seems that the answer to both of your questions is Yes.

And it took me two minutes of online searching to find those for you. I guess I must have been pretty good in my tech support days.

You did not find them for me - I know Sony supports coaxatron - because I had a client who needed it and other encoder manufactures did not support it. You found that for you to support that Avigilon does everything I guess?

What would you do in a case that a customer wants SNMP based management of end points and wants to encode all their existing analog cameras?

(actual...

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I believe your original questions were:

"Does Avigilon have a rack mounted encoder? Do the support Coaxatron?"

Now you're faulting me for finding positive answers to them? Why ask in the first place?

Honestly, I don't even work in the industry and didn't know all that much about it until a few months ago when I subscribed to IPVM. And I...

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My wrath ? Not at all. I like the fact that you are willing and able to make strong statements and discussion- its much better than lurking! :)

On SNMP- Avigilon does not support SNMP off of their devices - so you cannot pull bandwidth information off of an Avigilon Encoder l( that I know of- i could be wrong and have been before) like you can off of an Axis encdoer and pull that...

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Very few physical security devices support SNMP. But, why wouldn't you just get that data off the switch port?

This SNMP angle is way, way off topic. I have started a new discussion just for it. Please take it here: SNMP And Video Surveillance?

And honest question on that encoder- is that blade ( like axis /sony ) or is that just 3 4channel put together to form a 1u ?

Avigilon only offers 4 channel encoders, no blade devices/systems. 3 Avigilon encoders can be mounted side by side in a rack, excerpt from install guide:

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One thing I'll give to Axis is that they make some pretty cool looking toys. :)

The Avigilon Encoder is a four port unit with 4 485 ports, 4 I/O ports, plus a 3v voltage for relay control, mount three on a metal shelf. Voila. Support 768x512 encoding. H264/Mjpg

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...

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"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."

You'll have a tough time convincing me about this. For years, government and large corporations have been relentlessly pushing the "stick to our core business" mantra and...

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Alain, you can be convinced or unconvinced or disagree, but the practice of large end users buying direct is quite common (e.g., Distributors Dealing Direct to End Users). Not all of them install themselves, but many will purchase the equipment directly from the manufacturer...

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"many will purchase the equipment directly from the manufacturer and then pay the installer/integration to put it in."

I can see how that would make sense for large global/multi-site organizations since they can probably negotiate bulk purchasing agreements at lower cost compared to local integrators who don't have the same scope.

That doesn't...

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"That doesn't prevent the manufacturer from promoting the local integrators they know have expertise with their products and probably makes sense for the clients as well, as opposed to trying to build that expertise in-house when it may only be needed from time to time."

This is not reality.

Reality is where the manufacturer is terrified of losing...

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Amen

Brian - I'm not saying the manufacturer will push back and tell the prospect "No, no. We can't do this. Go talk to this guy and that guy and that other gus and they'll put their orders in individually because we can't cut into their margins".

More something like "Here's you confidential price list and agreement. Oh! And here' a list of companies in the different locations where you...

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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,...

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Many hundreds of cameras over six years? Maybe your test pool is not very large but every system has issues and complexities.

I am not arguing that Avigilon is bad or selling it is bad but blindly recommending it is bad.

“I would consider our expertise unequalled by any traditional CCTV vendor”

What expertise beyond Aviglion install experience over six years does...

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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...

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Scott, thanks for the feedback. The counter that I have heard is that manufacturers can track down who the online reseller is buying a unit from them, getting the MAC address of the unit shipped and then determining what distributor that unit was originally shipped to. Then they can go the distributor, have them check where that unit went and push them not to sell to this...

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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...

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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...

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So you are a Managed Service Provider that sells Avigilon ? What IT products do you support? Do you manage systems ? What is your VoIP solution ? Do you host or resell ? Did you start in IT and move to Video ? I am genuinely curious because you do not come across IT/IP Centric dealers that have a strong surveillance arm.

You focus more on image quality and pixels per foot over...

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Josh,

Yes,

We are an IT MSP, and began providing FLAT rate IT support in 1995, after the margins ran out on hardware and software during our early years from 86 - 94. From the early years of Novell NE1 cards, Arcnet, and every protocol since. Avigilon was once sold via the REP method and they found us, they've since gone direct removing the REP, and they may someday go via...

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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...

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Michael, that's a good point. Question is - how do they get there? It's challenging when all/most of one's competitors are charging much less. See our Security Integrator Hourly Rates results, e.g.

Michael,

Don't undersell either. You can't rob peter to pay paul in this our any other service oriented business. You need to know the client expectations and budget well in advance of doing any work or providing any products. Move as quickly as possible to solution selling or grow accustomed to price shopping. Pre Installation Education, and Post installation support are the two...

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Andrew,

We do all you say where possible. But the mindset is different on the construction side. While we do charge more for Programming/IT services, it is still not at the rates IT guys get. My point is we need to change the expectation/mindset as an industry-integrator - particularly if the customer want commodity pricing on product. See to me that the IT guys (who usually don't do...

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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...

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Apple of Video Industry ? Based on what ?Maybe based on their fanatical following and users unwillingness to concede that there may be a better solution besides what they offer. Than yes Apple of video industry.

That's what Aviglon is sounding like.

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...

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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...

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How is SNMP a security risk inside an enterprise network ? You can pull off of switch but try doing this on a large customer and match ICMP testing with bandwidth / netflow- it sucks- a lot of times the security managment team has little to no access to managment side of the switches they are using. It is much easer of device supports SNMP and can deliver bandwidth, status, power etc in one...

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This thread regarding Avigilon has devolved to a technical discussion and my final thoughts.

SNMP has been exploited since day one, and remains an exploited unsecure protocol. one quick search for SNMP RISKs will net you years of evidence. The occurance of L1 physical RUNTS, COLLISIONS, SHORT PACKETS, etc on the Switch Port is a much better indicator of potential health issues. Keep...

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Andrew, leaving aside SNMP pros and cons, I think we would agree that a non trivial number of enterprises use / require SNMP as part of their network monitoring solution. To that end, this is a feature set that differentiates one surveillance manufacturer from another, just like a customer who demands 20MP+ cameras, even if others think they are a bad decision and should...

******.

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...

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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...

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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.

Are you saying Avigilon is a niche player? They are many things, but niche is not really one of them.

To expand on this, Avigilon did nearly $200 million in revenue last year (2012). They might have been a niche player a few years ago but not anymore.

Yes, niche player regarless of size. The company I work for is a niche player that runs about 200m a week in revenue.

Does the company you work for sell 200 million in surveillance products per week??? Cause that is roughly the size of the entire global surveillance market :)

Presumably, your company is in a different (far bigger) market. In surveillance, a relatively small market (compared, e.g., to computers or mobile phones), $200 million annual revenue puts...

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Still, not a revenue or company size that to me makes a niche. To me, Apple, #1 largest market cap company in the U.S. to me is a niche player and yes, I have several Apple products, but is not the mainstream product for servers, desktops or even laptops, yet I get lots of people asking where can I get NVR software that runs on Macs, but the CCTV industry considers Apple too small, a niche...

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NVR software or client software that runs on MAC? Several companies have MAC/ Apple clients and all of the big ones have Apps. No one makes an Apple NVR because Apple market is not servers ( NVR) and unless you realy small you should not install the head end engine directly on to a desktop-- if a customer wants that its pretty easy-- tell them to run a dual boot ( windows) or vm and run...

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No one makes an Apple NVR because Apple market is not servers...

Pretty sure the Mac Pro can function as a pretty decent server.

You probably didn't get the memo because it's just a niche play but Apple has a server operating system called OS X Server. They did drop their rack mount XServe, guess that niche play did not work out but as said above, the Mac Pro with Xeon processors and hefty $4K price range certainly puts in the server catagory.

I'm not saying I would ever want to run NVR software on a Mac even...

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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...

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But who can deliver those sorts of benefits? Is this an area that is likely to be of much benefit to the integrator?

Horace, VMS providers with capabilities to integrate POS, access control, EAS systems, and provide exceptional reportings taking video as evidence (to the extent that it will be seen as critical biz intelligence for Enterprise End Users.)

integrators will be beneficial since they are the one who can promote such kind of integrated video solutions to the Enterprise End Users, and in...

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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...

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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...

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