Avigilon Acquired By Motorola Solutions

Hmm.. nice... let's see now...

It is too early for me to decide if it is negative or not.  Neutral for now.

i am having definite flashbacks to the Panasonic push to cross-sell toughbooks and monitors.

It is not quite as disconcerting as some of the potential purchasers mentioned (Schneider, Hik, Dahua) in the past.  I still would be a bit more excited if it was a company with an industry relevant past that may boost one or the others product line - Hanwha for example.  My biggest concern is what this means for any future product development and how soon we will be competing against Motorola radio dealers. If product development stalls for a year Avigilon will die on the vine... the H4A line is aging rapidly, the multi-heads are the last H3 products, and the Pro series has stagnated for a while. 

As long as they leave us alone, keep the same distribution model, and continue to develop the product in a logical manner I could see it being neutral.  Let’s call this the Canon model.

Well, now...

Motorola is finally back in the video business. We sold a ton of it. They use to make the best cameras back in the day (late 60's early 70s). They had their own integrated FSK control, with audio channel as well. What goes around, comes around. It will be pure nostalgia to see that logo on a camera once more.

The big question is commitment. They use to own the 2-way biz, had all first responders. Would seem a natural to get heavy into city surveillance. Time will tell.

As an integrator, it concerns me greatly that Motorola is ready to go direct to the end user. If there is no 'protection', the big clients can circumvent the integrator. 

Could this be a winner?

Since the name merger will start as soon as the Undisclosed person who is great at Photoshop jumps in:

Motolon?

Avigirola?

Areola?

This is all about computer vision driven smart cities.  You don't make a billion dollar acquisition taking a public company private to worry about double digit percentage fluctuations in monthly P&L's.  This is long term, large scale.  Entire mega cities will be driven by public sector cameras, fixed mounted all over public infrastructure, and fully connected with (for Motorola's big interest) mobile cameras on every public sector vehicle and employee.  All unified with Motorola communications and network infrastructure and it's a long range match made in heaven.

In short term I believe that makes it good for current Avigilon dealers, main body employees, and overall maintenance to their existing channel, which they'll likely only want to see grow on top of their megaproject combinations.  And now they can custom tune all the products to their exact integrated computer vision needs.

Update: Here is the 101-page acquisition agreement between Motorola and Avigilon. Analysis to follow later.

Out of interest any western companies still in this business

japan

china 

korea

genetec Canada 🇨🇦 

qvis uk 🇬🇧 

the worlds national security being handed over to Asia 

Interesting, but they are not known for their innovative spirit.

Didnt read the whole string, someone might have already mentioned,  but as someone who worked in Schneider Electric's Buildings Business on the Security Side, during the entire Pelco buyout and re-organization, Im here to tell ya, Avigilon and its dealers and customers will suffer from this.  A company that does only one thing, being acquired by a conglomerate that does many things, usually ends up in an organizational s***show.

Who here thinks Pelco got BETTER after the SE acquisition?  The same will hold true for Avigilon, mark my words.  And if Motorola finds it to be not as profitable as their shareholders (or CEO) likes, it will get re-shopped and re-sold, etc etc.

Avigilon will now be nothing more than a pawn piece to be moved around at the will of the player/s.  Gook luck on the R&D and innovating side, Avigilon. Hard to get funding for that when there are 2 dozen other divisions that have nothing to do with CCTV who are fighting you for the same limited funds.

The Avigilon board on StockHouse has some entertaining comments from people thinking this will be the start of a bidding war for Avigilon:

I think Avigilon share holders, and several integrators, are in denial right now, hoping there is a better end to the AVO story than this.

Yes, it was my distinct recollection that Schneider Electric also had a PR division which invested 18-20 minutes producing an announcement-day statement of similar content and with equally dubious results.  Pelco also had many patents.  Even though Avigilon was publicly traded, it was tightly-controlled and operated in a singularly-focused way much like a privately held one.    Like I said before, publicly-traded companies with many divisions function in a fundamentally different way than people realize.  With this merger, Avigilon dealers and, especially employees, are going to absolutely find that it most certainly will NOT BE business as usual.

I'm going take the contrarian route and say that this will be a good deal for Avigilon, it's resellers and Motorola (at least for the next 3-4 years.)

I believe Motorola's direct end user sales concerns are seriously overblown.  Most of these 'direct' sales are long term, negotiated, infrastructure (proprietary wireless) sales to municipalities/public safety entities with extensive service contracts.  There's no shortage of Motorola 'radio/device' dealers out there and they are almost universally uninterested, unwilling or unable to pull off enterprise projects for IP video surveillance systems. 

For Motorola to execute an end around Avigilon dealers to sell/install/support city wide surveillance systems they would require a massive, bottom line punishing investment in manpower and skill sets.  As a public company, I don't think Motorola would be willing to make such an investment in fixed costs.  I see it much more likely that the Motorola infrastructure sales teams work with preferred Avigilon dealers to get equipment specified and roll up projects as part of negotiated, long-term agreements with which they are so successful. 

On the commercial/enterprise side, I see virtually no conflict with Motorola's existing products/services/channels and Avigilon's.

On the downside, we can expect the usual consolidation in back office, manufacturing operations and possibly R&D.  This will likely result in slowing the pace of innovation in Avigilon video hardware products and some customer service hiccups but nothing like Pelco experienced.  While I agree with UI14 that the vast majority of acquisitions by mega conglomerates have been soul destroying 'sh**shows' (been there for three of them), there have been exceptions. 

For all the Schneider, Honeywell, GE, Tyco, etc acquisitions that have had the life blood squeezed out of them, there's a Canon that gives us hope.  In addition, Avigilon immediately becomes the networked video center of excellence for Motorola Solutions.  Many of the previously mentioned acquirers bought innovative, fast growing video companies to make up for their lack of internal development and/or loss of market share.  However, since they were mere rounding errors in the quarterly income statement, they soon became bureaucratic road kill, squeezed for profits and not viewed as a growth engine for the mother ship.  Even our beloved old Pelco made up less than 3% of Schneider's global sales at it's height.  Avigilon is closer to 8% of Motorola's global sales and has a faster rate of growth then the parent company which gives me hope for how Motorola handles Avigilon.  

Conversely, it's not hard to envision additional investments on the software development side as tighter integration with Motorola's infrastructure solutions as well as body cam and in-car video systems becomes a competitive differentiator.  And if Motorola's ultimate goal in acquiring Avigilon is to be the 'Safe City' company they will have to make regular investments in software development as well as acquiring key technologies in sensors, analytics and machine learning.  If so, these should benefit Avigilon and Avigilon resellers.

My biases include a long time admiration from afar of Avigilon, several of its key personnel that I've worked with at different companies and their successful, methodical global expansion.  Specifically, I admire how they executed with a high-end/high performance/high cost model when the market aggressively commoditized.  I admire how they protected their resellers/brand while the integrity of industry distribution channels became questionable (to be kind).  Finally, I'm still amazed that they succeeded with end-to-end, relatively closed systems when the industry screamed for 'open'.  True, the founder's deep pockets played a big part in helping them establish a beachhead where so many others withered and died but it also took some serious mettle and discipline to believe and keep at it until they became profitable.  I have not worked for nor competed directly with Avigilon.

Interesting poll differences, with 400+ total responses, just 11% of integrators say that the deal with help Avigilon's competitiveness but 26% of manufacturers do. So while overall both are negative on the deal, manufacturers are more positive than integrators. 

[IPVM Note: Avigilon Employee]

Can we think a little more critically here and be more consistent please?

First of all, no one knows the future of any company 5 years from now.  Who would have seen the almost complete departure of Dedicated Micros?  Or the train-wreck that was to become the current ONSSI post law-suit with Milestone?  Or in another industry - the complete demise of Motorola's cell phone sales in 2007 after being on top prior to that.  There are so many factors that will effect any company 5 years from now that are completely unknown to any of us.

Secondly, please be consistent in comparing apples to apples.  All of the "failed" acquisitions of security technology companies being used as evidence of the certain demise of Avigilon have been by physical security companies (i.e. Tyco, Scheider, etc).  The successful acquisition was done by a non-physical security company (Canon).  Motorola Solutions is not a Physical Security company.  If we are going to compare past acquisition history than this comparison needs to made to Canon and not to any of the others.  

Third - R&D.  Motorola has historically spent over 12% of revenue on R&D each year.  I'm sure that we can all agree that $900M is hardly a small pot of money from which to fund future R&D projects at Avigilon.  Let's remember that Motorola has the largest market share of public safety critical communication in North America and their goal is for Avigilon to also reach the top market share position and they know that will require R&D as well as not only continuing but growing even more in all the areas that have brought Avigilon to where they are today.  

Finally, go-to-market strategy.  Motorola has NOT said they are going to change Avigilon's go-to-market strategy.  They have never said that they will "sell direct" to anyone.  What they have said is that they will use their direct sales channel to bring Avigilon to their current customers.  That is, they have a team of 600 sales people customer facing on a daily basis.  Those 600 people will now be advocating for Avigilon with those customers.  This in no way implies a direct sale to those customers much in the same way that any manufacturer who pitches their product directly to the buyer is not conducting the transaction when that buyer decides to go with their product.  In essence, what just happened was Avigilon got 600 new salespeople who have over 1,000 public safety jurisdictions that they are going to try to introduce Avigilon to.  The result will be Avigilon's existing dealer base receiving gift wrapped sales - not being circumvented.  

Let's be fair in our assessment of this announcement on what is only the 3rd day since any of us became aware of it.  We will all see what the future holds in due time.  But if anything, my opinion is that the competition should be afraid of the money that will be infused into Avigilon's already impressive R&D as well as their increased exposure and that integrators who are currently Avigilon dealers should be excited about the potential for future growth and anyone who is not currently an Avigilon dealer would seriously consider trying to pick them up as a new product in their line.