Avigilon Tightens Channel

Author: John Honovich, Published 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 what is happening, what it means for integrators, end users, Avigilon and their stockholders, who have suffered the company's stock dropping more than 50% from its peak this year.

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Comments (12)

Frankly, good for them. “Those who cannot remember the past are condemned to repeat it.”

IMO this might be a smart move, though a bit more challenging when the sizable competitors are pursuing the exact opposite model successfully.

Avigilon has a wnning strategy.They understand the pros and cons of openning it up and I suspect they have actullay openned it up a bit more than they would have liked to so it's time to real it in a bit. My observation is that Avigilon believes they are a high end solution - and they are. With that said - the "diret touch" model must be maintained. Expanding the channel is getting done with an eye for both geographic coverage including Regional VARs, National accounts and the vertical markets. Aviglon Partners must demonstrate they add value to the territory. This means they would need to build the pipleline and grow the revenue on a specific timeline. This in turn allows the territoty managers to spend their time in the most productive places. For some that may be working large or strategic opportunities with the partners or driving end user activity to hand off to the right Partner. Each Avigilon territory manager is responsible for his or her territoty and must also coordinate that effort with the larger regional, national and WW channel strategy handed down from corporate.

Spay pray works well for comodity type vendors (Hikvision, Dauhua, Axis etc..). The Online Resellers and most Swiss knive Partners love easy non comit type channels. At the very least it keeps them in tune to competitive pricing so they can understand where the competition will be on cost and sell against them (it's happened to all of us).

Avigilon will be well sereved controling the channel mix. In a past life I cut the channel in half, ramped up the channel support infrastructue including training and tripled the revenue over the next 2 years to north of 500mil. Avigilons strategy can scale nicely beyond 500mil without attempting to reach a thousand points of light. The key to their success will be a top flight channel program that includes snippet based training - Resellers are swamped with vendors wanting their SE's and Sales people's time out of the field. The best training programs require that Resellers quickly get engaged and fire up some nice opportunities that the vendor can assist them with (on the job training - imagine that). Combining the above with an excellent communications platform will serve them well.

Conclusion - Avigilon will continue to grow and it will be easier to manage through it with a controlled channel strategy. The only Integrators that won't like it are the ones on the outside looking in.

Thanks for the thoughtful comments.

One question on this:

"I cut the channel in half, ramped up the channel support infrastructue including training and tripled the revenue over the next 2 years to north of 500mil"

Did you do this in the surveillance industry? Because that would be incredible. The dynamics, growth rates and size of the surveillance industry make such expansion very hard.

No - this was with Marconi, the Networking & Telecommunications company who has since been purchased by Ericsson, the largest Telecommunications company in the world now at 35 Billion annual revenue in 2013. The Communications industry combined revenue (all categories) is at 5 trillion WW for 2013 and projected to be at 5.4 Trillion in 2014 - (Plunkett Research Group). The Surveillance industry is now around 20 Billion and migrating quickly to IP so many of the same Channel principals will apply over the next few years. I have seen quite a few existing Surveillance Integrators resist change, it's time for that to stop.

Some advice to our beloved Integrators - get up to speed fast on IP, forget HD analog etc.., and get your core networking skills in place. Hire some Networking professionals or aquire a Network Integrator or you might find yourself getting aquired.

Prospective (or existing) Avigilon Integrators might want to do 2 things that will help win favor with the local Territory Managers:

1) If you are just jumping on with Avigilon - be sincere about your intentions. Get up to speed on the technology quickly - take initiative and train yourself - don't wait for someone to come out and do perpetual training sessions. Aquire Networking skills if you don't have the horses yet. Know the products and how to position them inside and out as you shoiuld or would with any core product line.

2) Generate immediate opportunities and real pipleline that can close in a reasonable timeline. Accept Avigilon's help with design etc.., when it's available, but don't be "high maintenance". Don't wait for the vendor to "bring you" into deals, that's not realistic. It might become recipricol at some point. If you claim to lead with Avigilon be sure to because it's easy to tell over time.

I think change is coming to the Surveillance industry at a pace that some of us may not be prepared for. I am simply thowing my take at it and I understand it will be hard for some Integrators to adapt.

While what you did was incredible, it is not a reasonable comparison to the surveillance industry. Telcom is, as you note 100+ times bigger than surveillance, and when you did it (the dot com boom), was a historic explosion in telcom spending.

I agree with your advice to prospective Avigilon dealers, which can be summed up as do your best to anticipate and exceed Avigilon's demands!

Dennis,

To be fair, you should mention in your thoughts that you were part of Senior Management at Avigilon for a few years. There is no harm in that but your remarks have a bit of a home team feel to them. IP video sales are projected to reach nearly 16 billion dollars by 2016, roughly triple what they were in 2012. Analog video sales are expected to reach nearly 10 billion by 2016. I would not qualify that as "dead".

Clearly IP video is expanding at a faster rate (and it should given what it has to offer). It is a far superior technology. We who have been in the industry for a number of years have a better handle on economics and markets than your remarks would imply. The customer will decide when it is time for something to "stop". Not us, and not Avigilon.

Mark, where are you getting your numbers from? Specifically IP videos sales tripling between 2012 and 2016? That would mean 31.6% CAGR, which is notably higher than what we are seeing, what IMS / IHS is reporting from manufacturers, etc.

As for analog video sales, the consensus is they are already declining in North America and Europe. It's Asia and Latin America that are keeping them from falling further.

This is now getting very off topic but the bigger issue, for the whole market, is what analog HD does in the next 5 years, which is unclear and debatable today (though I am bullish on).

Mark, the original post " is Avigilon's tightening of the channel good or bad" I hope we shed some light on it. Having worked for Avigilon, I do favor them along with a number of other vendors. I am also a few years removed and I was actually a field sales director in the trenches (not Sr Mgmt) so I have first hand experience working dirctly with the Partners grinding it out in the feild every day.

My comment that IP is taking over as the dominant Surveillance technology is something we should all agree on. There will be some opportunity for analog for a period of time but it's slipping away - that doesn't diminish the great things our industry veterans have achived. The most important component to this is that we are now part of the larger Telecommunications industry and it is very competitive - Cisco plays here - they bought their way into the Surveillance business and there is more of it on the way. I have seen explosive growth from companies in a large markets so I know it can be done. It is possible that a strong Channel program will help Avigilon. We will see more formal Channel programs from the top tier Surveillance players in the coming years that will include additional Partnering guidlines - Avigilon is getting out in front of this and it's a good move. Just my opinion.

"We will see more formal Channel programs from the top tier Surveillance players in the coming years that will include additional Partnering guidlines"

I think there's value for some other manufacturers to pursue a similar channel strategy.

While I doubt Axis will move to that, a number of the other bigger players might benefit from locking down sales from the Internet and 'unauthorized' dealers.

So far, there has not been a significant shift in this direction from other companies, but I see the benefits (e.g., I think that's the best move for Vicon/IQinVision).

Has there ever ever been a historical example of a manufacturer using tightly controlled channels to grow a business at first, then switch over closer to a "free for all" or open state?

The largest issue that I see for Avigilon is they are focusing on what is good for Avigilon. I have found that the Manufactures that keep their focus on what is right for the customer and what is right for the integration company enjoy long term success.

What makes a company great is its customer focus and their innovative nature. There are tons of products that I won’t use as they are proprietary and slow to innovate. In my role we are challenged every day to bring value to our company, manufactures need to realize that and focus on value add verse building a sandcastle.

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