Can PSIM move downmarket?

Significant speculation exists about the future and potential of PSIM. Widely criticized as being a niche product for the largest security organizations, one line of thought advocates expanding PSIM downmarket. In the PSIM LinkedIn Group, proponents contend:

"New technologies/ techniques like PSIM always begin their life at the top of the food chain and migrate downward becoming, eventually becoming a standard component of every integrated system."

"It is easier to scale a product down and make it available at a lower cost through implementation of industry specific templates built on the experiences gained through large scale deployments."

We are skeptical both for product and marketing reasons.

On the product side, today's PSIM solutions are designed for large organizations with complex security requirements/workflow. For their core customer base, this makes perfect sense because that is what their customers need. However, mass market users do not need the power nor complexity of PSIM as their requirements are much simpler and their users are often not dedicated nor trained for using security systems.

Disabling functionalities is the easiest way for the provider to re-pacakage a high end product for a lower end market. Unfortunately, the workflow usually remains more complex and the offering misses features important for the lower end market (that are irrelevant for the higher end one). Milestone's 'free' VMS targeted at the home/SMB market is a perfect example of the problems/challenges one faces when forcing a higher end product on a lower end market segment.

Making things more difficult in the move downmarket is that both video surveillance and access control systems already have offerings optimized for those market segments (in terms of lower price, simplicity, feature sets most important to less sophisticated use cases, etc.). Worse for PSIM providers, these companies are moving upmarket into PSIM's sweet spot.

Historically, studies show that products moving upmarket are more likely to be distruptive. The most famous and well respected of these is Clayton Christensen's Theory of Disruptive Innovation. Christsen examined numerous industries from software to mining showing that over and over again the innovations that have the strongest change at success move upmarket.

Moreover, moving downmarket will be difficult for PSIM providers on the marketing side as well. Today, PSIM providers focus on a small number of large, high dollar projects. This means the sales and marketing team is 'big game hunting.'  This rewards elite salespeople working with very few dealers who can execute a complex, long term sales process. A move downmarket would require changing PSIM provider's sales and marketing process fundamentally. By contrast, access and video providers can leverage their existing, much larger customer and dealer base to cherry pick a handful of large projects that want a PSIM solution.

In our next update, we look at PSIM moving even more upmarket, taking a look at Intergraph's positioning themselves as 'PSIM Plus.'