Canon Buy Axis, Owns Axis and Milestone

By: John Honovich, Published on Feb 10, 2015

This is the biggest deal in video surveillance ever.

Just 8 months after buying Milestone, Canon is set to buy Axis.

Canon has offered $2.8 billion USD for Axis, a ~50% premium over Axis stock price. Axis' 3 main shareholders, holding 39.5% of the shares, and Axis' board are unanimously supporting the deal so it appears that this will close shortly.

For background information, here is Axis' official statementCanon official release and a Swedish business news article.

Axis Struggling

Axis has hit a wall over the past few years, with decelerating growth and no clear plan to deal with (1) the rise of low-cost Chinese vendors and (2) the strengthening of 'end-to-end' offerings like Avigilon. Axis, historically a camera manufacturer, clumsily attempted to strengthen its own VMS while continuing to release a variety of high-end but niche cameras.

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Axis **********

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Rich *********

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Canon, ********* *** ****

*******, *** ******* ********* impact ** ***** ****** both *********, *** ** the ******* *** *********, and ****, *** ** the ******* ** ****** developers.

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The ***** **** / ********* ********

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*** *** ** *** IP ****** ****** *** is * *** ****** for ****. *** **** growth ** ************* **** SD ****** ** ** is *** ** *** tail *** *** *** new ***** ******** **, **** *** ***** low *****, ** *** for ****** *** ***** brands.

****** ****, ** ************ has **** **** ** identify * ***** *** growth ****, **** *** Avigilon, *** ** ****** a ******* *** ** analytics, ************ ********** ***** ****** $*** million ** ******* (*.*.,*****).

Can ***** *******?

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Who **** / *** *****?

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****** ****, ** **** depend ** **** ***** does, *** ** ***** suspect **** **** *** Milestone's **** ********** *** mostly ****** ****, **** if ***** *** ******** more ******* **** *** two.

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What ** *** *****?

Comments (97)

The impact depends on the future market strategy and policy that Canon will undertake for the vast portfolio they will acquire. The impact on Milestone from their acquisition is yet to be seen, and while there were many predictions for market disturbance and general policy change in Milestone nothing has happened yet (at least judging from distributor's point of view in Europe)

For Axis shareholders the outcome should be extremely positive. The company's growth and innovation potential is declining, and although they are not admitting it, the fierce price competition from China manufacturers will be smashing them gradually in the longer term. Once a technological leader and innovator, now Axis is one of the many camera suppliers (the IP camera now being more and more a regular commodity product). With this offer I think the outcome is very lucky for the shareholders, they will hardly get any better option in the near future...

Wow didnt see this on coming. Canon are agressively expanding into the market in style!

I suspect there is a element of patents etc being bought here. Will be interesting to see how its going to play.

Sony to buy Genetec?

I would suggest Bosch or Schnieder are more likely.

Or Schneider.

Pelco is releasing a new VMS plus I am not sure if they have the will to put down more money in surveillance given the challenges they have had in the Pelco acquisition.

Pelco has a history of not purchasing good existing technology but rather investing into a black hole creating their own, not so great IP technology, i.e. Endura

Sony would make sense, they need a real VMS and their biggest Japanse competitors have both done so in the last year.

That said, I am sure there will be competition for Genetec so it depends who is bidding and how much they want it.

Bosch does lot of reselling of Genetec, so it offers them plenty of options but so is Sony!

Sony just sold their online Entertainment division last week... (SOE). hmmmm.

I have heard from several Sony employees that Sony seems to be hemorraghing from several bad investments - (did you know Sony was making cell phones? I heard they are losing a ton of money in this market) and is selling different parts of their business to garner some cash.

I dont know how much cash they have to make any major acquisitions.

I guess this answers the question from the other day about when Axis will have a full blown VMS. Looks like the answer is right now.

The less independents in the security industry and those that drive open standards, innovation and no agenda of end-to-end solutions is simply bad for the industry. There is a lot of history within the access control manufacturers that prove this time and time again... The biggest losers are End-Users!

I think the VMS Software and Camera Manufacture should be independents.

It sounds to me a step back, like it were with Verint, Vicon and others how adote the same strategy of market.

The world is opened, and Canon should keep the companies totaly independents, altough we as Integrator could not trust works with the Canon brands, if its work with a cameras Axis and other VMS or VMS Milestone and other cameras.

Marcel, unfortunately, big companies can make more money cross-selling / bundling the two, so it's hard to understand why they would keep them independent.

They won't. They did not buy them to keep them separate.

Ok, however we as integrator could work in a project with Axis and other VMS. How can we trust them, they will not take advantage of our lead information and try to put other integrator with their whole solution.

It´s not confortable to work in this way.

Thats is my point of view, as a System Intagrator.

Marcel, I don't see this as being a big risk, i.e., sharing your leads with other integrators. The bigger integrator risk is that Axis favors Milestone and makes it harder to work with other VMSes.

Manufacturers that sell solutions most hurt non-solution manufacturers. Genetec is the one with the biggest risk here, as they legitimately need to worry that leads they share with Axis will go to Milestone.

Very interesting move. The only thing missing from Canon's portfolio now is a good marketing firm. They have never had good marketing, in part because of product line. They have fixed that. They now need a very clear vision for the future, and someone to trumpet what that vision is.

It imposes a number of interesting questions. Will Axis products be manufactured in the Pacific Rim? Will that lower the cost and/or quality? Will they start to limit the availability of the cameras; one problem Axis always had was that end-users could buy it anywhere. Integrators could not earn respectable mark-ups.

They (Canon) have become, again with proper marketing and strategy, a clear break-away player. Milestone has recently introduced an recording appliance along with their "famous" software. True end-to-end.

I have remarked on this board and in other places that the market is just too fragmented. That appears to be quickly fixing itself. Integrators can make longer term decisions on whom to partner with.

If Genetec doesn't do something, and soon, they run the risk of becoming irrelevant.

" is too fragmented. It appears to be fixing itself." In reply to Mark Jones: I respectfully but wholeheartedly disagree. What you refer to as fragmented I refer to important for the industry. History has demonstrated within this industry that the innovative independent companies have provided solutions and business models that resonate with End-Users; hence why the good ones grow successfully. I know at some point they eventually get bought by large conglomerates which there again history has shown us these transactions often lead to less R&D, lack of vision and both Integrators and End-Users eventually abandoning the products. Although it may be more challenging for Genetec to work with third party manufacturers due to all the consolidation they will hardly become irrelevant...

I respect your opinion, and you are certainly entitled to it. I understand how you feel and your mindset as a manufacturer. I just disagree from the perspective of the integrator/installer. To be sure, competition is healthy for the consumer, and it does drive innovation. What has been missing from this equation for some time are standards. Mimimum standards. IP video, despite the best efforts of ONVIF have very few if any standards and is a long way from plug and play. The end user and to some degree the integrators are caught in the switches. Which manufactures do you partner with? Does this VMS, which has a lot of great features work with that camera, which clearly does a great job at a nice price point. There are too many factors that are beyond the integrators/end users control. I choose to partner with a VMS provider this year, but next year here comes a very nice camera that can help my customers and I can't take full advantage of it becuase it is not in the VMS library of cameras. It will make you take pause for sure. This will now start to clear up to some degree.

I can't help but remember about 12 or so years ago I walked into an ASIS show somewhere and just took a look around. The Tyco booth was larger, GE was there in force, Honeywell, UTC. They were busy gobbling up assets (companies) left and right. It was clear to me then and there I, as an integrator had to make some decisions on whom to partner with. History is repeating itself again and again.

I agree about Canon's lack of marketing, though I am not sure how they can fix that as it's not like they simply can buy advertising, they need to really understand how they are going to take these two companies to market.

If we can no longer buy AXIS product from “anyone” we will quickly move away from them as that was the key benefit for us as an end user. Being able to get what I want whenever I want it without having to pay an outrageous mark up or for a support agreement I will never use is a huge plus. If that does end up going away I can see us easily moving to other camera lines.

AXIS runs the chance of quickly becoming like Pelco (whom we also moved away from).

That is how you feel. That is not indicative of how all end users feel. But again, you are entitled to your opinions. They belong to you, not me. I do have interest to protect. Mine and to a larger degree, my employees.

Our interest are better served when we do a great job for our customer and they return. If you are buying from "anyone" how does that help me? How does that serve us?

Like it or not, integrators do provide a necessary service. I am glad you apparently can, but few customers have the resources to install and maintain their own systems. It is to everyone's benefit if there is a healthy, stable marketplace. An end user that could care less about his integrator is a customer I do not need, respectfully.

I agree 100% Mark. I was stating what this AXIS purchase means to me personally as an end user not as a statement about integrators in general.

We have strong relationships with the integrators we use for BA/FA and analog CCTV, the only thing we handle on our own is IP CCTV.

Who will buy Aimetis?

Who would trust Aimetis anymore when they abandon their end users and integrators to patent trolls....

Patent Troll - Hawk Initiates A New Round Of Patent Infringement Lawsuits?

Aimetis who?

I very nearly retired (early) two years ago. Man am I glad I stayed. John this must have you excited. Your job just got very interesting indeed!!

The opposite. I am more sad about these moves. I think they are overall bad for the industry and bad for end users.

Sure, it will generate page views but that's far less important to me than a strong industry.

Cisco to buy Avigilon?

You never know with Cisco, but I suspect not, if only because Cisco is strongest in its own channel, something that Avigilon has excelled at in its own way.

If Cisco made a surveillance acquisition, I suspect it would be a less expensive play (considering Avigilon is already has a billion dollar plus valuation). Genetec might be an interesting fit. Axis would have been great for Cisco. Maybe they'll make a counterbid?

Today is a good day. Free round of drinks on me if Canon picks up S2 next.

Brian, so you are upbeat on Canon owning Axis? I thought you used Axis cameras? :)

We do use Axis, most often in fact. We also are heavy into Milestone. When we design systems to solve customer problems, these two products never let us down. Frankly I was concerned Axis was going to buy Genetec, which would have been bad for us. I think consolidation is unavoidable, and if it is going to happen I want it to be with best of breed products that we typically sell. I was half joking but if Canon was to pick up S2 I think they would have the most solid solution on the market. The only real threat that I see then would be Avigilon's analytics’ strength. Even a Sony/Genetec paring would be third in my opinion behind Canon and Avigilon. Canon is a huge company, if they run this right they could be the major player for the foreseeable future.

Sell a lot of S2 do you?

Good point. For Axis / Milestone users, this may very well be a good day!

Question raised: Who, if anyone, could counterbid and pay more for Axis than Canon? In other words, who will pay more than $3 billion for Axis?

Cisco makes the most sense, if they can / choose to pull the trigger.

For security / surveillance companies, that is an immense / almost impossible sum.

For large consumer electronic companies, like Sony and Panasonic, they already have well-established surveillance camera offerings, so it would be hard for them to justify paying such a sum (by contrast to Canon, who is not strong in surveillance cameras).

Cisco is the one company who it makes sense strategically, is in the market, and could afford it. They have struggled in video surveillance for years and their camera offering is really weak. If they were serious in rectifying that, Cisco makes sense.

Wholly conservative beavers, Batman! The Mayan calender was 2 years late. The world started shaking last year and continuing this year.

Sony just might be the next one to buy a VMS, but who's left? I agree if they were, Und A and John's speculation on Genetec may be next logical choice. Sony's NSR's and Real Shot Manager software was never well executed.

Whoever Cisco buys, you can probably count that company out as they'll most likely screw it up.

Congrats to Axis shareholders, I would take that offer too!

In my opinion Canon paid a foolishly high price unless they have a plan to greatly grow the business. By my calculations they paid 3.4x revenue and 26x profits on a company whose growth is slowing and competitive pressures are rapidly increasing.

Perhaps Canon can help cost out Axis manufacturing. Given the rapid downward trend in IP camera prices, I see that as a defensive move to sustain the business not one that can grow the business. Maybe Canon will share their high end imaging technology to increase image quality. Some will pay that premium, but I believe the market is reaching a performance saturation point where (at least for a while) the performance is good enough so price becomes the decision maker.

When you're stitting on $20B USD you can afford to overpay by a billion and not lose your job, huh?

"By my calculations they paid 3.4x revenue and 26x profits on a company whose growth is slowing and competitive pressures are rapidly increasing."

It's actually worse than that.

According to Canon's offer statement, Canon will pay 23.6 billion Swedish krona compared to 2014 sales of 5,450 million Swedish krona. That's ~4.3x revenue. Given 539 million Swedish krona profits in 2014, that's more than 45x profits.

What you don't believe Axis continued claims that they are going to do 16 to 22% growth rate going forward? That's ok, neither do I :)

Axis growth in local currency terms was only 7% last year per their annual report vs. 16% revenue growth. That means their actual sales to customers are growing slowly but they got lucky with exchange rates.

My belief is we're hitting a performance saturation point on basic image performance. To end users there's a declining return on adding pixels, so price becomes a much bigger factor in the purchase decision. Though Axis has released some lower cost models, financially they must offset that with huge volume increases just to break even on revenue. It's like downshifting your bicycle when you're already cruising; you have to pedal REALLY fast just to keep your speed up.

I don't doubt Axis will continue to release quality product, and at lower prices. But I think they'll find revenue growth extremely challenging because I predict they'll need at least 20% volume growth in 2015 to stay revenue neutral. That takes a lot of additional sales staff who have to win over a declining pool of dealers who are entrenched with other brands.

Maybe Canon has technology to make a quantum leap in image quality over all others. Maybe they can shift their professional video production expertise down to surveillance cameras as they have with digital cameras and camcorders. But I don't see a gigantic Japanese company shifting it fast enough or at the right price point to catch the opportunity.

"I think they'll find revenue growth extremely challenging because I predict they'll need at least 20% volume growth in 2015 to stay revenue neutral. That takes a lot of additional sales staff who have to win over a declining pool of dealers who are entrenched with other brands."

Good points. I am not sure what exactly the level needed, but I agree with the basic underlying pattern.

Also, Axis is busy dealing with Hikvision snapping up dealers left and right.

Wow - what a time to be in this industry. Do you think that we'll soon see a change in ONVIF?

ONVIF is pretty well established at this point and beyond simply being an Axis effort. It could impact how Axis contributes in the future and how much ONVIF grows, but that remains to be seen.

That's not to say ONVIF is perfect (see our ONVIF Mega Test results) but I don't think these deals will make it much worse.

I wonder exactly what is so lucrative about video surveillance that Canon sees?

10 years ago, the profit opportunities were very different. Now the entire market is under commodity pressure. Now Canon has essentially paid ~$3B USD for two companies to compete in a market with margins narrowing every day. It just seems like better returns could be found elsewhere?

Overall, this is a sad day. The wild west is over. The carpetbaggers are moving in!

I wonder exactly what is so lucrative about video surveillance that Canon sees?

This was my thought as well. Not that the security industry is tiny, there's several billion dollars spent every year. But Canon is trying to buy their way up from almost last place, and the Japanese do not have an acquisition culture of buying things and letting them be. It will be interesting to see what brand names and product names emerge from all this, how the channels are handled, customer response and so forth.

Personally, I think this play by Canon has a high chance of a becoming a "WTF were they thinking" case study in a B-School book 10 years from now.

Good move. Nothing wrong with a big company buying another big company that is going to be profitable. Same with the Milestone buy. It happens all the time in other industries.....buying up profitable competition which adds to your product portfolio.

As a small Gold Axis partner, and a small software developer, I'm glad to see it. Axis was getting stale in conversation and we have been pretty disappointed with responses from the staff since they changed (or scaled down to prepare for sale?) the structure of sales and support.

Ryan, I am curious. If Axis was getting stale recently, how does this deal help? Do you think Canon is going to invest more resources or?

Definitely, in the short term, Axis employees are going to be even more tied up / stale / uncommunicative, given the uncertainty / transition. In the long term, it depends what Canon does, yes/no?

It may not help, but we can hope it does. From working with engineering (bug-fixing) to regionals to local contacts it has felt like they scaled down over the last 6 months. Possible all for a prettier sale picture.

This is the time, during uncertainty, when those guys work least those with something to prove/gain. Agree all depends on what Canon does....but Canon has always been a stellar company with other products. They just couldn't market video right IMO.

It will be interesting to see how hard they work (or don't). One plus for Axis is that there are not a lot of good manufacturer job opportunities out there, so it won't be easy to jump ship even if they want.

I wonder if the sheer volume between Axis cameras and Canon other products (surely they own tons of manufacturing lines) will ease Axis into making a 'cheaper' camera. However I suspect Axis has always been able to do it, they just want to stay on the 'professional' side of the aisle. Do they add in a lower cost Canon line to the products to get something in the lower range for residential and small businesses......

Does Canon take away the week long vacation all the employees take to Sweden at the first of year when nobody is reachable!!! :-)

Canon's network cameras have historically been even more expensive than Axis, so...

My gut feel is that 'Axstone' is positioned at the mid to high end and they let the Chinese to take the SMB / low end, hoping to stop them at the mid-point of the market.

It will be interesting to see what happens with the various Axis and Milestone regional sales reps. Do they integrate the two and have a mammoth sales force pushing their respective products? Or, do they cross train and trim back? Probably the better option is to cross train and make use of the larger sales force to establish dominance.

That's a very good question Austin.

Obviously, it will take some time for that question to even be answered internally but there is potential for significant cost savings if they went to an integrated sales and marketing team.

That itself could boost profits notably. Axis spend ~18% of revenue on sales and marketing, so if they could cut that by 1/3rd with an integrated 'Axstone' organization, it would increase net profits by 6 points, which is a big deal.


Well, It sounds awesome.

Sounds Cutting Edge... and a bit Pre-historic at the same time.

The news is spectacular because the market leader has been aquired but Canon brings nothing to the party and, more than likely, will slow innovation when the current environment is really pressing Axis to be nimble. I am sure Axis' competitors are very happy today. Now if Hikvision bought Axis and combined there low cost manufacturing with the Axis brand that would be something that would really shake things up.

Axis competitors are very happy indeed.

Maybe Hikvision will counter offer :)

I doubt it though, because $3 billion would be a lot even for Hikvision, though their market capitalization right now is very high right now (~$18 billion USD market cap and more than 6x revenue).

Certainly in the short term, Axis the company, its employees and partners lose here, as they have to deal with the end of being an independent industry leader.

Axis seems like a progressive employer and most likely has loaded up its top management/performers employees with significant equity.

Would those employees even consider fighting the tender offer, to squash the deal and and look to IPO far in future, to have a longshot (1 in 5?) to make more?

Nah. Take the 5 million. (Or $500,000 or $50,000 or $5,000). :)

I mean the rank and file employees in this context.

Sure, the top 5% of Axis' 2000 or so employees might do well here but I doubt the people on the front lines (i.e., RSMs) are going to make anywhere close to Avigilon CFO money here....

I'm just amazed that the majority of poll respondents think this is good for the industry.

I get why this could be good for Axis (given the price and their struggles).

I can't fathom how this is good for the industry, though maybe people are answering from the perspective that it is good for them, given that many compete against Axis. Anyone who wants to elaborate, I'd like to hear.

I did. Apparently you don't agree with my assessment. That's okay though. Most people disagree with a lot I have to say! Here is the definition of a fractured market: "A marketplace where there is no one company that can exert enough influence to move the industry in a particular direction". This market needed some clarity.

Even with the recent mergers, we still have several players, more than enough to continue to spur innovation and competition. There will be more for sure.

From a pure competiton standpoint, it is not good. Competition is better for the consumer. It would appear (and appearances are decieving) that some here think that innovation will just cease to exist. I don't believe that for one second. All of these companies will continue to push the innovation envelope and one-up each other. That will not stop. Startups will continue. New technology will continue to emerge where you least expect it.

In the 80's and 90's Microsoft reigned supreme with a 99% market share, and if there was a threat by a smaller company or a startup, Gates & Co just bought them. They were in Federal Court every year for one anti-trust violation or another. That did not stop startups or smaller firms and innovation continued (even within Microsoft itself). Now Microsoft is still gigantic, but their share is down to around 50% (mostly due to mobile computing) and they are loosing traction. The same will happen in our industry. That is the excitement to me. What will we be doing 5 years from now? What is there that we don't see? What will be our version of mobile computing?

For the installer/integrator this partnering is good. There is a far better chance of offering an end-to-end solution that meets customers needs, that actually is integrated and works well. I don't have to have 20 or 40 vendors. I can partner with a few and serve them well. I can also place one call when something goes wrong.

In the past three months I have been inundated by reps wanting me to take on their lines. There has been no mention of sales minimums, but I can't sell everybody and do them justice. We can't learn everyone's technology and be good at it. We have to narrow our focus and take on only the lines that will serve our customers in the best way possible (our customers are how we survive). All of this merging is making those choices easier and clearer.

From an end-user perspective, they were/are faced with making decisions on what equipment/software to partner with for the next 10 years. How do they know who will be in business 10 years from now? How do they know they will be able to integrate the latest technology with their existing system 5 years from now? This market "shake-down" will actually help that in my opinion. There are no guarantees in life, but I have more relative confidence today that Axstone, BRSigilon, ExaqCo and (GeneVison?)will all be in business in the relative distant future than I did yesterday.

One person here remarked that the "wild-west" is over. Sometimes stability is a good thing. This much is for sure; it is the only thing I know for sure. Times will change. Embrace it, don't be afraid of it.

These are some great comments.

What happens after you get to undisclosed Z? Does it go to double digits?

What will Canon do with Axis' access control panel, yes they have integration to milestone but only for a very limited number of doors after which you need 3rd party access control software.

Is anyone aware of Canon owning an access control company? If sales have been as slow to take off as we have been hearing, I wonder if the Axis panel will wither on the vine now.

It's an interesting question. This is the way things look now:

1) Canon does not own an access control company now, unless you count Milestone.

2) The Axis A1001 works with more than only Milestone. There are currently 5 -6 other partners than Milestone, and that list is expected to add more this year.

3) The A1001 has seen sales in Y1 since launch. While Axis Admits Access Control Expectations Low, we believe (but have not verified) that the 5+ m kroner jump in 'other' comes from access control product, ie A1001:

For context: Axis 'other' revenue previously has been trending down (print servers, etc.) and access is the only non-video offering from Axis in the past year.


One point of clarification, Milestone is not an access control solution, even for the Axis panel, meaning there is no configuration capability within Milestone, just monitoring. We have found integrators and end customers to be quite confused by this. To go beyond Axis' limited software capabilities you have to have management software from a 3rd party, which as you point out is available and the list is growing.

Of course there are a number of ACM integrations with Milestone as well. If Canon chooses to be open, there's lots of opportunity in both directions.

I'd find it hard to believe that the entire jump in other revenue is the A1001, it would be really interesting to get more breakdown on that number.

OK, my bad. I missed that the numbers you posted are Swedish Krona. At the current exchange rate, and at a rough price of $425/panel, the growth shown equates to 1,600 panels sold.

K, that's my fault. I passed that part of the comment off to Brian.

Yes, if it's 5.7 m krona, that is $690,000 USD for the quarter. Over the year, that means a run rate of $2.7 million. It's a pittance for Axis but it's bigger than publicly traded access manufacturer Viscount ;)

In all seriousness, Axis is going to continue to ramp that number up (Europe just started recently), so they could have a $10 - $20 million panel by next year. Not saying that's huge but for the smaller size of access companies, also not tiny.

I wasnt around for it, but does any of this feel like Schneider buying Integral and then Pelco?

An interesting comparison. Back then, it was the consolidation of the analog independents, now it's the IP ones.

Could it be that Canon wants the patents in order to use the technologies of the two companies to combine with their already considerable patent portfolio?

This would allow Canon to create numerous new products for the consumer market that is ready to explode with DIY home / small business self-monitored whole-home monitoring solutions.

For a nearly 3 billion dollar deal, the value of the patents are relatively immaterial (e.g. compare to Avigilon's 'mega' $93.5 mil on video analytics)

I love how the general perception is the days of the "wild west" are over... As though the companies being discussed were the ones actually driving all of what little innovation there is in this industry. Do people really think Axis and Milestone were the big drivers of innovation or am I mistaking sales drivers?

I'd be very curious to see if people mean these things in terms of R&D or in terms of just sales channel changes.

I believe I spoke directly to technical innovation. Sales channels come and go.

N, Axis and Milestone, over the past 5 years were two of the biggest drivers of innovation in the industry. They may not have invented groundbreaking technologies but they were aggressive in pushing the industry forward (Milestone is a far better VMS than it was in 2010, they've also cut prices with new versions, new licensing policies, etc.). And while Axis innovation largely became niche, even last year they had some relatively novel releases - like the suicide resistant camera, the multi-imager PTZ accessory, the accelerometer inside a camera.

Please do not respond that tiny companies are doing similar things. That may be true but of the behemoths, Axis and Milestone were exceptional agile and innovative (compared to the Honeywells, Pelcos, Interlogixs of the world).

I find it odd that Canon buying Axis (and Milestone before it) would immediately mean that the company would be less innovative. I can see the fear for drowning in corporate bureaucracy, but having a company with bigger pockets also means the ability to spend more on research and having bigger muscles to defend and protect their investment in innovation. The real threat to innovation in this business is all the patent harassment and extortion going on. Who would dare to really invest in analytics now if they did not have the money and patents to defend themselves? Is that good for the industry and innovation? All this consolidation is just strengthening the companies so that they can continue to do what they are good at.

That's funny. Because Canon had bigger pockets than Axis for years, and had IP cameras for years but never could compete with Axis. Because Tyco had bigger pockets than Exacq for years, and had NVRs for years but could never compete with Axis. The list goes on.

Yes, I agree with you that they have bigger pockets. What I am skeptical about is the desire to open up those pockets. More often what I see with conglomerates is that they act to extract as much cash from acquired technologies, which pulls attention / effort and money away from innovation and towards packaged sales.

Would you also say that Canon have NOT innovated and run a successful bussiness in the consumer market for years? While they have kept an unsuccessful IP camera bussiness running?

I would say that is more about focus and attention. Now the surveillance market and IP cameras have got their attention, so they either fix it or throw it out. And it looks like they are trying to fix it.

The funny (and sad) thing with conglomerates is that if a small enough part of it's bussiness is having issues but not causing too much trouble, they can still keep it running for years and years without even looking at it.

Yes, I do not think Canon has run a successful business in the consumer market for years.

Their revenue, profits and stock price have been flat or worse for years (literally). All the while competitors in consumer electronics, who have innovated, have surged.

Good luck to Canon and I think they will need a lot of luck to get a payback from this deal.

Have Milestone or Axis ever actually produced anything really innovative? Maybe that's why they are being traded and I don't count marketing bs as innovation so don't quote any of that.

Seems to me (as an IP Video engineering veteran of 14 years) that here we have a company with no idea about IP Video simply buying up available companies with good market share to try and cobble together an End-to-End IP Video solution to attempt to get into the market that they missed 10 years ago.

Lucky me as I am employed by an independant company with a genuine End-to-End IP Video solution that we 100% designed, we own all the Intellectual Property rights to our products and because we understand our market and our benefits we are growing and we actually make a profit.


<not bothered> Steve

If you don't mind my asking, whom do you work for?

"Have Milestone or Axis ever actually produced anything really innovative?"

Milestone is one of the few VMSes I've seen to support SIP enabled intercom devices.

Barix and Milestone

Axis was one of the first cameras to allow development of custom apps loaded onto the camera for whatever you want it to do.

I think those are two advancements for industry that overall has lacked a lot of forsight.

I would counter by stating that AXIS is (at least historically) one of, if not the most, innovative IP camera companies ever.

Have Milestone or Axis ever actually produced anything really innovative?

Axis first IP camera

Milestone first IP camera recorder

The proverbial chicken AND the egg.

You may argue it's been downhill since then, but without them there would be no hill.

I don't think there's really any question that both companies innovated and were successful. This is really the natural cycle of business, startup->rapid growth->mature->cash cow. Canon bought them for one reason only, no matter what they say, and that's to put available capital to work making their shareholders more money than they could otherwise (or at least that's the expectation, but look at how that turned out for Schneider with Pelco.).

As a cash cow and large company, the primary focus will be on managing growth and not damaging the financial contribution those companies make. Of course this means that this leaves a vacuum for other smaller companies still in the 'rapid growth' phase to grow into, and the cycle goes on.

Congratulations to them for their success, but it smells like opportunity to me!

Lot of great comments and assessments here. Cisco and IBM have tried to invade the security world for many years now. Their decisions on products and approach have fallen short in every case. I'd be surprised if they suddenly take a leap that works.

If Schneider/Pelco isn't the best example of how these acqusitions affect the companies, customers, integrators, and most of all, the dedicated people who work for them, I don't know what is.

I don't see this helping anyone except the few who will take home a check.

It's funny how history gets written, Schneider will forever be blamed for ruining Pelco, but that's just not the case. Companies have mass and momentum and big companies have lots of momentum. The paradigm shift to IP was already happening in 2007, Pelco was behind on IP with plans that continued to put them ever further behind. If you dig into it, Pelco was traditionally a fantastic company in the small to upper medium market, they OEM'd all their DVR's, did a lot of metal bending to turn out great cameras based on guts from others and supported their integrators to no end. But by 2007, they viewed themselves as an enterprise company, engineered an incredibly niche product at massive expense in Endura with no consideration for the larger market. By that time as well, Pelco was starting to live more on a past reputation for customer service than delivering on it day in and out.

So, Schneider's mistake (and they don't screw up very often) was to believe that the ride would continue on a foundation that was already sinking, but in the history books they'll take the hit because the decline of Pelco happened on their watch. If Pelco had stayed private, I believe you would have seen a more dramatic implosion.

"So, Schneider's mistake (and they don't screw up very often) was to believe that the ride would continue on a foundation that was already sinking"

Insightful comment.

So is Canon making a similar mistake? :)

I know you were kidding with your comment John, but AXIS at least makes products people want! Pelco was trying to sell old technology (all be it great, solid fantastic stable easy to use old technology) at a premium when all anyone wanted was new shiny fancy IP cameras.

History is littered with companies like Pelco who were big fat and happy one day and left in the dust the next. In fact I’ll bet we could all list at least five companies like that: Xerox, Polaroid, Radio Shack, Sears, Compaq, Enron, Pan Am are ones that come to my mind.

AXIS continues to innovate in a field they pioneered so Canon, will at the very least, get something out of them. Now whether it will prove to be enough to justify their investment…… Who knows?

Consumers create market demand and therefore influence manufactures. Therefore, in my mind regardless if Cannon decides to package Axis and Milestones solutions at a discount, the Pansonics, Sonys, Boschs, and Hik Visions, etc of the world will still want to write the drivers to integrate their products with Milestone becuase the customers will demand thier products to be compatible, and the Genetecs, Video Insights, ONSSIs, etc, will still seek to provide integration with the Axis cameras, as the customer will demand their products to be compatible. If they don't they will lose market share.

I am not sure how a company that is solely committed to providing an end-to-end fits into the consumer demand for interoperatbility.

Thomas, it is more about favoritism that exclusion.

For example, Exacq is now part of Tyco's 'solution' but that does not mean they are going to break Axis integration (Avigilon, sure, but probably not Axis).

It's not a binary support or no support decision. Solution providers will do deeper integrations with their own solutions, will have their sales team advocate / push for their own products rather than rivals, will be less likely / motivated to solving problems for 3rd party products.

I am not saying any individual solution provider will do all of this, but these types of decisions / favoritism are common.


I agree, through consolidation there will be less motiviation to dedicate time to third party integrations, and therefore will most likely slow the pace of innovation, as if you ever attended a MIPS confrence, Milestone had a beautiful thing going on, it was a platform for innovation, where manaufactuers with synergeries would discover each other and work together to make their products compatible and manufacuters would debate their philosphies and learn new perspectives. My concern is this will change.

However, I do not see this merger negatively impacting Canon's ability to complete in the market as it seems like they might be postioned to have the best of worlds in meeting consumer demand with industry leading product lines, end-to-end and interoperaility.

Zeroizes Axis' rep with other VMS players. Vertical consolidation looks good to the vendor but is bad for customers due to lack of diversity. This does not improve anyone's position in terms of technology maturity since there's less and less motivation to create interoperable products that work. So now Canon becomes the Digital Equipment Corporation of the security video world. Is that supposed to be a good thing?

I believe - based on past conversations with Canon and memory - that Canon and Axis had an OEM relationship.

From that perspective Canon acquiring Axis is simply a move upstream - similar to HTC buying Dopod. Make sense?

Tony, you're citing a 13 year old press release as evidence? Kind of out of date.

I've never heard anything about any significant OEM relationship between Canon and Axis.

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