Canon Acquires Axis Communications

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...

Sony to buy Genetec?

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.

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.

Who will buy Aimetis?

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.

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?

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

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!

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.

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.

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.

These are some great comments.

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

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

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.

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 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!

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.

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?