I think they will have better luck pushing Lorex than Dahua. Dahua seems so disorganized. For Dahua’s sake I hope the stay out of day to day managment of lorex and just give them money to fuel the company. It’ll be interesting to see what happens next. We don’t buy either product line currently.
Dahua Acquires Lorex And FLIR SMB Surveillance From FLIR
Would you buy your own customer? Well, Dahua has just done that.
FLIR has sold its Lorex / home / SMB business to Dahua, just over 5 years after FLIR bought Lorex for $59 million.
In this note, we examine the deal, why it happened, and how it helps both Dahua and FLIR.
Acquire a competent / experienced management team
This, as long as they can keep their executives from meddling and replacing with their own staff.
I could not agree more. Even if Lorex team is not replaced, the influence and pressure from Dahua's executives will eventually disintegrate Lorex team. I would say we will see this happening before the end of this year.
Costco will be SOOO happy that they can now sell Lorex for even less .....
Speaking of which, this could impact Hikvision's Ezviz. Lorex is an incumbent in that space. If Dahua can make Lorex more competitive (by reducing cost or improving offerings), it could hurt Ezviz's attempts to make inroads. On the other hand, if Dahua screws Lorex up, surely Ezviz is waiting for the opportunity.
Not clear why the existing Lorex management (who may well be awesome at selling to Costco) would have any value when mapped into the enterprise world.
Rodney, good question.
So 'Lorex' is part retail / consumer and part commercial already. For example, FLIR (Lorex) won ADI Vendor of the Year beating out Hikvision last month:
As for the 'enterprise' world, they have not had enterprise products. But in the commercial world, at least by volume (if not by product quality considering they OEMed Dahua), they are a player.
FLIR seems wise to offload to Dahua in my view. At ANY price.
I think the transaction is worth meaningful contemplation by every installer/integrator in this industry. Every surveillance kit Lorex sold was a slap to every installers face. It seems most ignore the erosion these retail kits cause, but it's a factor. Small business represents an enormous share of overall cctv market sales. These retail kits are quite popular in liquor stores, mom and pop gas stations, retailers, bar/restaurants. This purchase by Dahua is in my view, "the canary in the coal mine". The message is clear , Dahua was already essentially a "direct" to consumer company given the public pricing model chaos, and most notably, Amazon pricing for every end user to use as leverage against any installer attempting to win bids. That challenge just became more severe.
Dahua has eliminated an additional cost layer by eliminating the middle man (Lorex).
Immediately, Dahua has the ability to reduce USA pricing and aggressively take share from other direct to retail competitors. Problem is, this will logically result in simply more obstacles for the installer market. More margin compression, and less total available business for installers.
The logical strategy for installation companies in my view is protest by only means available. Simply refuse to install Dahua product. Let them have retail, but dont fuel your own demise by financing Dahuas "margin" business and install what Dahua labels for obvious reasons, their "professional" products. Its the same equipment, simply labeling one as consumer, one as professional is a bit insulting to those with knowledge.
FLIR off loading at what appears to be a fire sale valuation...............
AS INSIDERS, we all know that a Ring, Blink, etc. product is about as basic and simple as a video product can possibly be. Yet, what is extraordinary is pricing. A Ring floodlight camera yields $200.00 and recent venture capital inflows into Ring establishes their company at a present 1 Billion USD valuation. CNBC.com for reference.
Search online for 2 minutes, you'll easily find a 4CH NVR, with 4 HD IP cameras, with an installed 1TB Hard Drive for same retail price as one Ring camera. That's incredible. For that matter, a complex, full featured 4MP IP camera, with smart features like missing object, trip wire, people counting, etc. Search a few minutes, direct retail pricing, and a typical Omni-Vision image sensor, with the latest Hisilicon DSP is only yielding 60.00 to 80 dollars. 1080P Ring or Blink? With only a sort of , kind of, maybe motion detection function yields a 300% premium retail pricing. Likely, a fraction of the support overhead of A complex NVR system. More profound is the public feedback of these simplistic products. They genuinely yield near 100% customer satisfaction ratings. These products are not just for homes. MANY small and micro businesses are electing a Ring or Blink product over traditional complex CCTV products.
When the dust settles, I strongly believe Lorex post Dahua acquisition ends with a total loss for Dahua. Ring and others like them will continue aggressively taking market share from traditional CCTV, Dahua will be harnessed with infrastructure and other legacy Lorex overhead resulting in negative cash flow at some point. Margins are already in a very "dangerous" range.
FLIR has a market cap as of today, 1 PM of 6.6 Billion USD. Obviously they could care less about 29 million dollars Dahua paid them for Lorex. One can safely assume a multi-billion dollar entity has PHD staff to look through a prism of what the "future" potential truly is. Accepting a seemingly ridiculous .2X sales to dump this entity could ultimately end up as the deal of the century for FLIR. FLIR left for a reason.
The question is in my view...............
Will our industry continue installing Dahua given the obvious direct competition Dahua admits by making this acquisition? Dahua is the competition now, NOT a partner.
Gerald, interesting thoughts. Some feedback:
Dahua was already essentially a "direct" to consumer company given the public pricing model chaos, and most notably, Amazon pricing for every end user to use as leverage against any installer attempting to win bids.
I had not thought of that directly but generally, that makes a lot of sense. Both Dahua and Hikvision, through their selling to everyone tactics (and I mean through HQ nor than the local subsidiaries) has shown that.
Dahua has the ability to reduce USA pricing and aggressively take share from other direct to retail competitors.
I wonder, though, how much. And to somewhat play devil's advocate, Hikvision Ezviz is happy to sell at aggressive prices direct to retail competitors but to date have had limited success.
Simply refuse to install Dahua product. Let them have retail, but dont fuel your own demise by financing Dahuas "margin" business
I hear a lot more dealers objecting about quality and hacking issues than about the economic one, but selling direct is an integrator hot button, for sure.
1080P Ring or Blink? With only a sort of , kind of, maybe motion detection function yields a 300% premium retail pricing.
In fairness, Ring was early with doorbell cameras and Blink early with total wire free. Combine that with Ring's marketing (Shaq, etc.) and that's been something the Chinese have yet to match (though they may in the future as they catch up).
Dahua is the competition now, NOT a partner.
Has Dahua ever really been a partner to anyone in the West? They sell through a vast number of OEMs, they happily tolerate product from China shipping out to the West at a fraction of the local price (e.g., empirecandy on ipcamtalk), etc.
With only a sort of , kind of, maybe motion detection function yields a 300% premium retail pricing.
I think you are overlooking the value of their app/mobile connectivity, and the solutions approach.
It is hard to compare a kit of 4 cameras, which the consumer has to figure where to best place, how to mount, how to configure, and how to setup on a mobile app to something that installs with 2 screws, 2 wires, and a QR code scan.
Consumers have always been willing to pay for solutions that solve real problems. Ring targets a very specific problem, has an understandable use-case, and seems high-tech and cool (video doorbells are one of those things "of the future" that are now not only here but DIY-able). Blink similarly solves a problem in a way that customers expect, a totally wire-free camera, stick it wherever and it "just works".
It is the basic "sell the sizzle, not the steak" approach, which the majority of the kit suppliers have attempted, but not executed very well.
I agree Brian but the math still intrigues me.
Yes, the app simple to use but the BOM file of the doorbell or floodlight camera
and frankly, the engineering investment is simply minimal. I suppose this just underscores the value of a well managed marketing campaign.
Ring was turned down by every member of SharkTank a few years ago and he was only asking for 100k. I think we can accurately use GoPro as an example of what could go wrong with Ring, Blink, others. GoPro stock soared to 90.00 a share, and then the Chinese knocked it off, flooded the market, and the poor guy is selling GoPro, laying off staff, and shareholders are sitting on a 5.00 stock now.
Ring can be and is being knocked off by the Chinese as we speak.
I wish all American companies luck, and hope they dont experience the same slaughter as GoPro.
Tune into CNBC and you'll receive a ton of Ring.com commercials.
They are marketing the product as this incredible safety product that makes neighborhoods demonstrably safer. The public actually believes this stuff.
Regardless of our opinions, and industry knowledge, products like Ring and Blink are a net negative on industry sales.
Ring was turned down by every member of SharkTank a few years ago and he was only asking for 100k.
Ring was not turned down. The CEO's first venture, DoorBot (which ultimately failed) was turned down. Not that I think celebrity rich people on a TV show are especially keen evaluators of tech, but DoorBot was an ugly baby and it is to their credit they passed.
Siminoff had some major modifications to his company and his product to turn it into $500MM Ring.
The end of dahua
Of all the strange things Dahua has done, why is this the one that is the end of them?
As someone that sells primarily Dahua, I find the move disappointing. I agree in the fact that they are now a direct competitor.
As someone that sells primarily Dahua, I find the move disappointing.
Jay, genuinely curious. What will you do? Hikvision has the same setup via Ezviz. Others?
I don't know. I guess as long as they keep the Lorex brand, it is not an issue. But if I start seeing Dahua boxes at Sam's, then I will probably look at Uniview. We may look at Uniview anyway just to be prepared.
I am a firm believer we do not sell on price, we sell on value. I am not usually concerned about selling Ubiquiti radios for more than Amazon. Amazon sells boxes. I offer a lot more. So the Dahua/Lorex purchase shouldn't be an issue.
I doubt Dahua would ditch the Lorex brand but with Dahua you never know...
I doubt Dahua would ditch the Lorex brand but with Dahua you never know...
I like how you are thinking. Inside IPVM, we have an expression, never overestimate Dahua.
But, yes, rationally, they would be far better off keeping the consumer brand Lorex since Lorex is an established Western brand and Dahua is Dahua.
Jay, curious, if you sell on value, why do you primarily sell low-cost Chinese products instead of brands with better reputations, a more protective channel model (no OEM) and higher overall profit potential?
Its strange that in the press release that they don't mention that Dahua purchased it?
It's atypical for sure. I don't know why that came to be.
However, what's not strange is that Dahua was incapable of coordinating their press release at the same time or shortly thereafter FLIR released their release. That's just Dahua being Dahua...
Have Dahua officially confirmed this anywhere on the internet?
Fair play John on getting the news super quick!
SIW put out a story on it a few hours after us.
It's been an open secret, sort of like Avigilon being acquired...
Perhaps they aren’t happy about taking it on either and just pushed into it
didn't want to lose the sales channel
The fact that Dahua has been selling direct to end users either directly or indirectly has been known for a few years now. Most competent resellers/distributors knew this as well. It was clear that their game plan was to achieve direct to end user sales. Honestly, I am not concerned given their organizational issues. It takes alot to sell to end users and I don't think this is really a specialty of any Chinese Manufacturer so I say let them try their experiments early so they can understand that this isn't their wheelhouse. Honestly, I think they will fail miserably and perhaps dissolve lorex or sell it off. Dahua the company will continue on though.
I also truely believe that this will have very little impact on Dahua's USA sales to integrators. I seriously don't think the average Dahua installer will care. You can call it sad, mad, crazy that anyone would continue to buy Dahua but thats just the how the market will react. The only way they will care is if it starts affecting their ability to sell the product and it wont because:
#1) Most end users wont know the relationship between Lorex and Dahua
#2) Customers who want their products installed are not interested in DIY systems. DIY systems have been around for years and integrators still conduct business as usual.
To give you an example. Whenever we sold Dahua, Dahua listings on Amazon were rampant, yet we weren't that affected.
If Dahua gets into the integration business, thats another story, their sales to integrators are gone.
Sean have you heard of Hikvision selling direct to end users?
I have never heard of Hikvision selling direct to end users. Their have been rumours (mainly from other manufacturers) but I don't think they amounted to anything. I do think they could do alot better job policing Amazon though.
As far as Ezviz, that is all very consumer grade stuff and its designed as such. Even more consumer grade than Lorex. Not even a concern for me or most Hik dealers. Again, selling to end users in the USA is difficult and this just isnt Dahua, Hikvision, or any other Chinese manufacturers forte so its not really a threat even if they decided to go this route. I think they will be much more successful supporting, designing and manufacturing products for the companies who would like to reach the end user.
I have never heard of Hikvision selling direct to end users. Their have been rumours (mainly from other manufacturers) but I don't think they amounted to anything.
I will let you know in a week or so for sure after a meeting we have with an end user.
Sounds good, be sure to get the salesmen names and all the details.
Sean, we both are well aware that Hikvision WR (World Region), recent version firmware products are being sold widely on the Internet, Aliexpress, Amazon, etc. I know you mention Amazon above but it appears to be all over the place, right? And that conflicts for end-user sales, no? Same for Dahua.
In the same way as Axis is all over Amazon? To the end user there is no difference. I've never had a customer raise the point but there is an easy response if they did. I really don't see end user sales dropping off John. Your assumption is that all Hik integrator sell 4 camera systems to corner shops and domestic customers who will see it online and do it themselves. The reality is that many are installing 100+ camera systems, configured RAID arrays, ANPR, tripwires, HDMI 4k monitor matrix and touch screen keypads and integrating into other platforms. If you are losing business to Amazon - you are in the wrong game. The Axis on Amazon would be a good story to run though.......as it seems Hik has had more success closing down the end user sales from intermediary's.
Must be great to only fit 100 plus cameras
you sure hiks a good fit
we find their gui dated
We find them entry have done for last 15 years
great if you don’t have competition
We have plenty of competition Mick and have won national tenders using them.
We do installs down to 16 cameras, but also well above 100.
I did look at using Tecton on a project recently, but their VMS doe not even support the PTZ functions for Panasonic. Indeed, it supports virtually nothing above ONVIF compatibility. So much for using home grown suppliers.
Hik have entry level - yes, but what do you have that matches their DarkfighterX, IP touchscreen joystick and 4k 8 channel HDMI decoder? Do you have a no cost ANPR solution also? To suggest Hik are only entry level is naive and misguided.
A national retail store hated Cathexis as being the most complicated GUI they had seen. They were perfectly happy with the IVMS4200, even though I fully accept it could be better. A lot, is how its set up and handed over - and sadly a lot of HIK installers don't get this bit right. We've looked at Wavestore, but even though they have native Hik drivers they don't support the decoder and keypad. So we are neither blind or ignorant, we make good margin on well designed systems but are always mindful of what we are up against in terms of competition. You'd be surprised how including ANPR functionality at no extra cost can sway a sale.
My feeling has always been the same. The very low end HiWatch and earlier Hik sales to the public was essentially new business and not biting into integrator sales. Most systems are installed without the engineer even entering the camera menu and at a price point point where no integrator could even touch.
The issue with Dahua and Hikvision is the price arbitrage between local Chinese sales and Western ones. Since costs are much lower inside of China, they sell their products for less there than in the West. But these companies also allow these Chinese sales to 'leak' out to the rest of the world, with the same part numbers at lower prices (my note above about getting WR Hikvision products on various online stores).
Axis and other Western companies don't have this issue, if simply because they are effectively blocked out of China anyway.
To be clear, the Western Dahua and Hikvision local offices don't like this because they have to compete against those offerings but Dahua and Hik HQ allow this to happen.
Agreed. I still think Hikvision can do alot to firm up their sales channel. It would bring tremendous value to their brand if they could simply police the Amazon and Ebay sales alone as these are the main avenues the companies who buy from the Alibaba sellers use to offload their products.
Why would it bring tremendous value to their brand?
- Makes the brand more exclusive
- forces buyers to purchase thru authorized channels which is better for everyone involved including buyer, supplier, and Hikvision. Buyers would get a much better user experience(tech support and warranty), suppliers would save their margins, and Hikvision's reputation as a solid product would increase. Sales would increase
- Pricing would be regulated
Dont get me wrong, Im not against internet sales. Im not even against Amazon Sales. But what needs to happen is a strictly enforced MAP policy in which only authorized sellers can sell on certain avenues.
Policing this is not difficult. I mean, you can hire one guy who's full time job is to simply scour the internet 8 hours a day and take down offenders. The benefit of doing this will be much greater than the salary of that one guy. Sure their will be an occasional leak here and there but atleast it would not be the rampant insane craziness that there is today. With Hikvision being the manufacturer and owner of the trademarks and such, Amazon and Ebay have things in place for them to take advantage of protecting their brand and pricing.
Other brands have done this. Take seagate for example. I can't sell a seagate hard drive on Amazon. Amazon stops me in my tracks when I try to make the listing. I then have to go thru a lengthy and very difficult process to get approved to sell a seagate product on Amazon. I have to have a letter from seagate themselves saying that I can sell hard drives on Amazon and even then its sometimes still not good enough.
I guess it just really depends on Hikvisions desire to control this.
Reminds me of HSBC Bank not doing a "better job" policing the $800M of USD transactions from terrorist groups and drug cartels because it was a large part of their profits.
I wonder if the 100 major and the thousands of small business Hikvision OEMs also never sell to end users (especially online).
Every business has a different personality, outlook, and is likely why we're all addicted to business in the first place. We all like to beat to our own drums.
Our Cincinnati facility is popular among Ohio/Kentucky/Indiana installation companies and I take every opportunity I can to talk to every installer that picks up product here.
I would be accurate in relaying that 100% of our customers are annoyed, are affected, and do feel pressure to explain why their pricing is multiples higher than a Lorex kit.
But, i do respect your views, and might even be envious you dont have the same challenges my customers seemingly have.
Lorex sales revenue is clearly the majority of Dahua USA sales.
Give that thought.
The only reason why I still have some Dahua hanging around here is purely to still screw around with some real HW in the lab, I would never ever introduce that into any production environment, and if the only choice I would have been between Dahua and Hikvision, I would choose Hikvision.
Sad, but true.
The only reason why I still have some Dahua hanging around here is purely to still screw around ...if the only choice I would have been between Dahua and Hikvision, I would choose Hikvision.
-DIY is here to stay. Just added some "Dots' to several rooms in my house and now Alexa has become my home intercom system. Will probably add a video door station with an IoS and Android app...more features than a Ring system.
-Selling direct is not just for the low cost manufactures. How many stories have we heard about high end camera manufacturers selling direct to casinos?
-I think we are in the middle of a paradigm shift, and, as usual, the integrator who best serves the middle and high end customers will survive and prosper, and the low end products will continue to not be a significant worry.
-The lowest common denominator keeps pushing upward, and our job is to stay higher in the food chain, IMHO
So going forward, FLIR will not be selling any ultra low-cost kits under any brand, or?
Yes, FLIR is out of the low cost security kit business. Surely, they will continue to sell other consumer products like the FLIR One thermal, but that's different than security kits.
Don't they still manufacture the digimerge products?
My understanding is that the Digimerge brand was discontinued by FLIR and replaced by FLIR for commercial sales, e.g.:
Is the Digimerge brand making a comeback? What will the new brand be? To be determined.
The difficulty for customers as I see it
is lack of credible alternatives
manufactures struggling for growth so selling out
all well and good saying dahua buying Lorex puts pressure on installers but where’s the serious alternative
hik already over saturated
installers I speak to here like buying ice cream for the first team they fit hik
so excited to put it in and think their customer loyal and locked in
then a year or so later their super locked in partner bought hik elsewhere and the only company locked into the end user is hik
not sure uniview any better
then there’s a leap from here to high end
where price don’t matter
aviglon here prices are eye watering expensive
axis milestone Genetec sit way above China products
so for the main installs China only solution I don’t think installers are Nieve
that they are digging their own graves
they just don’t have a choice
so as much as Costco knock out Lorex dahua below dahua own brand pricing
or hik sell hiwatch below hik brand pricing
customers have to eat
As an industry, I think we need to keep an eye out for these types of transactions, if only out of curiosity. But, as an integrator, if this deal in any way affects your operations, you likely are playing to very small install markets. I can’t imagine how this deal affects a great majority of integrators or their distributors.
Oh, and Dahua will find a way to muck it up. They are relentless.
How long until it's announced that Tim Wang has been appointed as new boss for Lorex?
Dahua has simply purchased the former DigiMerge business segment known as SMB from FLIR. Some of the SMB products where being manufactured by Dahua. This will become a TBD branded division of Dahua. The low end kits are made by yet another vendor and will continue to be provided as such, 4K included. The current FLIR SMB brand name will be gone soon.
As for Lorex, I'd be surprised if Dahua puts their name on it. That would indeed dilute the attempt for Dahua to be recognized as a "pro" channel video supplier.
That is simply the funniest thing I have ever heard
dahua a pro brand
has the industry given up
we had an international customer who use to use us and stayed with dahua
as we use to oem from them
he has come back to us crying his local sandwich shop now distribuotrs
The consumer market is huge as the Arlo article shows us. But the consumer market is also brand driven and building a consumer brand is expensive, challenging, and takes a lot of time unless you own some new breakthrough technology. Even though Lorex may not be a household name it is miles ahead of Dahua in terms of brand recognition at the consumer level. Also, managing the retail channel is very tricky and requires a much different approach and management skill set than what's typical for professional market channels. There are different rules to play by. Relationships in the retail channel are also extremely important and take time to develop. So Dahua picks up an experienced retail management and sales team with the acquisition and this also has a lot of value. And by having a brand segmented from their professional line they also can reduce channel conflicts and bad blood in the professional market. $29 million is not so much for a company the size of Dahua so I think it is a pretty good move. But also one which Dahua could easily screw up which would not surprise anyone familiar with how they operate.
My only concern is whether Dahua's name or logo will appear anywhere on Lorex products and when. This is crucial to how we move forward.
As a competitor it’s our mission to notify as many customers as possible
we also include links to maplins UK website
where you can buy dahua cheaper at retail prices than trade