Danger of Buying Packages

Author: John Honovich, Published on Aug 07, 2008

A dangerous and mass movement is underway for video surveillance companies to sell you packages. Packaging together cameras, encoders and IP video management systems, vendors hope to entice you with an integrated, optimized end to end solution.

One of the great ironies is that while everyone is paying lip service to open platforms, the industry is clearing moving to more tightly bundled packages. I think this is very risky and you should carefully consider the dangers of buying "solutions." "packages". Originally I called this solutions.  I believe this is a poor choice of words. I have now changed to packages to better connote the phenomenon. 

Who's selling packages?  Verint, March, American Dynamics, Pelco, Cisco, DvTel, Bosch, IndigoVision, Avigilon.  You can even see the beginning of this with Axis with their expansion of Cam Station. Today, Panasonic announced it to was moving to selling "solutions", i.e packages.  It's almost easier to ask who is not selling packages (Milestone being the most obvious large player).  And what's key is that, 5 years ago, a lot of these companies specialized in just management systems or cameras.  The trend is expanding.

Vendors love the thought of selling packages because it has the potential to increase revenue (by cross selling) and to increase margins (by bundling). They can also tell themselves that they have moved up market and are delivering greater value, etc, etc.

I do not doubt that some vendors can but when you have more than a dozen vendors all selling fundamentally the same package, you have a very risky situation for everyone involved.

Danger 1:  Packages Are Too General

Video surveillance buyers have a wide variety of needs.  However, most packages are horizontally positioned (that is, they are not optimized for any specific use case). Packages can restrict flexibility and adaptability to different use cases.  Be careful that the package properly addresses your need.

Danger 2: You are screwed if you choose a Market Lagging Package

Since there are so many vendors selling packages, some of them are going to lose.  You cannot expect to have a dozen companies all basically offering the same thing to all succeed.  If you choose a packages that loses, you are in trouble.  It will be very hard to expand the package and you will likely be locked in to its limitations.

Danger 3: You are controlled if you choose a Market Leading Package

If the package wins, you become at the mercy of the vendor. This is why so much ill will exists towards companies like GE Security and Tyco.  They got you into their package and they know it.  Requests for supporting third party products or new features are slow or unlikely to be approved even if you are a giant customer.  This move to IP video solutions seems to risk replicating the same problems we have been struggling with for the last decade.

I am not saying you should not buy packages. I think some of them are particularly strong (especially to the extent they focus on a vertical).  However, you should clearly understand these moves and factor in the risks of them.

Thoughts?

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