Examining Cisco's Defense of their Video Surveillance Strategy

Let's examine each point, one by one:

• "Cisco's physec business is growing strongly." Cisco could sell ice to eskimos. I mean this as a compliment. Cisco has an incredible channel program and huge global presence. However, the issue for Cisco is not whether it can sell tens of millions of dollars in video surveillance products through that channel but whether Cisco can truly be innovative and bring better video surveillance products with greater value.
• "The Pelco relationship allows us to rapidly expand our IP HD camera line with industry leading technology."  Pelco's cameras are not Cisco's cameras. Where is the innovation in 'co-branding"? And adding in Cisco IP functionality is not a major benefit for IP cameras beyond what Pelco could develop on its own. We examine below the claims to Cisco's future IP networking contribution to Pelco's cameras.
• "This industry is all about partnerships." This is an atypical partnership in the IP video market. Usually partnerships are about technology support, not re-selling other companies products. It would be like Milestone announcing they are going to re-sell Axis cameras and add support for Milestone's VMS inside the camera. What value would that add? Even if Cisco did not OEM Pelco's cameras, any buyer could still buy Pelco cameras directly and use them with their VMS if they wanted.
• Cisco's "value proposition is to use the network as a platform to deliver multiple applications to the market". This is not a value proposition but Cisco's business strategy. It is a critical difference and at the core of why physical security buyers are generally unimpressed with Cisco's offering. To the physical security buyer, using the network as a platform has no direct benefit. It's why mature physical security companies focus their value proposition on things like improving investigations, stopping criminals in the act, improving evidence quality, etc.
• On why Cisco selected Pelco: Pelco is the leader in "physical security systems" Pelco may be the leader in physical security systems (depending on how you define it) but they are nowhere close to being the leader in IP cameras. That is clearly Axis with a strong case to be made that Sony, Panasonic, Mobotix, IQinVision and ArecontVision are also ahead of Pelco. The practical consequence is that sophisticated buyers will recognize this and may want better and likely cheaper cameras than Cisco branded Sarix cameras.
• Cisco has a bigger vision including integrating systems's together. Ok but what product offering does Cisco has that makes them a leader in PSIM?
• Cisco is "putting efforts in its labs" to enable accessing IP cameras from phones. Yes but there are a half dozen companies already doing this with deployed support for all Cisco's VMS rivals.
• "You can’t just snap your fingers and become a major manufacturer of video surveillance hardware ... have to deal with manufacturing issues like enclosures, the optics, etc." Yes but that's the opposite of what Cisco assumed 3 years ago. Indeed, Cisco did try to make their own IP cameras and evidently failed. Furthermore, most of the innovation in "network cameras" comes from the camera side - higher resolution, better low light imaging and dynamic range, compact form factors. 
• Cisco will be pursuing both the physical security and IT channels. This is a recognition of failure of their original premise that they could dominate through their IT channels. Moreover, the physical security channel has no loyalty to Cisco, little experience and not much cultural similarities to Cisco. Plus, the physical security channel tends to be very price sensitive. It's a bad idea for Cisco to go after the physical security channel and a sign of desperation.

[Update: The Cisco / Pelco partnership was unsuccessful and has been discontinued.]