Examining Pelco's Expansion into Asia / Latin America

Author: John Honovich, Published on Aug 31, 2009

Pelco is expanding its operations in Latin America and Asia with the acquisition of its manufacturer representatives for these regions, Crockett International.

This is a different approach than common in the US. While Pelco sees this as an improvement for the international market, Pelco is continuing the traditional model inside the US. In an interview, Pelco stressed their commitment to manufacturer representatives and the traditional security channel for the United States. 

With the recession and forecasts of Asia/BRIC countries driving economic growth over the next few years, expansion in these regions may be key to Pelco's own growth.

Background

Pelco currently generates about 2/3rds of its revenue from inside the United States and 1/3rd from the rest of the world.  Even though only 1/3rd is from outside of the United States, given Pelco's overall size (estimated $600 Million USD revenue), Pelco's international business alone is nearly as large as Axis overall.

Inside the United States, Pelco, like most security manufacturers, uses manufacturer representatives. Each manufacturer representative is assigned a geographical region. Pelco has 16 total manufacturer representatives listed inside the United States. Each manufacturer representative supports integrators and dealers within their territory on specifying products and designing systems. The integrators and dealers buy from distributors and the manufacturer representative is credited for those purchases.

Outside the United States, Pelco used a mixture of direct sales and manufacturer representatives. See a listing of Pelco's international manufacturer representatives. Pelco reports that Crockett started originally in the China and Signapore markets. Crockett than expanded into many other Asian and Latin American territories over the years. With the acquisition of Crockett, the approximate 90 employees of Crockett who acted as independent representatives are now direct Pelco employees.

One specific difference between Crockett and typical US manufacturer reps is that Crockett had a very limited line card - doing 90-95% of their business on Pelco products. By contrast, in the US manufacturer reps often have 5 - 10 lines and some of them can be moderately competitive (though the manufacturers attempt to minimize this).

Rationale for the Acquisition

Pelco offered 2 main reasons for the acquisition:

  • International buyers prefer having sales and support conducted by direct employees of the manufacturer. Having an independent but related 3rd party was often found to be confusing and less attractive.
  • Direct resources more aggressively into the Asian and Latin American markets. With Crockett as an  independent company, Pelco was limited in how much they could grow sales operations in these markets. As a unit of Pelco, Pelco can now directly invest and increase the rate of expansion of employees and sales efforts.
Both make sense. The announcement mentioned that this was a merger. According to Pelco, this refers to the merging of Crockett's employees with Pelco's. It is not a merger in the common American usage of similar size companies joining. This aspect can be confusing.

Secondly, Pelco reports that Crockett is not an integrator (the wording on Crockett's website can leave that impression) and that Pelco would continue to work as it has previously with local dealers and integrators in those countries.

Competitive Impact of this Move

Pelco's focus for growth into these regions is the high end of the market. In our interview, Pelco was quite clear about this. Pelco estimates that they already have 20-25% of the high end market in Asia and Latin America (this would work out to be about 7% of the total market - assuming that the high end was the top 30% of the market). Given their approximate sales volume internationally, this seems realistic. 

The fastest growing markets in Asia and Latin America tend to have significantly lower GDP per capita than the United States and lower price thresholds for video surveillance equipment. For instance, while a $250 USD camera would be mid-range for the US, in many Asian and Latin American markets, the required price point would be significantly lower.

While Pelco has some entry level or budgets products, it has never been focused in these segments and would have difficulty competing with low cost focused producers for the lower end of these markets (it is challenging enough for Pelco for the low end of the US market).

As such, this expansion is likely to focus on increasing their market share in the high end of these markets. Given that these countries have a lower adoption rate of IP cameras than Europe or the US, Pelco's focus on building hybrid systems that integrate cleanly with analog cameras may be an especially good fit.

1 report cite this report:

Expands Manufacturing in China on Jan 13, 2010
As part of the details emerging from Pelco's layoffs, an interview with Pelco in SSN reveals that Pelco will be expanding its manufacturing inside...

Related Reports

The Dumb Ones: PSA's Bozeman On Cybersecurity on Jun 15, 2018
The smart ones are the hundred people who flew to Denver and spent $500+ on a 1.5-day conference featuring Dahua as a 'cyber responsible partner',...
Security Sales Course Summer 2018 on Jun 14, 2018
Based on member's interest, IPVM is offering a security sales course this summer. Register Now - IPVM Security Sales Course Summer...
Worst Features for Camera Installation (Statistics) on Jun 07, 2018
4 clear worst features for installing were identified by 140+ integrator respondents to: What feature(s) make a camera hard to install? The...
Top Features For Easy Camera Installation (Statistics) on Jun 05, 2018
Camera installation is the most fundamental and common task for video security technicians. Because of this, camera manufacturers market their...
Stats: IP Camera Dead On Arrival (DOA) Decline, Near Zero on Jun 01, 2018
New IPVM integrator statistics show that IP camera DoA rates have declined with zero dead on arrival units for many integrators and effectively...
Stats: Upgrading Cameras Far More Common Than Replacing Failed Cameras on May 30, 2018
The old saying "If It Ain't Broke, Don't Fix It" does not apply here. New IPVM statistics show that 60% of cameras that are replaced still work but...
Buy Arecont: Top Bid $10 Million Cash on May 22, 2018
Last year, Arecont had a deal for a purchase price of $170 million (see Failed Arecont China Acquisition). This year, Arecont has a deal for a...
Exacq Improving Technical Support, Responding To Integrator Complaints on May 21, 2018
Exacq had been a long-term favorite of integrators, but since their 2014 Tyco acquisition, Exacq has fallen in IPVM integrator studies (though...
Best Manufacturer Technical Support 2018 on May 21, 2018
While 5 manufacturers made the worst technical support 2018 list, only 3 stood out as providing the best technical support to 190+ integrators in...
Stealth / UCIT - Remote Video Monitoring Provider Profile on May 18, 2018
Can 2 remote video monitoring companies, Stealth Monitoring from the US and UCIT from Canada combine to impact the market and compete in a changing...

Most Recent Industry Reports

IFSEC Show Report Day 2 Report on Jun 20, 2018
IPVM is live from London reporting on the IFSEC show. The Chinese have taken over the UK, centered on Hikvision, flanked by Dahua, Huawei and a...
Mobotix Releases 'Move' Into 21st Century on Jun 20, 2018
For years, Mobotix stood resolutely against, well, every other manufacturer, selling it as a virtue: MOBOTIX equipment is designed with no...
Cybersecurity Startup VDOO Disclosing 10 Manufacturer Vulnerabilities Starting With Axis And Foscam on Jun 20, 2018
Cybersecurity startup VDOO has uncovered significant vulnerabilities in Axis cameras along with many others not yet disclosed. In this report, we...
July 2018 IP Networking Course on Jun 19, 2018
The last chance to save $50 on registration is this Thursday, June 21st. Register now and save. This is the only networking course designed...
Axis Guardian - Cloud VMS And Alarm Monitoring - Released on Jun 19, 2018
Axis has struggled to deliver a cloud-based managed service video platform. Video service providers have utilized AVHS for over a decade, and have...
IPVM Vulnerability Scanner Released on Jun 18, 2018
IPVM is proud to announce video surveillance's first and only cybersecurity vulnerability scanner. This tool allows quickly and simply...
Hikvision Corrects False Cybersecurity Announcement on Jun 18, 2018
Hikvision has corrected a false cybersecurity announcement that claimed a British government-sponsored program endorsed the cybersecurity of...
The Dumb Ones: PSA's Bozeman On Cybersecurity on Jun 15, 2018
The smart ones are the hundred people who flew to Denver and spent $500+ on a 1.5-day conference featuring Dahua as a 'cyber responsible partner',...
Amazon Ring Launches $10 Monthly Professional Alarm Monitoring on Jun 15, 2018
Amazon's Ring has announced an alarm system with 24/7 professional alarm monitoring for $10 per month, a fraction of the $30+ per month traditional...
Axis Releases First New Access Controller In 5 Years (A1601) on Jun 15, 2018
It has been 5 years since Axis 2013 entry in the physical access control market, with the A1001 (IPVM test). Now, Axis has released its second...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact