Genetec CEO Interview and Our AnalysisBy: John Honovich, Published on Sep 01, 2010
In this note, we summarize and provide analysis on Canada's SP&T excellent interview with Genetec's CEO [link no longer available]. The following are key points:
- Genetec perceives themselves as the Switzerland of the industry
- Genetec wants broader market representation - not satisfied with distributors trying to position them at the very high end of the market
- "Contrary to our competitors we’re not trying to get more partners we want fewer and better partners."
- Competitors are polygamous - implying very little affection - "we have a lot of affection for our partners"
- Demanding more IT skills: "Digital solved a lot of problems but every technological solution will solve a problem and bring up two more problems. So yes we are solving a lot of problems but it is increasingly becoming IT-centric."
- Many features are not being used, want integrators to get more out of the product, created internal group to facilitate
- On fads, "You saw the fad of analytics — five years ago you couldn’t get into a project if you had analytics and then the industry cooled down and now the expectations are more realistic."
- No external investors, growth entirely self-funded
- America economic rebound strong: 'After the crisis [America] has dusted itself off and took off almost like nothing happened."
- US biggest region but Europe close and will likely equal US revenue as Europe economy recovers
- "Always been cash-flow positive"
- No long flattered by VC investors overtures - "We have a mission and vision of where we’re going and it doesn’t include selling out to our partners or taking partial investment from our partners"
- 280 total employees, about 12% revenue from Canada
The entire interview is quite long and in-depth. We recommend reading it at SP&T [link no longer available].
Our observations and analysis:
- Genetec should be happy and focused at dominating the high end of the market. Their solution is too big, too complex, too expensive and too demanding of IT knowledge to win long term in smaller deployments. We think it's better for them to ignore smaller deployments so they can maintain and grow advantages of high end functionalities.
- While Genetec may be fairly neutral when it comes to servers, storage and cameras, the development of SecurityCenter and their own access control solution almost certainly increases the conflict with other large vendors who lead with their own access control offerings.
- The criticism about partners seems to be directed at Milestone Systems who gives the impression of partnering with every integrator in the world (review the specific re-sellers in Milestone's online directory [link no longer available] or follow their Twitter account to see the 10 new partners they announce each week).
- Partnering with a limited number of companies makes more sense when the company's focus is on a smaller number of large deployments. However, in a fragmented market like security, you probably need a huge number of dealers to reach all of the small to mid sized projects in the market.
- Genetec's product approach does demand more skills but we doubt that every "technological solution will solve a problem and bring up two more problems." We see the complexity and IT demands as a major vulnerability for Genetec. They acknowledge that integrators do not make use of all features. With a 600 page (or so) manual, dozens of features littered across multiple applications, this is no surprise at all.
- This noted, we still believe Genetec has an outstanding high end solution. While Milestone makes noise about using Genetec as a stepping stone to control the high end of the market, their recent low entry market moves further indicate that Milestone's threat to Genetec at the high end is questionable.