Manufacturers Sound Off On Milestone's AcquisitionBy: John Honovich, Published on Jun 23, 2014
The consensus of manufacturers is that Milestone will be weakened in the aftermath of their sell off to Canon. VMS rivals are especially excited about this turn of events while camera manufacturers are dismayed.
Over 100 manufacturers responded to an IPVM survey request, giving in-depth commentary on what they think will happen and what impact they see on the market and themselves.
Let's start with the camera manufacturers.
Camera Manufacturers Input
Even the largest camera manufacturers expressed concerned.
- "Bad. Milestone will put more emphasis on Canon than Openplaform."
- "Bad...Milestone was a key VMS partner."
- "Since our company has many significant projects with Milestone, the business may be affected in some countries"
Specifically, their worries were around integration speed and depth:
- "Bad. Obviously Milestone resource will be focusing on their parent company Canon for integration. And given nowadays project distribution using Milestone in US, I believe it will be a major impact for projects and customers will be forced to use other VMS if they don't want Canon cameras nor want to wait."
- "Nothing good and possibly bad since Milestone is an advanced integration partner of ours and further integration development may slow with the acquisition."
- "We cannot as a camera manufacturer be dependent on any 1 integration partner and must continue to develop solutions within the surveillance industry that are independent of any VMS."
A few camera manufacturers found an upside in that this might impact Axis, noting:
- "Milestone/Axis presence will decrease."
- "Axis has always been a rather closed camera vendor, favoring Milestone always, keeping a distance from other VMS vendors. We hope this will finally compel Axis to begin being an open vendor, working with other VMS vendors."
Camera manufacturers also expressed concerns about co-selling / sharing project info with Milestone anymore:
- "Of course it will affect to the kind of info to be exchanged with Milestone from now on. We are used to work with VMS manufacturers who also have cameras, like Avigilon or Verint. Of course not with the same level of confidentiality as with Milestone so far."
- "I realize from Canon's point of view they were purchasing a top player, but by acquiring the company, they are stopping the business culture that existed. The first time an Axis rep gets burned by a Canon/Milestone rep flipping a deal, it will be the last time that Axis rep partners with Canon/Milestone. All other camera manufacturers will likely follow suit as well."
VMS competitors are simply happy, like an early Christmas:
- "Good. We'll continue to ensure that our products remain vendor neutral and meet the open standards."
- "Good. Milestone is our major competitor. Milestone has widest presence in the world, so almost in each county we compete."
- "Good, perhaps now people will look elsewhere for an alternative it may however influence larger projects with Canon having deeper pocket to cover up any problems with platform."
- "A positive for us. I believe that other camera manufacturers will be 'put off' by this. We are truly an open architecture, nonproprietary software house and although Milestone always claimed to be, this proves otherwise."
- "This will be positive for us in the mid-term as Milestone is our biggest competitor in the open platform large system market."
- "Uber Super Fantastically Good! Of the top corporations in IHS’ VMS global leaders list, we are now the only major VMS who is truly independent, Open Platform and camera manufacturer agnostic"
- "This is great news for us. Obviously Canon's strategy is to attach cameras to Milestone licenses. This will not only upset Milestones camera partners which are already cautious but will create a dilemma for the new rep channel and their camera lines, most likely being pressured to push the very weak Canon camera line."
- "Good. Disruption in the channel via sales uncertainty or new conflicts of interest (VAR's, Rep Firms, End-users) from an industry leader could be beneficial for all smaller players"
- "Positive. The impact on my company, as a VMS competitor, will be positive. Canon will likely require Milestone to deliver decent margins. IP camera manufacturers will also want to push VMS options that are NOT aligned with their competition."
One VMS manufacturer, who had recently been acquired by another giant had an interesting observation of his own:
"When we were acquired, I felt that some of my camera partners started steering business to Milestone because they were one of the few VMS companies without a camera line. Now that they are owned by a camera line, my hope is some of that business will return. So I believe the prospect is good, but time will tell."
Not Milestone's Call
Milestone is touting the 'Chinese wall' between themselves and Canon and that they are an independent member, but as one manufacturer appropriately noted:
"Even if Milestone swears they won't step into the customers with Canon cameras, it's not their call anymore, its Canon's."
Capture Entire Customer / Overseas Competition
One manufacturer observed how this reflected a broader industry reality:
"More companies want to capture the entire customer, not just a piece of it. Bottom line, you cannot sell just a piece and survive as overseas competitors run prices down."
Incentives to Cross Sell
A camera manufacturer warned that they will be paying attention to new sales incentives:
"When sales team get incentivized on cross selling (esp. Milestone selling Canon, not so much Canon selling Milestone) will de facto make the Milestone system less open, we will then focus on other VMS solutions."
Axis Could Hurt Milestone
One manufacturer thought that Axis could move away from Milestone, hurting Milestone more than the other way around:
"All brands except Axis didn't like Milestone, because Milestone was very much connected with Axis. Now Axis (major driver of Milestone) will change strategy and it will affect Milestone."
Milestone Management Motivation
Many questioned what would happen to Milestone's existing management teams:
- "Canon don't know the security market and will try and force MS to follow their strategies. Now that the MS executives have sold their product the next step is for them to loose interest which happens when the new dominant partner starts to push it's opinion."
- "Would the founders of Milestone have the same passion to stay open & vendor neutral now that they've encashed their baby? If they do, this will be an exception."
- "I think that the Milestone Directors will move away from Milestone now that they have made their millions. Some back office functions may merge and I guess certain jobs may be lost as part of the EBITDA savings for the group."
- "The greatest danger will be if there is an exodus of talent from Copenhagen, so Canon have to quickly reassure the Milestone staff that all is well."
A number of manufacturers emphasized cultural / integration issues:
- "Canon is a HW company, which is really a different business from SW development. If they try to run a SW company like a HW company - I think some challenges are in store."
- "Milestone is a software company & Canon is a hardware company, so I don't believe the odds are good on this one. In my experience hardware & software companies speak completely different languages, so it will be interesting to see how well they get along."
- "Slowly it will turn into a small cog in a very large wheel. then they will start cutting on R&D, Service, sales, support. Just like what happened with all the other smaller companies swallowed up by giants."
- "Canon will take over and the management will become much like the other Japanese companies. Once Canon is in control they may adopt an attitude similar to Canon which is more about having an integrated quality product than a product for every price point. Development will suffer."
- "They'd have to try to position Milestone to sell more Canon cameras, but I feel this will backfire. I think Milestone will lose market share. Canon will realize that this isn't a market that they want to be in and will sell it or spin it off."
We agree with one manufacturer that emphasized that, whatever happens, will likely take time:
"It'll take a company like Canon a full year just to absorb Milestone as it exists today. I'd guess the first things we'll see are signs of them trying to reassure us it's business as usual, then we'll see some extended functionality with Canon cameras. It'll probably 3 years before we really get the slightest idea of what is *really* going to happen."
Consensus is Weakened Milestone
From our original poll, the consensus of 150 manufacturers (68%) who took it was that Milestone would be weakened: