Milestone Moves Into Silicon Valley

By: John Honovich, Published on Sep 03, 2012

Hey Mark Zuckerberg, you've got a new friend - Milestone Systems is coming to town [link no longer available]! The über ambitious VMS developer is expanding yet again - with a new office in Silicon Valley and a new business unit led by yet another former Microsoft employee. In this note, we examine the positioning and potential of this.

Let's first review the key details of the announcement [link no longer available]:

  • Claim: "Accelerates Innovative Developments" - No specific product or technology innovation is in the announcement but a rough outline of how they are going to pursue it is.
  • "Adding Silicon Valley location" - This is prominently highlighted at the top of the release and repeatedly throughout, indicating how important Milestone thinks the Silicon Valley aspect is. This looks to be for business development, not software.
  • Business unit is to be "Incubation and Ventures" explained by Milestone as relating "to organic product innovations that can be developed and taken to commercial success" as well as joint ventures, mergers and acquisitions.
  • New VP [link no longer available] worked at Microsoft from 2002-2008 and aims to "to contribute up to 25 percent of Milestone’s growth in the long run"

Since this is an aspirational release wrapped around a new hiring announcement, what's most telling is Milestone's focus:

  • Growth: Mentioned 5 times in the release, clearly Milestone is focused on accelerating growth, something that is no surprise given their world domination plan but still much different than their competitors who, while they may be growing faster, are typically equally concerned with profitability and internal development.
  • Silicon Valley: Tying into the growth focus, emphasizing Silicon Valley matches well given the hyper growth of many tech companies based there.
  • Microsoft: Milestone continues to hire ex Microsoft employees (the new head of tech support [link no longer available] is from Microsoft as well) and emphasize the Milestone / Microsoft relationship.

Can This Succeed?

Just last week, we declared that Milestone was unrealisticaly ambitious and setting itself up for a major correction. This is a clear example to us of Milestone overextending themselves. Indeed, it feels like something out of the Onion or 1999 (when Microsoft was relevant and the first tech bubble had yet to burst).

Love it or hate it, one thing is clear: no video surveillance manufacturer has ever opened up a Silicon Valley office for such a purpose. Indeed, no video surveillance from Silicon Valley has ever become a major player (e.g., 3VR, Intransa, Proximex). Either this will prove to be a genius move for Milestone or a foolish waste of time and money.

The best part we see is that it's a great 'rah rah' announcement especially for the naïve. This can be used as a talking point about how Milestone is expanding and doing things no one else is doing.

The problem we see is delivering growth via this strategy. Silicon Valley and physical security don't mix. The Valley's focused on b2c with a heavy emphasis on social, local and mobile and wants companies that can have hockey stick growth to hundreds of millions in a few years. The physical security industry is pretty much the opposite of everything the Valley values. That's why the Valley has so little impact on our industry despite revolutionizing so many others.

Now, Milestone has been recently emphasizing VMS's role in 'optimizing business processes' and being 'more than security [link no longer available]', a point reiterated in this announcement. Of course, lots of VMSes are used for 'more than security' and there's no clear explanation of why Milestone can disproportionately capture such uses. Could Milestone somehow acquire, partner or merge with a Valley company outside of security? Perhaps that's their tactic.

The most likely outcome is that this gets Milestone some good press, they eventually do some minor deals that have little overall impact and they continue to burn cash. In their defense, and as the lotto saying goes, "You got to be in it to win it". Milestone is certainly taking a shot at the big prize but the odds look long against them.

2 reports cite this report:

Milestone / Canon Announces Cloud Spinoff Arcus Global, Now Arcules on Jun 27, 2017
Milestone has spun off a business, Arcus Global [link no longer available], funded by their parent company Canon. The new company aims to transform...
Hikvision Silicon Valley and Canada R&D Expansion on Feb 15, 2017
After massive growth in their sales team, Hikvision is now planning to add two new R&D centers in North America. In this report we examine...
Comments : PRO Members only. Login. or Join.

Most Recent Industry Reports

Access Control Door Controllers Guide on Oct 22, 2019
Door controllers are at the center of physical access control systems connecting software, readers, and locks. Despite being buried inside...
Alarm.com Acquires OpenEye on Oct 21, 2019
Alarm.com is targeting commercial expansion and now they have a commercial cloud VMS with the acquisition of OpenEye. In this note, based on...
Government-Owned Hikvision Wants To Keep Politics Out Of Security on Oct 21, 2019
'Politics' made Hikvision the goliath it is today. It was PRC China 'politics' that created Hikvision, funded it, and blocked its foreign...
Integrated IR Camera Usage Statistics 2019 on Oct 21, 2019
Virtually every IP camera now comes with integrated IR but how many actually make use of IR or choose 'super' low light cameras without IR? In...
Alarm Veteran "Demands A Criminal Investigation" Of UL on Oct 18, 2019
The Interceptor's Project pressure against UL continues to rise. Following Keith Jentoft's allegation that "UL Has Blood On Their Hands", Jentoft...
Camect "Worlds Smartest Camera Hub" Tested on Oct 18, 2019
Camect is a Silicon Valley startup that claims the "Smartest AI Object Detection On The Market", detecting not only people and vehicles, but...
Hikvision Global News Reports Directory on Oct 17, 2019
Hikvision has received the most global news reporting of any video surveillance company, ever, ranging from the WSJ, the Financial Times, Reuters,...
Camera Calculator V3.1 Release Improves User Experience on Oct 17, 2019
IPVM has released a new version of our Camera Calculator, V3.1, with significant user experience improvements, a new development plan, and an...
Securing Access Control Installations Tutorial on Oct 17, 2019
The physical security of access control components is critical to ensuring that a facility is truly secure. Otherwise, the entire system can be...
Access Control Course Fall 2019 - Last Chance on Oct 17, 2019
Register Now - Fall 2019 Access Control Course. Thursday, October 17th is the last day to register. IPVM offers the most comprehensive access...