Why Paid Is Good = Innovation & Service
Looks like Tyco is a trendsetter.
Weeks after Tyco starting giving free Exacq licenses, Digital Watchdog followed suit and now the biggest camera manufacturer yet is offering free VMS licenses.
In this note, we look at Panasonic's move, what it includes and how this is likely to impact the market.
While we have you here, as one of the last independent VMSes left, I'd be curious to hear your specific pitch against the free VMS bundles.
From an outsides perspective, I would be weary of using anything free for such a critical process. More importantly how will the customer react when they learn the software selected to secure their facility was free?
From an insider's perspective, IPConfigure invests blood and treasure into developing innovative software solutions with a team that's passionate about the important work they are doing. I could not imagine how the team might react if I told them we are selling the business to a camera manufacturer who will be giving our software away for free. Needless to say their best work would be behind them.
The consolidation of VMS manufactures went all wrong and will negatively impact the rate of innovation in the market. Silicon Valley was suppose to make the big move into this space, not the old guard who have been getting it wrong for so long.
Innovation and great customer support can only come from independent VMS companies. For they have everything to lose if they don't get it right.
I think it's a mistake to simply take the fact that vendors are offering their cameras with 'free' VMS licensing to mean that they don't recognize the value of VMS software. Just the opposite.
The reason bundling is attractive to buyers is because they save money, of course. And the reason it is attractive to the vendors is because they can make a sale that they may have not made otherwise.
And if that were all there were to it, then there is definitely an argument to be made saying the VMS license is worth so little that it can be just thrown in for free.
But another big vendor benefit, apart from the initial $ from the sale, is the channelling of the user into a controllable eco-system of the vendors choosing. And that can translate into many times the profit down the line as the end user is more likely than not to continue on their initial path with respect for to purchases.
Since the vendors cameras will always be supported first and best by their own VMS, this adds stability to the system that the end-user may not want to risk.
On the other hand if one were to buy one Panasonic cameras, and seperately purchase Christopher's IPConfigure product the situation changes. Even assuming that IPConfigure were to be an overall better VMS, there would be times when integration with Panasonic would be behind VI.
That's when the customer starts to think, "maybe I should buy the cameras that have the best features AND are supported by IPConfigure", instead of thinking Panasonic automatically.
This unrecognized eco-system affinity is a large part of the value of the VMS for a camera manufacturer, and bundling is the natural way to derive maximum value from it.
"But another big vendor benefit, apart from the initial $ from the sale, is the channelling of the user into a controllable ecosystem of the vendors choosing."
We call this vendor lock-in, which makes for a difficult exit if the customers finds the solution inadequate or seeks features not available in the Free VMS.
"Even assuming that IPConfigure were to be an overall better VMS, there would be times when integration with Panasonic would be behind VI."
This is where ONVIF profiles -S and -Q address integration gaps with VMS manufacturers. Note, not all integration is equal but the VMS should have those risky manufactures identified for their resellers.
"This unrecognized eco-system affinity is a large part of the value of the VMS for a camera manufacturer, and bundling is the natural way to derive maximum value from it."
If you are in a race to the bottom then I completely agree.
Thanks for the insightful response.
The customer saves money while the vendor/reseller makes more money? Actually, the vendor is losing the VMS revenue opportunity under the free model.
The customer appears to save money, the 'free' VMS appears to be a total loss. Neither is necessarily the case.
Yes, this is vendor-lock in strategy, and I'm not advocating it, only recognizing its overlooked contribution to the vendors decision to bundle in the first place.
Yes, ONVIF has made great strides in reducing the degree to which one is limited by such an arrangement. That is why I used the term vendor affinity instead of lock-in. But still there will be at least some benefit for some time to come.
And from an independent VMS manufacturer's perspective, it might seem like it is purely a 'race to the bottom', but from the point of view of someone who sells both cameras and VMSes, it may not be the case.
Imagine you are Panasonic and want to increase sales, you could just discount your hardware and charge fairly for your VMS, or instead keep the hardware the same and give the VMS away 'free'. Its a trade off from their point of view, not necessarily a race to the bottom. Anyway it's not a race because $0 is the bottom.
But I do agree with you that the appeal is lessening everyday as interoperability increases.