The Problem of Buying from Big Companies

Author: John Honovich, Published on Sep 21, 2008

Big companies like GE, Tyco, Bosch, Cisco and Honeywell make a broad range of mostly mediocre, overpriced video surveillance products that take advantage of customer's lack of information. While they are powerful today, the rise of the Internet is slowly but surely eliminating their main advantage.

Their historic success is based on the difficulty customers had in determining the best products.  Big companies 'solved' this problem by building large channel sales systems that 'educated' customers on why their products were best.  In practice, they mainly leveraged expensive sales force to wine, dine and mislead customers.  In the absence of better information sources, these companies slugged it out against one another, all using similar tactics.  The results were high prices to cover expensive direct sales costs and minimal incentive to build high quality products.

Innovative startups would emerge but eventually would have to sell to the big conglomerates. The innovative startup, despite superior products, lacked the sales channel to reach and convince customers of their superior products.  This was the most efficient outcome but only because the costs of customers finding the superior new product was too high -- a truly unfortunate circumstance for customers and society.


The Internet is Destroying the Traditional Sales Channel

As customers find more information and more objective information on-line, the value of the traditional sales channel declines.  10 years ago, the amout of information on products was pitiful.  There is far more today, including reviews and online purchasing options.  Over the next 10 years, the quality and amount of information will continue to rise as the costs of distributing information falls and the usage of the Internet expands.

As customers can learn directly and easily determine the best products and the best pricing, the value of sales channels decreases.  This is a powerful and general trend not unique to video surveillance products.  As this alternative matures, the 'educational' value of large companies engaging in self-promotion will decrease.  Unfortunately for those companies sales costs will actually increase as it will be harder to overcome this trend.  The resulting combination undermines the core value of the big conglomerates, placing them at high risk for failure.


Two Practical Examples

Axis: Axis' business model scares incumbents far more than Axis' technology. While big companies can easily buy out technology, they are not sure how to respond to Axis mass distribution sales model.  It's the most common concern I hear from big manufacturers and integrators.  The ease of buying Axis' products over the Internet radically expands the reach of their products. However, it severly undermines the profits and the structure of traditional distribution.

These big conglomerates depend on controlling sales through their channels.  Axis' explosive growth, done by violating this structure, makes acquisition by the big conglomerates far less attractive to Axis. Simulaneously, Axis' cost structure is far more efficient than their larger competitors.

Axis business model is a template for future video surveillance companies to increase customer value, cut costs and escape the grasp of traditional conglomerates.

IP Video Market Info: Imagine if you could research and identify the best products for your needs without being dependent on sales people and manufacturers.  Historically, this was impossible.  It's not ready today but it's clear that this is the future.

IP video Market Info started as a personal endeavor to help myself better understand the best products.  However, I am realizing that there is a deep need for such help.  Take a recent note I received: "Trying to weed through all of the different manufacturers out there to figure out what each company has to offer and who the market leaders are is a daunting task and your site has drastically shortened the learning curve in relation to IP video."

The site needs to get far better and I am not claiming that this site be the one to solve it.  Nonetheless, it is abundantly clear to me that honest problem solving information over the Internet is the future.  This future will cripple the sales channels that drive the success of big conglomerates.

It's going to take time.  How long, I do not know - maybe as short as 5 years or as long as 10 for clear sign of the fall of these conglomerates. The Internet promises to help you identify the best products for your needs at significantly lower costs by eliminating the waste and corruption of traditional channels. 

Such value makes the transition inevitable - the only questions are when and how.

2 reports cite this report:

How to Cut Costs Using the Internet on Jan 03, 2009
The recession is forcing broad reductions. Worse, the era of excess consumer spending is over. In response, most business around the world, whether...
Eliminate Sales and Marketing on Sep 30, 2008
10-20% of all spending on video surveillance goes to sales and marketing costs yet customers find great difficulty determining the best solution...

Related Reports on Sales

Hikvision Distributor Says Hikvision "Top Rated Yet Most Hated" on Jul 12, 2017
The CEO of 2M Solutions, a distributor selling Hikvision cameras under their own as well as Hikvision's brand has publicly declared Hikvision to be...
Best Manufacturer Perks on Jul 07, 2017
A decade ago, the best manufacturer perk was likely a trip on the Pelco jet: But the Pelco jet is long, long, long gone. What types of perks...
Hikvision USA Hires VP of Business Development on Jul 05, 2017
Hikvision USA is expanding again, this time in its drive to move up market to larger integrators and end users. In this note, we analyze...
IndigoVision Raids Avigilon Sales Team on Jul 05, 2017
If you can't beat 'em, hire their employees? This could be described as IndigoVision's most recent strategy to increase market share in North...
Hikvision Hits Record 'ALL PRODUCTS' Sales Run on Jun 30, 2017
Hikvision has a new record. This one is for the most times a video surveillance manufacturer has put all their products on sale in 2 months....
Hikvision Stock Surges - Doubling In Past Year on Jun 29, 2017
Hikvision's stock, on the China Shenzhen stock exchange, has more than doubled in the past year, vaulting the company's worth to an astounding (for...
Top 5 Improvements For Manufacturer Sales People on Jun 28, 2017
Manufacturer sales people are very important to integrators, but it takes more than just punching a clock to be successful and truly valuable to...
Manufacturer Sales People Are Very Important - Statistics on Jun 26, 2017
IPVM's new integrator statistics show what sales people say regularly: Sales people are very important. From 150 integrator...
Importance of Sales To Integrators - Statistics on Jun 23, 2017
One of the top trends in the industry over the past few years has been the rise of across-the-board sales (e.g.: Hikvision Sales, Dahua Sale,...
Resolver / PPM 2000 Incident Management Platform Profile on Jun 20, 2017
You might have seen the company whose employees wear hockey jerseys at trade shows and wondered "what do they do?" PPM 2000 has been active in...

Most Recent Industry Reports

Security Robots Are Just Entertainment on Jul 21, 2017
Great entertainment, no real security value.  That is the happy (or sad) state of security robots in 2017. Knightscope robot's drowning, the...
Wireless Burglar Alarm Sensors Guide on Jul 21, 2017
Wireless sensors for burglar alarm sensors are an increasingly common option for the historical labor intensive wired alarm systems. However,...
Competing Against ADT on Jul 20, 2017
ADT is one of the biggest players in the security industry, with ~$4 billion revenue. In 2017, they were acquired / merged with Protection...
Hikvision Launching Deep Learning Recorders on Jul 20, 2017
Hikvision has become a common choice for super low cost NVRs. Now, Hikvision is aiming to move up market, with deep learning NVRs that claim far...
PR Campaign Exploiting Manufacturer Cybersecurity on Jul 20, 2017
Manufacturers increasingly have a bulls-eye on their back. As cyber security solutions providers grow, they realize a great way to get publicity...
Axis Door Station Tested (A8105-E) on Jul 19, 2017
Axis continues their push into niche markets, especially audio, with network speakers, an IP horn, and video door stations. We bought and tested...
Manufacturer Favorability Guide on Jul 19, 2017
This 120 page PDF guide may be downloaded inside by all IPVM members. It covers our 20 manufacturer favorability rankings and 20 manufacturer...
$8 Billion Utility Georgia Power Enters Surveillance Business Offering Avigilon And Genetec on Jul 19, 2017
Utilities are typically considered major customers of surveillance integrators but one utility, Georgia Power, with $8+ billion in annual revenue...
Knightscope Laughs off Robot Drowning on Jul 18, 2017
A day after a Knightscope robot drowned, Knightscope has issued an 'official statement' making fun of the issue: The implied message is that...
Microsoft Video AI Cloud Services Examined on Jul 18, 2017
Microsoft has released one of the most amazing video analytics marketing videos ever. In it, they detect oil spills, track individual people giving...

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