The Problem of Buying from Big Companies

By 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.

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...
Eliminate Sales and Marketing on Sep 30, 2008
10-20% of all spending on video surveillance goes to sales and marketing...

Related Reports

Don't Be Fooled By Hot Water Bottle Fever Camera Demos on Aug 24, 2020
Fever camera salesmen like to fool buyers (and themselves) with hot water...
Biggest Low Light Problems 2019 on Nov 08, 2019
Over 150 integrators responded to our survey question: "What are the biggest...
Faked Convergint Fever Camera 'Expert' Marketing on Jun 16, 2020
Convergint touts they are "THERMAL CAMERA SOLUTION EXPERTS" while faking...
Verkada Speaks On Disrupting Security Sales Channel on Aug 28, 2020
Verkada's fast growth has taken the industry by storm and their enterprise...
The Problem With Fever Detecting Thermal Sunglasses on Apr 15, 2020
While the media has promoted using thermal sunglasses to detect fevers, this...
Briefcam Buys Frost Award* on Jun 20, 2019
Frost 'awards' are well-known and widely disrespected. Now Briefcam is...
Faked Coronavirus Fever Detection, Athena Used Hikvision; Responds - Selling NDAA Compliant Cameras, Pledging 50% Of Profits to Victims on Mar 24, 2020
US company, Athena Security, faked its coronavirus fever detection marketing,...
Clearview AI Alarm - NY Times Report Says "Might End Privacy" on Jan 20, 2020
Over the weekend, the NY Times released a report titled "The Secretive...
CheckMySystems Company Profile on Aug 14, 2019
CheckMySystems says that too many users respond, "I get an email when...
Masks Cause Major Facial Recognition Problems on Feb 24, 2020
Coronavirus is spurring an increase in the use of medical masks, which new...
Dumber Techs, Bad Box Movers, Says Australian Distributor on Jun 10, 2019
Techs today are "dumber" than they used to be, despite better education and...
Beware Rigged China Fever Cameras on Sep 08, 2020
Many China fever camera manufacturers have rigged algorithms dynamically...
Anixter Runs Fake Coronavirus Marketing Using Shutterstock Watermarked Images on Jul 24, 2020
Coronavirus faked marketing is regrettably commonplace right now but Anixter...
Budget Covert Cameras Tested on Nov 26, 2019
Covert cameras under $100 are widely available online but are they any...
Fever Camera Sales From Integrators Surveyed on Jun 01, 2020
Fever cameras are the hottest trend in video surveillance currently but how...

Recent Reports

GDPR Impact On Temperature / Fever Screening Explained on Oct 22, 2020
What impact does GDPR have on temperature screening? Do you risk a GDPR fine...
Security And Safety Things (S&ST) Tested on Oct 22, 2020
S&ST, a Bosch spinout, is spending tens of millions of dollars aiming to...
Nokia Fever Screening Claims To "Advance Fight Against COVID-19" on Oct 22, 2020
First IBM, then briefly Clorox, and now Nokia becomes the latest Fortune 500...
Deceptive Meridian Temperature Tablets Endanger Public Safety on Oct 21, 2020
IPVM's testing of and investigation into Meridian Kiosk's temperature...
Honeywell 30 Series and Vivotek NVRs Tested on Oct 21, 2020
The NDAA ban has driven many users to look for low-cost NVRs not made by...
Avigilon Aggressive Trade-In Program Takes Aim At Competitors on Oct 20, 2020
Avigilon has launched one of the most aggressive trade-in programs the video...
Mexico Video Surveillance Market Overview 2020 on Oct 20, 2020
Despite being neighbors, there are key differences between the U.S. and...
Dahua Revenue Grows But Profits Down, Cause Unclear on Oct 20, 2020
While Dahua's overall revenue was up more than 12% in Q3 2020, a significant...
Illegal Hikvision Fever Screening Touted In Australia, Government Investigating, Temperature References Deleted on Oct 20, 2020
The Australian government told IPVM that they are investigating a Hikvision...
Panasonic Presents i-PRO Cameras and Video Analytics on Oct 19, 2020
Panasonic i-PRO presented its X-Series cameras and AI video analytics at the...
Augmented Reality (AR) Cameras From Hikvision and Dahua Examined on Oct 19, 2020
Hikvision, Dahua, and other China companies are marketing augmented reality...
18 TB Video Surveillance Drives (WD and Seagate) on Oct 19, 2020
Both Seagate and Western Digital recently announced 18TB hard drives...
Watrix Gait Recognition Profile on Oct 16, 2020
Watrix is the world's only gait recognition surveillance provider IPVM has...
Intel Presents Edge-to-Cloud Ecosystem for Video Analytics on Oct 16, 2020
Intel presented its processors and software toolkit for computer vision at...