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

Faked Convergint Fever Camera 'Expert' Marketing on Jun 16, 2020
Convergint touts they are "THERMAL CAMERA SOLUTION EXPERTS" while faking...
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,...
Anixter Runs Fake Coronavirus Marketing Using Shutterstock Watermarked Images on Jul 24, 2020
Coronavirus faked marketing is regrettably commonplace right now but Anixter...
Fever Camera Sales From Integrators Surveyed on Jun 01, 2020
Fever cameras are the hottest trend in video surveillance currently but how...
Uniview Deep Learning Camera Tested on Jul 14, 2020
Uniview's intrusion analytics have performed poorly in our shootouts. Now,...
Convergint Refuses To Fix Faked Fever Marketing, FTC Complaint Filed on Jun 19, 2020
Since Convergint has refused to fix their faked fever camera marketing, IPVM...
Facial Recognition: Weak Sales, Anti Regulation, No Favorite, Says Security Integrators on Jul 07, 2020
While facial recognition has gained greater prominence, a new IPVM study of...
Verkada Falsely Claims "First Native Cloud-based Access Control and Video Security Solution" on Jun 18, 2020
Verkada's false claims continue, this time to be the first native cloud-based...
IPVM To Disrupt Trade Shows With Launch of Online Shows on Mar 17, 2020
IPVM is launching Online Shows, a series of ongoing events that allow sellers...
Dahua Faked Coronavirus Camera Marketing on Apr 01, 2020
Dahua has conducted a coronavirus camera global marketing campaign centered...
Disruptive Free Lead Generation Added To IPVM on May 15, 2020
IPVM has added lead generation for sellers, for free, disrupting the...
The Problem With Fever Detecting Thermal Sunglasses on Apr 15, 2020
While the media has promoted using thermal sunglasses to detect fevers, this...
Masks Cause Major Facial Recognition Problems on Feb 24, 2020
Coronavirus is spurring an increase in the use of medical masks, which new...
Breaking Into A Facility Using Canned Air Tested on Jan 28, 2020
Access control is supposed to make doors more secure, but a $5 can of...
Fever Cameras Are Medical Devices, Per The FDA, Dahua, Feevr, Hikvision, InVid Contrary Claims Are False on May 28, 2020
Fever cameras are medical devices, despite what euphemisms various sellers...

Recent Reports

Dangerous Hikvision Fever Camera Showcased by Chilean City on Aug 07, 2020
Deploying a fever camera outdoors, in the rain, with no black body, is...
"Grand Slam" For Pelco's PE Firm, A Risk For Motorola on Aug 07, 2020
The word "Pelco" and "grand slam" have not been said together for many years....
FLIR Stock Falls, Admits 'Decelerating' Demand For Temperature Screening on Aug 07, 2020
Is the boom going to bust for temperature screening? FLIR disappointed...
VSaaS Will Hurt Integrators on Aug 06, 2020
VSaaS will hurt integrators, there is no question about that. How much...
Dogs For Coronavirus Screening Examined on Aug 06, 2020
While thermal temperature screening is the surveillance industry's most...
ADT Slides Back, Disappointing Results, Poor Commercial Performance on Aug 06, 2020
While ADT had an incredible start to the week, driven by the Google...
AHJ / Authority Having Jurisdiction Tutorial on Aug 06, 2020
One of the most powerful yet often underappreciated characters in all of the...
SIA Coaches Sellers on NDAA 889B Blacklist Workarounds on Aug 05, 2020
Last month SIA demanded that NDAA 899B "must be delayed". Now that they have...
ADI Returns To Growth, Back To 'Pre-COVID Levels' on Aug 05, 2020
While ADI was hit hard in April, with revenue declining 21%, the company's...
Exposing Fever Tablet Suppliers and 40+ Relabelers on Aug 05, 2020
IPVM has found 40+ USA and EU companies relabeling fever tablets designed,...
Directory of 201 "Fever" Camera Suppliers on Aug 04, 2020
This directory provides a list of "Fever" scanning thermal camera providers...
Face Masks Increase Face Recognition Errors Says NIST on Aug 04, 2020
COVID-19 has led to widespread facemask use, which as IPVM testing has shown...
Dahua Loses Australian Medical Device Approval on Aug 04, 2020
Dahua has cancelled its medical device registration after "discussions" with...
Google Invests in ADT, ADT Stock Soars on Aug 03, 2020
Google has announced a $450 million investment in the Florida-based security...