Pelco vs Integrators

By: Brian Rhodes, Published on May 14, 2012

Once an integrator favorite, Pelco is increasingly viewed with distrust and concern by many. As the former US leader becomes assimilated into a French multinational conglomerate, Schneider Electric, concerns rise. In particular, Schneider Electric has its own large system integration business that may conflict with Pelco's channel partners, the regional and local integrator.

This backdrop set up an entertaining and tense speech at PSA Security's PSA-Tec conference by a Schneider/Pelco executive. In this note, we recap the speech, the points made and the concerns of the attendees.

Keynote Highlights

During introductions, PSA's President noted that Schneider Electric's EVP of Buildings Business (and former Pelco President) only accepted an invitation to keynote PSA TEC on the condition that a 'barbershop quartet' introduce him. Playing on the gag, a group of crooners took the stage to sing an irreverent song that lamented Schneider's takeover of channel beloved 'Big Blue', the overt 'Frenchness' of the company, and the death of perks like Pelco Jet junkets/trade show trinkets.

When addressing the 'Elephant in the Room', Meyer highlighted the tenuous competitive relationship that Schneider Electric's service arm has with 'independent integrators' like the PSA members in attendance. Meyers laid out Schneider's defense of this practice in a straightforward manner, citing several justifications:

  • Major Markets Only: Schneider only competes in major US metropolitan cities, in 15 branches nationwide. This was meant to show that most "mom 'n pop" integrators have 'nothing to fear' from Schneider pursuing business in smaller markets.
  • High Profile Targets: Schneider seeks 'high profile' business and customers to enhance the Pelco name. The marketing advantage of having esteemed clientele benefits the entire channel. Likewise, self performing the install work for these clients ensures that Schneider can "manage their own standards" for workmanship and service.
  • Greenfield projects hold Pelco's interest, not cherry picking existing 'installed business' from channel integrators.
  • Necessary to Compete: Schneider sees its primary competition comes from other large, multinational integrators, and they must compete in the services market to protect its business.

Summarizing the point, Meyer noted that "Today's [Pelco] Channel Policy is the same as Yesterday's" and clearly downplayed the potential business impact to the loyal integrator channel of years past.

Despite these assurances, several integrators noted disagreement with these statements. Meyer's statements clarifying competition as limited to "large, greenfield projects" was met with several "bulls**t!" murmurs and skeptical "Riiiiiiiight" responses from integrators within earshot.

In particular, key issues we see with the statements made include:

  • It is hard to see how Pelco/Schneider taking away large scale projects will help integrators. Most integrators see the branding advantage of such wins as far secondary to their own local efforts.
  • It is difficult to believe that Schneider can restrain its focus to greenfield projects. There are simply not enough of them to satisfy a large company in a market where surveillance has already deeply penetrated.
  • That it is necessary for them to do so to compete with other behemoths (like Tyco/ADT) may be the most convincing and honest answer. Unfortunately, that is not a good sign for independent integrators nor do we think for users looking for high quality integration.

Conclusion

While Pelco/Schneider's claims are debatable, their executive chose to 'grab the bull by the horns' and speak on a very controversial subject to a contentious and fickle group of integrators. Despite assurances of mutual benefit, Schneider Electric's integration business will continue to draw the scrutiny of a skeptical dealer channel. Only time will tell whether Schneider can profitably address the needs of both sides of its business.

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