UTC, Owner of Lenel, Acquires S2

The Casi precedent is a fascinating wrinkle here.  When Casi was ended, UTC/Lenel lost a significant install base because they didn't migrate those customers well.

The prospect of this being repeated with Lenel is worrisome, right?

From an integrator stand point this could be really frustrating. When UTC acquired GE the GE dealers typically by default could sell Lenel and vice versa. Difference being GE wasn’t really being pushed near as much at the time.  I guess it depends on how the market plays out and who gets to sell what. I know I have personally gotten tired of the supposed “protected” channels from manufacturers as more lines have either started selling to either anyone who signs up or even end users or both. 

F***.

Its more important to know what the planned product roadmap will be for Lenel/S2. Generally speaking, S2 is easier on the small/medium scale while Lenel is stronger on the large scale, so I can see a time where both products are targeted at different customers. Also, UTC has their own Ultraview VMS (sold a lot in the Middle East and Europe channels btw) so it could replace S2's tie-up with Exacq.

Wow, this should be fun .... this is the first acquisition in a while where the two companies had the exact same target applications and markets, for the most part.

I agree with a prior poster's comments about some of the reasoning being that UTC needed a strong Cloud-based offering in order to keep pace with the likes of Allegion and Assa Abloy, who are starting to really focus on organic Cloud solutions (ex.> Allegion's purchase of Isonas for their PureAccess Cloud platform).

Isonas is no S2, but the reasoning remains the same, i.e. the smaller, more nimble access control companies have been focused a lot longer on Cloud solutions than the biggies like Lenel and SH.  You can't just slap an overlay onto an existing server-based (on-premise) system and expect it to keep up with a true cloud-based system that was designed with a hosted architecture in mind.

I would expect the newer entrants with cloud platforms that were formed by or managed by ex-Lenel and SH guys are all thinking this is a good time to be acquired.

I would expect Feenics to be looking for a deal ..... again, they are no S2, but they have an established cloud solution that is right there and waiting to be picked up relatively cheap as opposed to having to start all over from scratch in-house.  

Assa Abloy still needs a cloud services ACS. 

Two Lenel employees expressing excitement about the deal,in response to a concerned consultant:

UTC management is likely talking this up as being good for both Lenel and S2.

A comment on LinkedIn about this article and disagreeing with our belief that S2 may supersede Lenel over time:

John, I truly believe you couldn’t be further from the truth with your article. There is absolutely no sense to your vision of UTC migrating customers off of OnGuard and onto the S2 platform. Lenel has long been the leader in the large systems and enterprise systems sector of the access control industry. They also pioneered the non-proprietary and open-platform concept that quickly catapulted them to the dominant leading position. Why would UTC go away from the highly trusted and utilized and successful platform to move to S2. S2 Netbox is a very solid platform in its own right but to say that there would be a mass transition to the proprietary S2 platform just does not seem well thought out. Yes, S2 can utilize Mercury panels but with a limiting feature set. The Mercury panels are the most widely used access control panels in the industry and people like having the flexibility to convert to another Mercury based system, such as Access Expert, should the relationship with Lenel go bad and vice versa. The fact that companies can choose from over 20 strong contenders that utilize Mercury hardware without having to do a complete forklift upgrade is a huge benefit and one that is not going to go away.

As for why UTC would move away - (1) they have struggled developing Lenel for a long time and (2) S2 is a much more modern platform with much faster development. There is no doubt that Lenel was an 'innovator' in its day, but that was a decade ago.

Looking ahead to 2025, e.g., does UTC really what to drag the shell of Lenel or would it better, to over the next 5 years, migrate to S2?

I have experience with both Lenel and S2, though a lot more Lenel experience that S2. 

There are a lot of comments about what UTC did to Casi. Really, I think that GE drove CASI into the ground. The acquisition of GE security was more about all the other products and not about Casi. Lenel got saddled with doing something with a bad situation. Lenel handled it poorly. But we all got Mercury hardware that will replace the Casi hardware and a number of software choices for whose head end to use.

I do think the panel aspect is something to consider. Nobody knows what HID Global will do with Mercury. HID has, for the most part, continued to update and develop new products for the companies they have acquired. When looking at the really big picture, what value do you assign to having a backup hardware platform? 

I am not aware of any patents or copyrights that S2 holds. Are there any? Is that part of the bigger picture? 

How much of Lenel is the government segment? How much of the technology being pushed by the government - OSDP over Wiegand, higher levels of IT security, PKI-at-the-door - will get moved into S2? Was it less expensive to purchase S2 and incorporate the new technology for the SMB market, rather than trying to get OnGuard to fit into the SMB market? 

Is there functionality, chunks of code, that can moved from the S2 web-based platform into OnGuard? A browser-based client for badging and video monitoring? Is there value in the S2 Magic Monitor? 

What is S2's global market? Will UTC be able to push S2 around the world and find increased sales in areas that don't have a product with S2's background? 

Will UTC use S2 as the platform to go after Brivo?

I have heard that there is a relationship between S2 and Blackboard. Is UTC looking to use S2 to make a much bigger play into the higher ED market? Perhaps a place where Lenel integration experience and S2 integrations with Blackboard will come in handy? 

I don't think a purchase like is typically done for 1 reason. I think there are a number of factors and that when all the factors are all weighted together, the purchase makes sense (to somebody). But we don't know what all their motivations are.