UTC, Owner of Lenel, Acquires S2

By: IPVM Team, Published on Sep 20, 2018

UTC now owns two of the biggest access control providers, one of integrator's most hated access control platforms, Lenel, and one of their favorites, S2 (see IPVM S2 company profile).

utc s2

Under UTC management since 2005, Lenel has had significant problems, e.g., Lenel Partners Angry, Lenel Does Not Care, Worst Access Control Manufacturers 2018, Worst Manufacturer Technical Support 2018.

In an extraordinary brief announcement, UTC does not mention Lenel nor explain what they are doing here. Inside this note, we examine the move and the potential problems for Lenel and the future of S2 at UTC.

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Comments (77)

Wait, wasn't S2 supposed to be Software House 2; now it's Lenel2?

Does anyone have any idea how the Lenel people feel about this?

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?

No, I think they learned their lesson with that.  The problem with the Casi move was there was no easy way forward and if you have to forklift your system out anyway, why would you give that money to the company that forced that decision on you in the first place?

With S2 they get a company that's extremely adept at system take-overs already and in a great position to transition the existing install base over.  There are definitely some things S2 will need to add to integrate the way Lenel does, but they aren't going to close down Lenel next year so they have time to plan and get things right.  This IS the whole point of Mercury panels, right?

The key to this all being successful will be to give enough direction to S2 to make the product what they need it to be, while staying away from them enough so they retain their own identity and maintain the culture that got them so well loved in the first place.  On that score I'm less than optimistic.  It always seems like conglomerates just can't help themselves when it comes to tinkering with the companies they acquire.  Either way, I definitely think Lenel's days are very much numbered.  

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. 

First, Congratulations to Mr. Moss and the entire S2 organization. They have built a fine product and have for years executed an excellent plan for growth and above all remained focused on their roadmap and vision.

My initial thought centers around the integrators that will be affected. I'm sure there are many cases globally where a S2 shop and a Lenel shop competed for the same customer base. If this becomes a combined offering from UTC (like the GE/CASI Products) which integrator is chosen as the lead? Someone always becomes "the chosen one" in a area and the rest are left to fiend for themselves.

Second thought would be who takes the lead as far as field sales. Surely they could not support dual sales roles for long. Certainly going to be some interesting times ahead with both companies.  

Agree.  Very happy for John Moss and the team at S2.

Not to mention that S2 has been a key product used to replace existing Lenel systems due to (TOC) total cost of ownership.

We're a small company and have probably had almost a dozen requests to propose a system specifically to replace Lenel over the past couple years. One or two I think were "enterprise" initiatives, but most were smaller companies with single locations.

I will say it was not always totally about not liking Lenel, but also not liking their integrators.

S2 was one of the few sizeable independent access control manufacturers.

What does independent mean in this context, not owned by a large conglomerate?

not owned by a large conglomerate?

Yes, not owned by a large conglomerate.

But will there be a S3? :)

I have a feeling this could go similar to the Tyco Exacq buyout. Pushing Lenel as enterprise platform and S2 as an alternative.

It makes a lot of sense for Lenel to be enterprise and S2 to be the smaller scale and distributed scale solution.

I'm surprised by the conclusion of the writer that "most reasonable assumption we can take from his statements is that S2 is the next generation platform for UTC and that customers will be migrated from Lenel to S2 over time." That doesn't seem very reasonable; Lenel can do a lot of things with scale and integrations that S2 is considerably weaker in. Why throw out perfectly strong development that isn't past its prime? And while S2 absolutely has some great product, it's not like it's a fundamentally disruptive technology compared to Lenel.

I would see an integration developed for S2 systems up to Lenel OnGuard Enterprise be the stronger play for everyone than a conversion of Lenel systems to S2. 

(And S2 re-packaging a now major competitor's product (Johnson Control's Exacq) for video doesn't seem like a great fit long-term.)

One point about which system fits at what scale: UTC also has another access line, TruPortal, which is sold through distribution. S2 being targeted at smaller or SMB systems could effectively cannibalize that line.

It can be argued which of these is best for whichever market, but it seems a bit of a stretch to call UTC's product lineup "complementary" when there are already two platforms selling at different ends of the market and S2 will cut into both.

I agree with what you are saying, Ethan, but there is a gap between TruPortal and OnGuard which S2 would fit nicely in. I could see S2 replacing some of the lower level OnGuard lines (ie 32 ES), as well. Should be interesting seeing how this unfolds.

From what I've seen, TruPortal has been limited in what it can do so it can't compete at a higher level as far as number of doors.  There is minimal integration though and it's certainly not an enterprise platform.  Lenel is a darn good small system too if they'd get that darn interface upgraded.

It appears that TruPortal uses Mercury boards with embedded Lenel software. In fact, if you read the fine print on the PC board, Lenel's name is printed on it.

TruPortal was designed for 1-2 door systems (sure, they have add-on panels, but your customer better have lots of wall space...) The browser-based software is pretty much "idiot-proof". Not a good choice for high-security applications IMHO. Very limited - especially when it comes to reports, but then again, if you're just controlling access to a clubhouse or pool at an apartment complex, its a perfect fit!

I believe the TruPortal is what Lenel called the NextGen panel.  It was supposed to be the one that migrated Verex and some other platforms to an in house developed and manufactured board.  It's very powerful and expandable, then Lenel went back to Mercury again.  Just from what I heard. 

Yes these boards are based upon the NextGen hardware Lenel used for a while. It is also based somewhat upon a GE Topaz platform as well. The single door IP module anyways. The NextGen panels didn't really work like they had hoped. You can however import TruPortal panels into OnGuard with some functionality now as well. TruPortal has one of the best apps and web page functionality of any system out there.

We love TruPortal.  The ability to flash it on OnGuard or integrate it to a full building system makes it even better.  Whoever figured out how to let them run a suite and give the tenant the simple portal access for their system and then tie them back to the big building system was on it!

I haven't tried to migrate one in yet. Last I knew before 7.4 you could only bring in for card holders if I remember correctly. Not sure all the functionality of that migration yet. But yes TruPortal is really good at what it does and designed for. Sure you could have up to 64 readers but those would have to be all in one building essentially. So if you are installing that many then Lenel makes better sense.

But yes TruPortal is really good at what it does and designed for. Sure you could have up to 64 readers but those would have to be all in one building essentially. So if you are installing that many then Lenel makes better sense.

Yet this says in a nut shell what is so backwards in the security industry. There is no reason why a system should not be able to scale for multiple locations. Maybe not for all the features of other software like AD or video integration, but to be limited to one location? I don't care how good it works for just one location. It's a blight on the security industry that gives any other technology industry the right to deride it.

Agree totally with your comment. That part is truly frustrating. Also the single door controller doesn't have a large memory in it. So if it loses connection to the base controller it will only remember the last 50 or so credentials.

S2 has their own video system deep in development.  It's only Exacq for now.

F***.

NOTICE: This comment  has been moved to its own discussion: 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.

Not easy to compare Lenel vs. S2 in terms of large /medium capacity

 

Lenel is a server/client architecture that scales well.  S2 is a web based client solution and ideal for small/medium sized solutions on a global scale.  

 

Both have their own benefits  and challenges, but I can see both solutions competing on their own for market share. There is no need for UTC to pick one over the other

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. 

 

 

S2 isn’t really a cloud solution but an on premises solution hosted by the end user

Actually, they do have a cloud hosted service: NetBox Online.

Actually, they do have a cloud hosted service: NetBox Online.

Sorry, I have to disagree. It works more like a panel that just happens to be on the Internet than on local premise. It requires a node onsite and you need a static IP address and port forwarding for it to communicate with the online panel. It's not cost effective for a small amount of doors because it is a minimum number of portals (16) to start. When I inquired about it, it looked more like them coming up with off the shelf application to satisfy some customers request for a "cloud" solution, or just to say we have a "me too" cloud solution. But it was never developed as a real cloud solution and was just the same system advertised as such.

Now compare that to something like Blub0x where when I looked at it, they seemed to have firmware for EP1501 panels that would permit the panel to initiate communication with the cloud so you did not need to have static IP addresses or do port forwarding at the site, and they were priced per portal without a minimum. (I think Brivo does the same with their panels but I am not as familiar with their products.) That to me is a real cloud solution.

A true cloud system will keep the database both locally and on the host servers, updated in real time. That way users can use the system during a temporary internet interruption.

A lightning strike and subsequent power surge fried the main panel and a couple door boards at one of my Brivo customers locations and all we had to do was replace the boards and call with the account number and serial number of the new main board. They were back online in 5 minutes with all the users and audit trail intact.

Translation: a true Cloud system is hosted offsite. The service also includes system updates and software revisions as part of the monthly payment.

Perhaps we are not seeing the forrest for the trees.  Maybe this isn't a software/enterprise play, but a panel play.

S2 has their own hardware...the "S2 Nodes".  They have a high end feature-set that rivals the Mercury panels.

I think that Lenel bought S2 in order to have decent panels that they own, rather than re-selling Mercury.  The OnGuard vs. NetBox software issue could be just noise.

I think that Lenel bought S2 in order to have decent panels that they own, rather than re-selling Mercury. 

What is the value of having decent panels that they own? In economic terms? I am genuinely curious. I know it's worth something but it strikes me as less value than having a 'converged' access/video platform to sell to large end users.

Hardware margins reign supreme in access control.  Nobody likes to pay for software in this industry, so everyone tries to make their money on hardware.

You could say that Mercury's entire revenue is their partner's hardware costs.  What percentage of this comes from Lenel?  What could Lenel save by selling a similar panel and pocketing the margin they would have sent to Mercury?

Yes, the 'converged' solution matters, and perhaps that's the bigger long-term goal.  However, Lenel supporting the S2 Node would be an easier short-term step that would begin paying off immediately.

Nobody likes to pay for software in this industry, so everyone tries to make their money on hardware.

Serious question - is not the real money in access control made from software upgrade and support plans? You get it every year, for literally decades with these large enterprises. Again, serious questions - is that less a financial factor than making one time money off of hardware markups?

While recurring revenue is brought in by SSA agreements, there is pressure at least to hit breakeven now.  I have seen providers start out with the plan that they'll sell the hardware with minimal markup, and hope to make their money over time with SSAs.  They nearly always revisit this decision.  I think the only provider that manages this model reasonably well is Genetec.

Not to toot our own horn but BluB0X is also a viable option and since we are on the topic.... 

The notion of making RMR solely on SSA is not the case with SaaS offerings. Our model has always been a pay as you go and only for what you use model. We have all major security applications on one platform that allow customers to choose what they need. It's just like any utility bill you receive. This is the benefit for both the end user and the integrator. I encourage all systems integrators that struggle with huge conglomerates that are running on old architecture (Client-server) to look at us. We use Mercury hardware too and you will start to see more and more system takeovers by BluB0X in all major cities. Undisclosed Integrator #5 has it right - we have been focused a lot longer on Cloud solutions - Lenel/S2 have a lot of catching up to do and virtually have to start from scratch to get anywhere close to true Cloud-Based Security. If you want to know more, just reach out to me. 

I was making a point about SSA agreements in and of themselves, and made no comment about SSAs vs. other forms for RMR.

Subscription or SSA, I would wager than BluB0X certainly tries to approach breakeven with the hardware sale, and is not embracing a cellular-phone model of rolling hardware costs into a recurring contract.

All BluBØX dealers sell at the same margin as everyone else in the industry. Typically 30-35% on the hardware and 50% on the labor. So they make decent margin to cover their cost in the initial sale and the provide a service through the BluSKY subscription that isn’t provided with legacy on-prem systems. Rolled into the subscription is the SSA and automatic software updates. BluBØX also offers Hardware-as-a-Service to turn the entire sale into an annual subscription. The point being that you don’t have to sell your hardware at breakeven if you’re also provide a recurring revenue. In fact, it’s a terrible idea. However, the subscription model does allow you to be more competitive on your initial sale price. Our previous company Touchcom and now all BluBØX dealers go to market successfully with this strategy. 

I must be losing my mind. Every conference I go to and every company representative I talk to focuses on ROR and margins. It's really sad that the security industry is more focused on margins than providing the best products possible.

 

The best product possible doesn't have a "subscription" model.

The best product possible won't stop working if someone forgets to renew the license.

 

I can't count how many times I've had to hack a PC's time and registry to get Software House products to work in critical environments when licensing issues arise (which happens often enough to be considered a vulnerability).

Agree.  It's hateful - the race to the bottom for equipment and labor means everyone is desperately trying to figure out another way to make money.

RMR is inherent on our product, so i'm sorry you think this is all we focus on. I'm not sure if you've taken a look at our product but being that in our former company we were both the manufacturer and integrator - we've been on both sides and have developed a product that fits the needs for both. 

 

In reference to your "the best product possible doesn't have a "subscription" model.... " Have you taken a look outside of our industry? This is where the world is going- Security is no exception. What do you use for your email? Music? TV? Etc Etc. Are you saying that all these products are terrible because they all have a subscription model? 

You mentioning RMR made me cringe again, I'll admit.

I have taken a look at products outside of the industry and outside of the country. I've served abroad for 15 years, integrating systems with the DOD, State, the other guys, and started my own company.

For clarity, I wasn't talking about products outside of our industry. Netflix != security monitoring after all. Your lapse in payment to Netflix won't cancel your alarm.com or BluB0X service. Also, BluB0X aint' Amazon Prime, Google Music, or HBO Go. I don't feel obliged to draw a comparison.

For email, I configured a Debian box with Postfix/Dovecot/Rainloop and I manage it myself because it's secure, within my control, and NOT hosted in the cloud. I designed/developed my web site, however, I hire a hosting provider for my front-facing web page because it's cheap and reliable enough to where hosting my own is not worth my time. I also hire a VOIP provider as it's cheaper and better than my local phone/internet provider. So yes, I do indeed pay for other services and no, I am not saying that all of those products are terrible because they have a subscription model.

Yes, Blub0x has an advantage of being SaaS from the start. But the interface is buggy and lacking easily used features and really needs a lot more work to be competitive. You can't just be innovative, you also have to be functional and usable. You have potential, but you still need a lot more work done, which I want to see happen so you and dealers succeed.

Thank you for your positive comments regarding our future success for BluB0X and its dealers, Integrator #20. I'm not sure if you use the product or perhaps have seen it at a tradeshow. But if what you say is true, then BluB0X would not be enjoying tremendous success in the marketplace. It is true that BluB0X is an innovator and is brought to the market capabilities that no other product has provided. BluSKY unlike almost every other product in the marketplace is used by every single person in a company and every single person in a building. Competing products are only used by a very small number of people such as security directors and administrators. If BluSKY was difficult to use or buggy then there would be no way for it to survive with that many people using it every day. To give you some numbers that is hundreds of thousands of people every day that use BluSKY and these people all have no security background at all. This wouldn't be possible if it was buggy or difficult to use. In terms of your comment about lacking easily used features, i'm not sure if you have specific examples but I can tell you from product comparisons we've done with every major brand, BluSKY has a more complete and integrated set of capabilities than anyone else. I encourage you to take a look at our product again to be brought up to speed. 

I am part of a group that likely manages the largest networked Software House system in the world. I can tell you that the price of the hardware is borderline irrelevant when compared to it's licensing. The American people would rightfully be appalled if they knew how much we are spending on licensing alone.

I have a .gov client considering integrating a system that will cost $11 million in Microsoft SQL Server licenses over the course of 11 years. The .gov could use any number of FOSS databases (SQLite, MariaDB, PostgreSQL) for this project but your government doesn't like code it can readily download and deploy, does it?

 

Better software integration.  S2 has a white paper that lists out all of the limitations that S2 the software has with Mercury hardware and some of them are strange.  I'm an end user and we have ONE MR1502 in a system of over 100 doors and that ONE MR1502 gives us all sorts of strange problems that our integrator was challenged to figure out. Thus, I'll never put in another Mercury board into my system.

 

So, I think that there is a lot of strength in owning the software and the hardware (i.e. Apple).  I know that Mercury is the 'industry standard' and by using Mercury hardware you can theoretically move from ACS to ACS.  We're essentially married to S2 now due to our hardware investment.

So, I think that there is a lot of strength in owning the software and the hardware (i.e. Apple).

Yes, I would agree, but keep in mind Apple also has much less market share for that very same reason because not everyone likes being told by Apple we should be happy to get what we get and wanting anything different is dumb and not hip and they should use the failure of any device older than a year to just upgrade to a newer device instead of wanting it to be fixed, which is just so lame. :)

Reference:

Market Share

Why would a manufacturer want to go back to the proprietary way. This makes absolute zero sense. Sure having everything Mercury does make it easier for a product to be switched out software wise but if an integrator is doing their job then this really shouldn’t be an issue. As far as firmware features with Mercury hardware this has to do with how the software engineers write code to the Mercury panels. This could be lack of knowledge or more importantly just flat not wanting to because it goes against what said company wants to do with their software product. To go the Apple way would be foolish. As I stated earlier the purchase is most likely based upon cloud architecture and services. Lenel currently has IaaS and SaaS coming down the road supposedly. This makes the SaaS a much more viable option especially considering most large to enterprise systems most likely are not going to adopt nor allow a cloud service for security anytime soon. The S2 acquisition helps fill in for the mid to large systems. Sure UTC has TruPortal, which is great at what it does do, but if you have separate buildings TruPortal is not the answer. S2 would be the better solution for this. Although I hope it is much better and reliable than it was back in the early 2010’s. People talk about the circa 1990’s Lenel interface but S2’s interface as I remember was like an early days web design as well. Again I have seen this system in years. 

Why would a manufacturer want to go back to the proprietary way?

Margins.

Mercury panels aren't so much open as they are the panels that the behemoths of the industry (Lenel) use.  Hence they are widely known and widely spec'd.  The line is blurred between true proprietary-ness and open-ness in this case.  They are very extremely popular, but the supply chains are tightly controlled.

I suspect that Lenel benefits less from having an "open" panel, than others benefit from having the panel that Lenel also happens to use.  Exhibit A is the relative market success of the very open Axis A1001.

Time will tell.

As far as firmware features with Mercury hardware this has to do with how the software engineers write code to the Mercury panels.

Yes, we ran into this a year ago when we found out S2 couldn't use a EP1501 board to control more than one MR52 at a time. We had to spec the project over to another ACS because of that. That was a limitation specific to the way S2 worked with Mercury boards.

It is also amazing at some of the simple features that could be added to a companies software and aren't but then want to charge you a $$$$$ custom script fee. Grrrr.

When you buy OEM panels at a higher price than you could if you were to build your own hardware you need to charge for everything to make margins...Software Maintenance, Integrations, Scripts, Custom Reports, Training, Certification.....

Although UTCfied doesnt have the same ring to it as Tycofied, the perception will be the same. I think this will be an opportunity for smaller independents to take marketshare;  Open Options, RS2, Vanderbilt, Ghalleger, etc. since it is the SMB solution that is being blackholed, not the enterprise one.

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.

 

 

It's doubtful those employees have any real info on the deal, or UTC's true intentions, beyond the high-level stuff similar to Moss' statement.

When I see these kinds of LinkedIn posts with employees so breathlessly excited about things they don't know all the details of I tend to downgrade their credibility. I also like how they trey to move the conversation out of public discussions. If the deal is so great for everyone involved, why not articulate THAT in your post or comments?

You hit the nail on the head #9...If they announced tomorrow that they were bringing back the Edicon name and those ridiculous large magstripe readers the LinkedIn Lenel crew would bubble with excitement!! I love those that for years worked for other access companies and sold against Lenel head to head and constantly talked smack about Lenel but since they have joined Lenel they have become the best tent revival evangelist for the brand!! 

Since neither of these two were there when UTC proceeded to destroy all of our hard work to build a first class brand, they might take a pause from cheerleading and make a sober assessment. Hopefully, history will not repeat itself and UTC has learned from their mistakes. Only time will tell. The consultant community has long memories of being caught in the middle of these kinds of aqusitions and enough perspective to be sceptical, as they rightly should be.

How much money will that VP & Director make on this deal?  Hard to think that their comments are objective.  Of course they will be talking about unicorns and lollipops.

I love the S2 product and now I'm scared for it. I don't want to see it get Pelco'ed.

Buckle up my friend it could be a bumpy ride! 

Wow - I did not realize that Pelco'ed was a word!

Schneidered may be more appropriate once you see what a mess VideoXpert, AccessXpert, SecurityXpert, and Andover Continuum has developed into.  Pelco is just one aspect of the mangled acquisition.

Ha! Pelcoed funny, Schneidered hilarious! (Hilariously sad, that is)

Agreed! We've been an S2 dealer since 2004 and have had great success and many customers. Once this new "acquisition" was announced, we received notice that we were being dropped as a dealer only to find out our Lenel competitor was being given our dealership and customers. S2 is a great product but greed of the upper echelon has soured us, and our customers who have asked us for solutions to migrate to something else. 

We used to be proud of being an S2 dealer and our relationship with John Moss, Adam Groom and Mike Riegelman, and the rest of S2, but now we are seeing how our loyalty and partnership mean nothing.

This is interesting news since it sounds kind of aloof on the part of whomever manages the dealer channel for S2.  Tell me, I thought S2 had quota requirements and also frowned upon sharing the shelf with other brands of access control.  In my less than scientific research, I have seen integrator websites that claim to represent S2 and more .... is the quota deal as well as the strong push for singular manufacturer representation accurate?

 

 

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?

John, It is obvious that you are not up to date with the technology updates which Lenel are bringing to the market. Please familiarize yourself with the recent developments and then comment. Besides, the benefit behind the acquisition is very well studied and wisely decided by UTC management, which you personally could not observe or even understand.

 

Dear UTC, thanks for your comment. Since you are from UTC, why don't you take this opportunity to make your case? How am I or anyone else to know if you are simply bluffing with your claim?

We are happy to talk to UTC and we have reached out to UTC officially many times over the past few years only for UTC to fumble, figuring out how (not) to talk.

To be clear, UTC's inability to communicate is not limited to IPVM. For example, SIW, in their brief post noted:

A spokesperson for UTC declined to provide any additional comments on the acquisition when reached by phone on Thursday.

UTC is a company that is so incompetent that when they announce buying S2, they completely omit Lenel from it, surely knowing that industry people are going to immediately wonder / worry what that means. But, I get it, it is our fault.

In all seriousness, I am happy to talk to you and I will email you directly. 

Someday I hope to achieve this level of baseless, unsubstantiated confidence.

HIKvision has some openings, from what I hear.  They could teach you.

UTC has not once demonstrated an ability to innovate to the degree required in the security marketplace

Thus, acquiring innovative products is their best option to remain current

10 years from now, S2 will have had its best days behind them, grow old and die after a good run

Anyone remember when GE/UTC acquired Infographic Systems in 2002? Headaches for our clients started then and where did they migrate? Many were told Casi-Rusco.

Higher Education clients rejoiced at the OS selection of AIX, Linux, or Microsoft. Now where are we?

The only positive that some of us see are the innovations of Mercury and their enhanced footprint hardware so we/they can re-use enclosures, mounting points, and connectors. 

I think the champions of Lenel should at least educate themselves rather than blindly lashing out at IPVM's position because it's in opposition to their own stance (sales of new systems).

This acquisition, as has been shown in the past, will be bumpy and frenetic at best. I never did buy-in to the "2-clicks" or "it's software that makes the system" but UTC has a history that is unique. They acquire and then dismantle. IMHO - similar to electrical utilities purchasing solar power contractor businesses to eliminate the competition and add their clients into the portfolio. 

It seems that there is a large trend towards consolidation in the industry. Think of all the companies gobbled up by big players.

JCI/Tyco, HID, and UTC all seem to be doing this.  The reason might be less towards solid synergies or strategic growth, and more towards needed to show increased revenue to improve stock performance.

The security industry has a lot of players.  Most big companies have installed systems.  How do the big players grow revenues? They can:

1. Displace existing systems, which is often difficult, costly, and takes a long time.
2. Win new business, which is limited and dependent on their integration partners.
3. Purchase existing lines, which bumps revenues immediately.

The further benefit of #3 is the perceived "consolidation" effect where financial guys say to eliminate engineering, support and admin staff from the incoming purchased company, so this looks good on the books as well.

The problem is that the purging of this staff ends up affecting the partner and customer base in negative ways as the "trimmed" departments are now overloaded.

As an anecdotal case, a friend of mine reported this exact pattern happened with the UTC acquisition of N2 Imaging Systems in the aerospace division.

Here's hoping that with this acquisition, UTC keeps both Lenel and S2 not only viable, but as strong relevant companies. We have invested significantly in both creating interfaces from their APIs to our handheld badge readers.

David

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. 

Acquisitions are indeed done for multiple reasons.  No one has mentioned that if John was for sale, and UTC did NOT buy them, then a strong competitor might have.  So maybe the deal was done to control the future battlefield.  Done all the time.

As to S2 replacing Lenel, it will be a long hard row.  Lenel is truly enterprise, and truly aged.  But S2 was designed as a mid-market system, and despite John's claims that it has no upper limits, its inherent design is not enterprise, and was never intended to be.  I predict that buying S2 gives UTC a product line for the mid-market that Lenel could not achieve without cannibalizing and upsetting their existing dealer base.  Remember Lenel Lite sold through other dealers, and that disaster?

I think sales people like Lindsay O'Leary (their SMB champion) are truly excited, because their forays into the lower market has been really tough.  Keeping that new round of smaller integrator out of Enterprise Lenel customers was really tough.  Now they have a 2nd platform.

But as everyone has said, we will see if they can make it happen, or screw it up, again.

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