Winner and Losers of the Milestone Deal

They can boost their camera name recognition and sales by offering license free connection to Milestone. That's not uncommon with other VMS makers that have camera lines. But keeping it open to other camera lines and charging licenses would be a way to cover the costs of software updates and continued development, so it'd still be beneficial in that respect.

Where it's a win or loose for customers is how far Canon thinks they can push the pain point to find the balance between "Screw it, the license cost is too high, but I want Milestone software, so I'll just use Canon cameras to avoid license costs" vs. "Screw it, the license cost is too high, but I don't want to use Canon cameras and using Milestone is not that important to me, so I'll switch to another VMS".

I think Canon are unlikely to interfere too much with Milestone as this would not be in their own interest. I think the more interesting question is how will Canon develop in the IP Video market over the next few years ?

What is their next move ?

I've always had a soft spot for Canon cameras. Their image quality was always incredible, especially in low light, as they used photography-grade lenses and, I believe, imagers.

The problem was always 1) speed and pace of product development and 2) balky and intransigent software. If Canon wants to invest in some R&D and bring out world class cameras to match their new VMS company, they could be a real force in the industry.

You wouldn't believe how often I've had customers say "Axis? Never heard of it. How about this Samsung?". Canon is a known brand that should help influence end users without much surveillance industry knowledge.

Well done analysis. Thanks

Ok, maybe now cover other VMS systems. NUUO gets little coverage even though they appear to have won at ISC West and my distributor speaks highly of them. Cameras wear out. Software does too.

Interesting topic. My opinions only, but based on experience. Companies merge or go through a buy out for any number of reasons, but almost all of them have a few things in common. The first is growth. The buyer has access to markets, be they geographic or economic, they did not have before. This is most certainly the case. The second is synergy, the purchased company adds to the buyers portfolio in a significant manner. Again, this acquisition fits that need. Lastly, less significantly, competition. You either want to be a player in a new market or get rid of a competitor. This actually accomplishes both at the same time.

One poster remarks that he has always had a soft spot for their cameras. He should. They do make a good product. But their chief market is not surveillance. It is (in no particular order) medical, industrial and professional; all markets where VMS has virtually no impact. Now Cannon can offer that. They also by default have a much larger presence in the security industry. Two birds with one stone.

Cannon now has immediate access to markets and revenues they did not have the day before. In the financial industry (our primary market) we have seen this time and again. The buyer always says "no changes" in an effort to calm the nerves of existing employees, customers and partners. And generally, they are true to their word. But to John's point, in the mid to long term, of course they will make changes. They own it and they have every right to. They bought it for a reason.

Cannon will obviously use the Milestone product, dealer base and customer base to promote thier cameras. Will the software code for Cannon cameras be included in the Milestone software, you bet. Will there be bundled deals? Of course there will be. Why else would you buy them? Will the licensing scheme change? Count on it.

To my point on competition, there have been many articles written about how Milestone is the "king of the mountain" in the VMS industry. I disagree. While they lead in revenue, and that is certainly not to be dismissed, they represent only a little over 8% of the market share, A virtual tie with Genetec. That really means the VMS industry is very fragmented and in my opinion there is no real, substantial leader - yet. I also believe that in the short run, there probably will not be one.

I used to believe that the industry was in it's infantcy. I now believe it will likely always be this fragmented. There are too many players, no meaningful standards (my apologies to OMVIF but there are at least 6 different versions of that supposed standard) and the IP industry changes almost at the speed of light. No one company has figured out how to keep up.

Will Cannon "see the light" and now continually invest in R&D in an effort to lead? Not likely. The best predictor of future behavior is past behaior. How will this effect Axis? I honestly don't think I care. Axis has dug a lot of holes for themselves and this acquistion won't change that.

Lastly, John raised a point that Cannon is not really a player on the level of Tyco. Well no they are not, and this acquistion will not put them on even par. But they are more of a player than they were this time last week, like it or not.

What do we think about the impact on ONSSI, is there a chance Canon/Milestone stops letting ONSSI use its recorder?

A couple years ago, Milestone announced they wanted to be the "Microsoft of VMS".

Fortunately, Microsoft did not get acquired by AMD.

Great article. Nice job.

Moreso than leveraging support, I can see Canon offer free Enterprise license for use with Canon IP Cameras.

I can see it now ... every Canon camera will have a Milestone VMS embedded in the camera, and each camera will upload either to a local Milestone server or a Milestone cloud server.

Winners - Canon Distributors

I believe Milestone Executives have been overly conservative in investing in growing markets and could be way further ahead as the leading VMS. It seems the last few years they have been concentrating more on setting themselves up for a big payday. I believe all VMS"s will need to be "open platform" to have long-term success, so I don’t think Milestone will ever not support the majority of the market cameras. Milestone is very good software that is developing products to cover every requirement in the VMS market and remains the benchmark.

So who wins and who loses? Big win for Milestone Executives and Canon agreed. I believe the biggest winners will be the End-users who will benefit with more innovation, better sales channel and better/more controlled pricing. End-users can’t go wrong and Milestone will always be a safe bet.

If I look at what has happen with Axis in the last 3 years. I am going to say the sales channel namely distributers and resellers are going to be the biggest losers. More distributors and lower margins (greater control) will also mean distributors may look at stocking other 2nd tier and more profitable VMS solutions. So some 2nd tier VMS growth is inevitable. Many distributors focus on percentage profit in sales rather than actual profit and reward sales people accordingly, so profit margins are important in distributor’s choice of products unless the numbers are extremely good.

Resellers or Integrators are continually going to battle to compete against each other with increasing sales channel and new entries into the market. The end result will drive down the skill level and profit for resellers. This will also force the Milestone to commoditize the VMS more in order to reduce the skill required to install and maintain the product.

The only way Milestone is going to maintain the skilled and loyal supporters as well as win the top projects is by strictly limiting the channel that has access to their top tier and multi-server products and ensure decent margins. They got to protect the long-time experienced loyalist against all the new entries (make them work for it). My personal opinion is that Milestone need to make sure they have skilled resellers implementing any multi-server installations, as this is where I see some of their biggest failures in the market. A strictly controlled channel is going to be important, this is apparent with all the top tier security manufacturers.

Just one suggestion. They got to control their product at the top end and make sure it is installed properly.