The ripple effects of the recent acquisition of Milestone by Canon are far reaching and significant, especially in this global village of a world we operate in. It would be interesting to know if the Milestone and Canon executive teams truly appreciated the impact their business transaction would have on so many businesses around the world. Competing VMS companies —large and small— from Germany to the United States are already jockeying.
Camera manufacturers from Sweden to Taiwan are taking notice and ancillary players to numerous to list are responding. Impact the industry they did, which begs the question “what next?”
SecurityHive.com reached out to a number of companies affected by the event to get their feedback on the Milestone/Canon union. We posed questions to Henrik Friborg Jacobsen, co-founder and Executive VP, of Milestone Systems, and he was gracious with his time and feedback.
We were also fortunate to get responses from Chris Williams, Marketing Director from WaveStore; Wolfgang Baumgartner, CEO of NetAvis, and Fredrik Nilsson, General Manager, Axis Communications, North America.
We asked Jacobsen what he thought about all of the buzz in the market already over Milestone being able to continue partnering with other camera manufacturers now that Milestone is part of Canon.
“Milestone’s focus will stay exactly as it has been in the past. Our dedication to all our existing camera manufacturer partners, our solution partners, and of course our entire community of sales channel partners remains fully intact, and shall not be questioned,” Jacobsen replied. “This eco-system of partners is one of Milestone’s biggest assets, which Canon fully acknowledges and appreciates — hence, no reason to worry.”
Mr. Williams of WaveStore seemed to agree with this assessment. “The future remains largely unchanged. VMS solutions are an important part of an integrated security solution, however, no single vendor has all the answers to fulfill the demands of the diverse range of applications across the industry.”
Wolfgang Baumgartner of VMS developer NetAvis replied in a different manner. “Definitely, we will see consolidation in the market. And I think the hardware focused companies have to invest into software [such as VMS and video analytics].”
Mr. Nilsson of Axis added, “Well before this acquisition, the software market has been very fragmented. For example, Axis alone works with more than a thousand software partners worldwide. Some software vendors also carry hardware, some are owned by integrators and still others are stand alone. According to IHS research, the overall VMS market is expected to be worth over $3 billion in 2018 indicating significant opportunity and growth for companies of all kinds.”
With regards to Canon and Milestone’s impact on camera manufacturers working with VMS companies, Baumgartner continued, “Short-term I see no impact at all. The camera vendor Canon is still interested in cooperating with the professional software vendor [such as] NETAVIS Software. The main goal of NETAVIS Software is to deliver real business value with IP video and video analytics, and for this we need professional camera vendors.”
Milestone has built-up years of respect and market position over the past 15 years and it would be safe to say that many –if not most– partners will give Jacobsen and Milestone the benefit of the doubt with his reassurances. It is, however, expected that partners at all levels will keep an eye on how Milestone will keep these partnership bonds in tact. With so much of Milestone’s value proposition built around inter-operating capabilities of partner products, this respect and leadership position will surely be tested.
Axis’ Nilsson said, “We strongly believe in the value of long-term cooperation and loyal partnerships. Milestone has been an important software partner for years and we look forward to continuing the relationship. Milestone’s commitment to open platform solutions complements our dedication to offering open IP-based, intelligent security solutions.”
SecurityHive also wanted to know what Milestone saw in Canon for such a marriage to take place. IHS Research just recently reported that Milestone, along with Genetec, were the VMS market leaders. Being the number one VMS, why did Milestone feel the need to make such a bold move?
Jacobsen offered, “The fit with Canon is very good. First of all, Canon supports Milestone’s Open Platform VMS strategy, and has a long-term perspective on growth through business solutions in the security industry.” He then went on to say, “Obviously, Canon has strong competencies within imaging/video technology, but also in many other areas that Milestone may benefit from, including R&D of premium quality products ranging all the way from the high end to consumer products, as well as many in specific new areas such as cloud services.”
“Milestone was not looking for a suitor, but saw the advantages of an ownership by Canon when the opportunity presented itself,” continued Jacobsen. “Canon’s strategic intentions are very clearly matching Milestone’s strategy. They also have a regional HQ structure by business area focus that supports the independent ‘company within a company’ model that allows Milestone to continue our open platform VMS as it is today, but with greater resources and new market opportunities to expand.” Jacobsen also noted “Milestone’s present management team will continue as today, including the involvement of the founders.”
Wavestore’s Williams believes, “The investors in Milestone have presumably gained their reward and exited, so Milestone will need to adjust to the new environment with new masters. One big challenge will be to gain the respect and trust of the new owners in order to be free to make decisions rapidly in this very dynamic industry. The uncertainty created in the market is a fact. In the meantime, decisions will be made regarding the choice of VMS for the many projects under review, and that is where we see the opportunities.”
It would also be safe to say that so many within the video surveillance market saw Axis and Milestone as very close-knit –some would say “like brother and sister” and wondered why Axis didn’t purchase Milestone. We asked Axis’ Nilsson what do other leading VMS software companies (such as NetAvis, WaveStore, Genetec, OnSSI, etc) need to do to stand stronger as an independent organization?
“Axis’ extensive partner network is based on long-term relationships and common strengths. As a company committed to openness, we look to partner with companies to solve customer challenges with fully integrated, best-in-class IP video and access control solutions,” replied Nilsson. “There is no one size fits all in the security market, so these solutions ultimately give customers and integrators freedom of choice.”
As SecurityHive was reviewing the acquisition press release and comments by the management teams, we started to notice a new phrase being used: “Network Video Surveillance.” We asked Jacobsen if this was an effort now to push “NVS” over that of just a “VMS” solution.
Jacobsen offered, “Network Video Surveillance is a phrase Canon uses to cover various equipment and software for IP video surveillance. VMS covers the video management software alone.”
We changed gears and asked Jacobsen to share his thoughts on where he saw the future of stand-alone VMS software in general and where he thought theVMS market was heading.
“We believe Open Platform VMS solutions that allow for best-of-breed solutions will continue to be attractive to many customers. We don’t believe that end users will want to be locked into single-vendor solutions,” Jacobsen continued. “The power of choice gives the most flexibility in price and product needs, not to mention the importance of integrations with new innovations as they become available in the market over time.”
NetAvis’ Baumgartner stated that he could also see other VMS companies being acquired: “Yes, from other camera vendors, [and] also from system integrators and hardware vendors from the physical security industry.”
WaveStore’s Williams replied, “We were aware of Canon’s ambitions to grow rapidly in the security industry and so it is possible that other manufacturers with similar ambitions may determine that the acquisition of one of the other VMS companies is also their way to leverage growth. Those VMS vendors who are independent have the opportunity to capitalize.”
Williams added, “Milestone was often referred to as the leading VMS provider; yet their market share was less than 10%, which illustrates the nature of this fragmented industry. Wavestore has a rapid product development program able to deliver new ONVIF features as well as respond to partner and customer requests. The ability to deliver a true Open Platform product; configurable to support the diverse requirements of consultants, customers and system integrators is key to achieving continued growth.”
With regards to potential other VMS acquisitions, Axis’ Nilsson stated “Like any industry, the security industry is always evolving and so there will continue to be changes both in terms of consolidation and the addition of new players in the space. However, as a public company, Axis is unable to speculate about acquisitions.” He continued, “While I cannot speak to other companies’ reactions, we look forward to our continued partnership with Milestone.”
Nilsson also commented, “Market research indicates significant growth in video surveillance with the network video market expected to grow by 22 percent annually until 2018, according to recent research from IHS. This research shows continued interest in network camera installations and recent M&A activity further indicates that surveillance is an interesting growth market for many companies.”
Jacobsen went on to say, “We do anticipate further consolidation will be happening as the market is maturing and competition is heating up. We believe [these types of mergers and acquisitions] indicate the market is indeed maturing and continuing to grow.”