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Avigilon
Avigilon founded in 2004 with sales
currently running around $200
million is approximately a quarter
of the size of Axis but its growth in
2013 was 100% and has a market
capitalisation of around $1 billion.
This is, to say at the very least, a
remarkable performance. Currently
they operate at the other end of the
size spectrum to Axis with some
95% of customers being in the
small to medium size category with
only 5% enterprise class clients.
They do not sell direct and have
a very strong relationship with
dealers and system integrators.
Their phenomenal growth has to
be more than a good product and
marketing. It is most likely to be
a combination of faster growth in
the mid-market and building up
loyalty through their distribution
channels by not selling direct. They
have forecast revenue of $500 mil-
lion by 2016.
In 2013 they acquired two
companies. In May they acquired
privately held Redcloud Security,
Inc. an innovative provider of
web-based, physical and virtual
access control systems. Through the
acquisition, Avigilon adds a com-
plementary product line to its end-
to-end high-definition surveillance
solution and provides the company
with access to a growing segment of
the global security market. Despite
it being a different product it fits in
neatly with their existing distribu-
tion network.
In December Avigilon an-
nounced a definitive agreement to
acquire the video analytics company
Videoiq, Inc. for cash consideration
of $32 million. Founded in 2006,
Videoiq has grown to become a
leader in real-time intelligent video
analytics solutions for security and
business intelligence applications.
Videoiq has a developed portfo-
lio of video analytics intellectual
property, with 23 patents granted
or pending, trade secrets and know-
how.
This fits in directly with their
existing business. Both of these
acquisitions should deliver much
more revenue than both companies
achieved in 2013 and at the same
time will provide their system inte-
grators with a more comprehensive
solution.
HID Global
The third "winner" for 2014 is
HID Global a major subsidiary of
Assa Abloy, which is a global leader
in door opening solutions. Founded
in 1994 Assa Abloy has grown
from a regional company to an
international company with annual
sales of $7.2 billion (2012) a 12%
growth on the previous year, mainly
achieved through an astute acquisi-
tion programme involving 150
acquisitions. HID Global sales in
2012 are estimated at £3.3 billion
having increased their contribution.
Assa Abloy acquired HID
(Hughes Identification Devices) in
2000 and over the last 13 years has
incorporated some 15 companies
into the HID organisation. Start-
ing with access control products
through Motorola Indala they have
progressed to identification tech-
nologies with Active Identity being
a major acquisition in 2010.
Since then major acquisitions
have included Lasercard, Identrust,
Lumidigm and Codebench. The
combination of the companies' has
made HID Global a worldwide
leader in secure identity solutions
that use multispectral imaging
technology, software, and biometric
fingerprint sensors to authenticate
identities with a high degree of
certainty.
HID Global have delivered
growth over 12% in the last 2 years
despite difficult trading condi-
tions and now have a strong cash
flow and good financial stability to
continue growth through organic
means and acquisition. n
Few are forecasting growth rates
much above double figures through
organic growth. Only those that are
intending to grow faster through
acquisition or have annual revenues
below $100m are predicting growth
above that. Sifting through their
annual reports there is little to find
about major new innovative prod-
ucts that will allow them to rapidly
increase market share; but a steady
flow of incremental improvements
showing that product performance
will improve to meet customer
needs.
Memoori's recent annual report
on the security business showed
that the first 3 quarters of 2013 well
outperformed what most stakehold-
ers had forecast; despite setbacks in
economic fortunes in the western
developed world. In the first three
quarters of 2013 it grew by 8% and
this marginally increased for the
remainder of that year.
Confidence
A little more light at the end of the
tunnel would suggest better trading
conditions in 2014 right across the
developed world causing security
equipment buyers to have more
confidence that now is the time to
replace their old systems; provided
they can be sure that their replace-
ments improve the effectiveness of
security, reduce operating costs and
deliver an improved ROI on the
investment.
So 2014 is now the time for
manufacturers to dig even deeper
and increase their efforts to align
the motivation of security buyers to
invest in better performing systems
through improving their offerings
and educating and training those in
the distribution channel in order to
drive out all the benefits and making
sure that the marketing message is
delivered.
In this article Memoori have
looked at three leaders in their
field; Axis Communications in IP
video surveillance, HID Global
in access control and the current
fastest growing video surveillance
company Avigilon, showing how
they have created strong robust
companies through different busi-
ness models that should deliver
winning performances in 2014.
Axis
Axis Communications founded
in Sweden in 1984 pioneered the
development of IP network video
cameras and brought it to market
in 1996, and has maintained a
strong R&D programme since
then. It has so far grown solely
through organic growth. It is the
only company that Memoori have
identified in the security industry
of its size that has achieved year on
year growth without acquiring its
rivals.
Even when it recently diversified
into access control it did not do
this through acquisition. Through-
out the last ten years it has gained a
reputation for reliable high quality
products, which sell at a premium.
Its products get to market through
all distribution channels and it
spends a lot of effort in working
with those channels to make sure
that the benefits of their products
are delivered to the end customer.
With such a large number of
manufacturers in the video surveil-
lance business it is hard to produce
product differentiation across the
whole range but Axis is regarded as
supreme at the higher end of the
market in the enterprise class where
maximum security is vital. In the
middle market they face challenges
where "OK" cameras at lower
prices are regarded as good enough
by a lot of end users.
security
technology market
Ethiris
®
Video Management Software
Financial results for the major manufacturers of secu-
rity products in the last quarter of 2013 and first quar-
ter of 2014 show a steady growth in revenues and
profitability. There is also confidence to forecast that
this trend will continue for the rest of 2014, accord-
ing to Jim McHale, founder of the market researche
company Memoori.
By Jim McHale, founder of Memoori.
Revenuesandprofitability
upforallof2014
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