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Long Term Strategy Defines the Axis Communications Deal

Within 9 months Canon has acquired two of the world’s leading edge suppliers in Video Surveillance technology. That’s not been done before! There are a number of reasons why Canon have adopted this acquisition strategy. One is based around business culture in Japan and Scandinavia and the other is thinking about the long term implications of IoT; not just on Video Surveillance but also how it will reach across all the Building Automation Services and dramatically change the structure of how products get to market. Dealing with culture first. Would Axis have sold to Canon if they expected them to take out a knife and destroy what they have built up from the ground over the last 25 years? No. Is Cannon taking a fairly long outlook at the market and earnings? Without inside information, we can’t be sure but we believe there is a long term play here and that has been accepted by […]

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Within 9 months Canon has acquired two of the world’s leading edge suppliers in Video Surveillance technology. That’s not been done before!

There are a number of reasons why Canon have adopted this acquisition strategy. One is based around business culture in Japan and Scandinavia and the other is thinking about the long term implications of IoT; not just on Video Surveillance but also how it will reach across all the Building Automation Services and dramatically change the structure of how products get to market.

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Dealing with culture first. Would Axis have sold to Canon if they expected them to take out a knife and destroy what they have built up from the ground over the last 25 years? No. Is Cannon taking a fairly long outlook at the market and earnings? Without inside information, we can’t be sure but we believe there is a long term play here and that has been accepted by both Axis and Milestone.

Of course expect the current collaboration between Axis and Milestone to strengthen. Software development is a major growth area and both could share the heavy costs involved. Eventually we would expect them to merge or at the very least start cross selling.

The Internet of Things (3rd wave of IT Technology) is now developing rapidly and commercial / industrial buildings will be one of the priority targets. Concern about delivering end to end solutions will have much less importance and we will be back to best of breed products as a result of open standards. This will start to take place over the next 5 years; disrupting Axis and Milestone now only to be forced to reorganise again within a few years would be an expensive mistake.

The growth of IP Network cameras has slowed down in the last 2 years and this has naturally reduced the profitability of Axis and caused some cynics to suggest that this is a good time for them to sell the business. The reason for the slow down is partly because of much cheaper analogue cameras holding up in the small building sector where IT Infrastructures are not commonplace and buildings operators lack the skills to realise the benefits of IP cameras.

This market will eventually open up through the Internet of Things because a significant proportion of small buildings are part of multiple estate complexes which would benefit from being joined up. IP cameras are the only solution.

The future growth of IP Video Surveillance will now depend upon how fast IoT is taken up by building owners and operators. This will be influenced more by the progress made in Network Communications Services and IoT Data Services than the suppliers of IP Video Surveillance and other Building Automation suppliers.

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