The integration of building automation systems with physical and logical security systems is pushing for the convergence of both technology and competition. United Technologies' acquisition of GE Security business is clearly in line with recent M&A activity made by other corporations in the building automation, such as Schneider, and networking side, such as Cisco, trying to get a foothold in the physical security market.
The integration of building automation systems with physical and logical security systems is pushing for the convergence of both technology and competition. United Technologies' acquisition of GE Security business is clearly in line with recent M&A activity made by other corporations in the building automation, such as Schneider, and networking side, such as Cisco, trying to get a foothold in the physical security market.
Matia Grossi, Industry Analyst for Frost & Sullivan Physical Security, said: “UTC had already made a few acquisitions in the security market which gave the company great integration capabilities and a dominant position in the fire detection space; with the acquisitions of companies such as Chubb, Red Hawk, Kidde and Lenel. However, the company needed to gain access to a full product portfolio and GE Security is providing that to UTC. With this acquisition, UTC has made a giant leap in the attempt to widen its capabilities and fulfill the need of offering its client a real ‘one-stop-solution.'”
The company can now compete in the market with companies such as Tyco and Schneider which have operated aggressively in recent years in the M&A field. Grossi continues on this saying: “If we look at Tyco, the similarities between the two companies are staggering. Tyco acquired ADT which would be the equivalent of Chubb for UTC, Software House of Lenel. Then Tyco proceeded to a number of acquisitions in the physical security space of companies such as American Dynamics, Sensormatic, DSC and many others. UTC was able to fill in the gaps in its portfolio in one stop.”
“From a GE Security perspective that was in line with a divestment process from its security space started with the sale of GE Security's Homeland Protection Business to Safran, only a few months back. In a converging market this move only makes sense if the long term plan is to exit it,” said Archana Rao, Senior Research Analyst for Frost & Sullivan Electronics Security.
“Frost & Sullivan expects the consolidation process to continue in the coming years because of the technology convergence in the market. We are going to see new players coming from the telecom market such as Alcatel Lucent, Nokia (Siemens) and others looking at the huge potential of leveraging their network infrastructure capabilities in the fast growing security market,” Grossi said.