Vicon Industries used to be the market leader in analog video surveillance equipment. Now, a year after corporate reorganization and under the leadership of a new CEO, the company is back to its old glory.
Vicon Industries has experienced a dramatic change over the past year. The company acquired the early developer of megapixel IP cameras IQinVision, and a new CEO, the former Chief Sales and Marketing Officer of Milestone Systems, Eric Fullerton, integrated the operations and business of both companies. After a year of restructuring and redirection, the company is ready to make a comeback in the security market. According to the company’s recent announcement, its revenues for the third quarter of fiscal 2015 increased 26 percent to US$11.7 million and gross profit margins also increased to 40 percent. This improvement is mainly due to the acquisition of IQinVision and also its new corporate strategy. Fullerton pointed out several megatrends in the industry, which mainly lead the future development of Vicon Industries. He particularly mentioned that commoditization has changed the dynamic of the security industry to focus more on systems and solutions instead of cameras only. That is why he would like to lead the company to deliver fully standard-compliant, open platforms and products for their customers.
Eric Fullerton, CEO
“We want our customers, especially in APAC, to have the freedom to choose a whole Vicon solution or buy only the products that meet their needs. The New Vicon does not have a company-centric approach, but rather believes in an end-user approach where we, as a team ecosystem, work to create dynamic end-user solutions that address real problems,” Fullerton said. Towards fulfilling its new end-user centric approach in the region, the company is investing in its APAC team and establishing a new Vicon headquarters here in Singapore.
Industry trend impacting the company
According to Fullerton, one major trend is the siliconization of surveillance cameras, which has impacted the whole security business. “Over the past couple of years, we have seen the functionality of complex megapixel cameras become integrated mainly onto chips. Chipset providers, such as Ambarella and Hisilicon, are able to deliver their customers megapixel and sophisticated camera functionality in silicon today. This means the camera industry has gone from innovating on the camera’s performance to being more like a camera OEM business.”
“That is why many vendors are able to bring 12-megapixel [4K] cameras to market almost at the same time. This doesn’t mean vendors should get out of the camera business, but what we are suggesting is that the business nature of cameras is changing. It has become much easier to manufacture entry-level cameras and now it is not the camera making the difference, but the functionality, the software you put on it, and how you integrate it into a solution that makes the difference.”
“Another trend is the slowing of innovation [in the security industry] or you can say the industry has been lacking innovation for the past few years. Now it is more about how you provide service; how you go to market, and how you package your solution. In a project with hundreds or thousands of cameras, the camera cost is not as important as before since the camera cost has become a smaller part of the total cost. Now, and going forward, it is more about interoperability, networking and solutions. Today the focus is the application or solution, and the value it brings to the business more than just surveillance.”
A third trend is that the hardware and basic VMS functionality is commoditizing. According to Fullerton, in the past, a VMS vendor could charge end users around one fourth of the total camera cost for a VMS license fee. Now cameras have become much cheaper and customers can get the features they desire from them. Different market conditions are causing basic VMS to become very inexpensive or even free of charge. This commoditization of hardware and software is changing the dynamics of the industry.
Standards-compliant, open platform
Commoditization of hardware and software is actually driving some of the recent consolidation we have seen in the industry. Learning from history, these companies eventually will become more proprietary in their technology approaches. “The tendency of this industry is that companies say they are open platform but actually they are using proprietary technologies. In my opinion, the one who controls a consolidation eventually will want to benefit from the synergy of merging two companies. If you embrace the synergy, then you start to become proprietary. So, my prediction for the industry is we might see more of the historical proprietary behaviors of the past which are not very good for end users. So, what I want to do with the New Vicon, is to deliver a 100-percent standards-compliant, open platform,” said Fullerton.
“My prediction for the industry is we might see more of the historical proprietary behaviors of the past which are not very good for end users. So, what I want to do with the New Vicon, is to deliver a 100-percent standards-compliant, open platform.”
All of Vicon’s products, ranging from cameras, VMS to access control systems, will be ONVIF compliant. “Our products are interactive to the devices complying with Profile G and any future profiles of ONVIF. If customers buy our access control products to integrate in a solution, then, I would say, they can freely choose VMS/IP cameras from other vendors. Or they can choose a whole solution from Vicon,” he continued.
“In order to build a robust VMS to protect the interest of our end users, we need to be totally standards based. Being ONVIF compliant is truly different from just opening a set of APIs for integration. When I arrived at Vicon, we did have the IP surveillance product line. However, we were all proprietary even though we did provide APIs for some integration. Now the big change is that we started to open up our technology as well as our way of conducting business. This is the strategic way we will go forward.”
Lawrence de Guzman, VP,
Sales & Marketing, APAC
Focusing on Asia despite regional challenges
But global trends apart, the APAC region comes with its own unique characteristics. To Fullerton, thriving in this region takes a combination of resisting price sensitivity and bringing in a unified approach. “Asia is a price driven market and we have seen that quality is compromised and state-of-the-art functionality is lost when price is a factor,” Fullerton said. “Vicon strives to bring quality, state- of the-art products to the market and will compete on innovation, rather than price.”
The company is making a bold move in the continent, with operations across the region. It will initially focus on verticals such as government, critical infrastructure, banking and transportation, before entering a wider market.
“Vicon is looking to be very active across the board in APAC, but will focus on some key locations where we can see immediate benefits from our strong partners in South Korea, Hong Kong/China, Malaysia and Australia,” said Lawrence de Guzman, VP of Sales and Marketing of APAC in Vicon Industries.
Future product development
In terms of Vicon’s recent product development, in addition to upgrading picture quality (e.g., light sensitivity, and field of view) and releasing an updated version of their Vicon VMS, access control is also another sector that Vicon is developing. “What we built is a door control system with PIR, integrated with access control management software. It is all PoE driven and targeted at the market of controlling one to 2,000 doors. In the future, we will strengthen our access control management software to control even larger door counts and to integrate with different equipment, such as door locks and card readers, from other vendors,” he said.
Finally, the company will launch several other improvements addressing customer needs and to keep itself cost-effective, according to Fullerton. In de Guzman’s words, Vicon aims on “not just adapting, but helping to build, shape and grow the APAC region and the future of IP video security.” And telling from its latest financial report, this new strategy is definitely proving to be a success.