There is general agreement that Milestone Systems was ripe for acquisition. Having built an enviable reputation as an open platform provider of video management solutions, the company had a contacts book that was second to none and was positioned as one of the top two VMS suppliers in the world.
Nonetheless, the news that came through Friday morning that Canon, a global brand in electronics and optics, was the company that had made the acquisition came as something of a shock. Several companies, speaking on and off the record to SecurityNewsDesk, expressed surprise at the move.
However, according to John Cropley, Principal Analyst at market researchers IHS, we shouldn’t be surprised by the acquisition at all.
“Canon is currently a small player in the video surveillance market but it has big ambitions. Back in August 2013 its CEO, Fujio Mitarai, spoke about security cameras becoming an ‘important pillar’ for the company and the market having ‘limitless possibilities for growth.’ This acquisition shows that Canon is serious in its intentions,” he said.
Cropley also observed that when it comes to surveillance, Canon currently only sells security cameras. The acquisition of Milestone allows it to offer customers a security solution combining cameras and either video management software or network video recorders. It also provides the company with access to Milestone’s large customer base, particularly in regions outside of Canon’s home market of Japan.
IHS estimates that Milestone was the largest supplier of video management software in 2013 with over 7% of a global market worth over $900 million.
If Milestone was the largest supplier of VMS in 2013, then a close second has to be Canada’s Genetec. The two companies have been battling it out for top place over the past few years, with Genetec top dog in 2012.
We asked Genetec to comment on the Milestone-Canon acquisition and this is the comment we received from the President and CEO of Genetec, Pierre Racz:
“This acquisition does not come as a surprise. That it’s Canon who is acquiring Milestone was not expected,” Racz said. “It will be very interesting to see how other camera manufacturers and end-users react to this and how this will impact the future of Milestone’s product development path, specifically in relation to their open platform message. Genetec views this development as a considerable strategic advantage, and further emphasizes the importance of our role as a truly independent and open software manufacturer.”
Genetec won’t be the only VMS supplier hoping to capitalise on any customer uncertainties in the market. Despite being top of the tree, neither Genetec nor Milestone control more than 10% of the VMS market, and therefore there is considerable market share to be divvied up among the rest of the top 10 and much jockeying of position to be done.
The Milestone message
To better understand the positions of Canon and Milestone, we spoke exclusively to members of their senior management about the acquisition.
Explaining how the acquisition came about in the first place, Jos Svendsen, PR and Communications Manager at Milestone, said, “The addition of Milestone to the Canon Group is a natural step towards realising Canon’s ambition of leadership in this market. This move will establish a significant footprint for Canon in the NVS market.”
“The acquisition brings with it the software capability and a strong partner network and will accelerate the expansion of the Network Video Surveillance business. The combination of Canon’s hardware and Milestone’s software technology will enable us to offer unique propositions.”
Svendsen was keen to point out that Canon is supportive of the way Milestone operates and that this acquisition would not disrupt the service Milestone users have come to expect.
“Milestone’s success is built on the foundation of the open platform strategy, strong partnerships and entrepreneurial approach and Canon firmly believes in this,” he said. “To support these foundations Milestone’s will operate as a standalone company within the Canon Group, and continue to provide open platform solutions to the market. Milestone will continue to provide their open platform solutions to the market and Canon will take appropriate measures to safeguard the confidentiality of all their partners.”
But what does all this mean for Milestone partners?
Jacco Leurs, Head of Professional Imaging at Canon Europe, said that Canon and Milestone would continue to operate as two separate companies. “It’s important to continue to support Milestone as an open platform company,” he said. “Working with many partners has been a key part of its success, and we have to respect the commercial sensitivities around that.”
Does he think that other camera manufacturers might be anxious about their position with Milestone as a result of the acquisition? “I cannot speak for others, but yes, there may be some concerns. However it’s in our interests to keep the two companies as separate companies but as a Canon Group company.”
He confirmed that the Milestone brand will be retained, but couldn’t say at this point the extent to which the Canon brand would be incorporated into the Milestone branding.
Canon will obviously benefit from closer integration of its products with the Milestone XProtect product range.
However this news affects the market, it’s clear that this combination of two of the biggest names in the industry will create a force to be reckoned with and the new joint approach would produce a range of new products and services for the security industry.
The message from Canon and Milestone is that existing customers can be sure that the support for their products – Canon or Milestone – will remain unchanged.