The IP video revolution has resulted in noteworthy levels of security industry growth and innovation over the last decade or so. Many companies were built, and many innovative products and solutions were introduced to the market. We saw a wide range of great technologies, business strategies, and go-to-market models — each enjoying fast growth and profitability.
Along with the industry-leading companies and products, there have also been less-well-planned ventures and offerings that came along for a good ride. Now, however, as the IP video market matures, and the pace of industry innovation and growth begins to slow, these companies are finding the currently greater competitive environment very challenging.
What’s happening is that today’s IP video market is maturing and experiencing a natural consolidation. It is no longer easy to compete with average or below-average products and business strategies. This industry maturation and consolidation bring about product price wars and other short-term competitive strategies. Companies that lack any real differentiation or fail to deliver genuine value to the market often react with price reductions, resulting in race-to-the-bottom behavior. This is a disruption to the business cadence our industry had become accustomed to.
So, if it’s no longer fast growth and ‘easy money’ like the early phases in a technology’s lifecycle, what are the new business models that must be developed to encompass the next generation of market disruptions? An open platform community offers a framework to succeed — together with our partners — by leveraging each other’s innovations and successes.
If you equate the so-called ‘easy money’ days to the ‘Scale’ stage of an industry lifecycle curve, we are seeing that the physical security market is maturing, and we are nearing the ‘Compete’ stage. I strongly believe that the community of innovative, third-party solutions can greatly extend the Scale stage of that curve.
An open platform delivers the ability to fortify the Scale stage of consolidation by leveraging innovation from many community partners and deliver forward-thinking solutions to the market, together. For companies that can articulate the long-term value proposition of an open platform architecture and a community of innovative, complementary solutions, there is still a lot of business ahead.
In contrast, companies that go to market proclaiming stand-alone, narrowly scoped products, with me-too features differentiated only by price will have a hard time competing. For them, their glory days indeed may well be over, and their business models may lead them down the back side of the ‘Consolidation Curve’, into decline, as is already happening to some.
Many businesses talk about being open but fail to deliver on the true value proposition of this approach. They choose instead to battle it out on price, and this is their downfall. If they would instead articulate the value of a platform with a community of innovation to deliver on that message, they could differentiate themselves and change the conversation in the marketplace.
Consequently, it's not that the IP video industry’s glory days are over, but rather that the easy money days are coming to an end. The maturing market for security in fact demands more of our solutions. For companies like Milestone and our diverse global community of integration partners working together to embrace the open platform, we can define a stronger future ahead.
Tim Palmquist, Vice President of the Americas for Milestone, is the author of this blog and will be available for further conversations at The Great Conversation in Security on March 5&6.