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Purchase of Pelco seen as positive move for the industry |
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Written by Andrew Wareing
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Pelco may have been one of the last of the independent large-scale security product manufacturers but its purchase by Schneider announced earlier this month is not being mourned but seen as a positive step forward for the company.
On Aug. 1, it was announced the Clovis, Calif.-based Pelco had been purchased by Malmaison, France-based Schneider for about $1.5 billion. The purchase is subject to anti-trust and other regulatory approvals expected to close by October.
Some see it as an inevitable development in the industry. “It was bound to happen,” says industry consultant Sandra Jones of Sandra Jones and Co. in Chardon, OH. “It wasn’t a case of ‘if’ it would happen but when. We have a phenomenon happening now that, when you look at who owns companies out there, it’s publicly traded businesses. And, while we would like to think they build their business one client at a time, the reality is, to satisfy stockholders, they have to keep growing the business significantly and the only way to do that is through acquisition.”
Steve Hunt, analyst and blogger on Securitydreamer.com says the acquisition is a reflection of a couple of trends in the industry including consolidation of smaller companies into larger ones which takes advantage of economies of scale, and the influence of new technology.
“Video surveillance has two different clusters of products,” he says. “One is the standard analogue surveillance systems and the other would be the new-fangled IP and computer and software-based surveillance. Those two flavours of surveillance are not just competing for market share but ‘mind share.’ Perspective customers, from government agencies to mom and pop retail shops have to decide which flavour of surveillance to use.”
He says new technology in the market is putting pressure on Pelco’s existing legacy equipment and it requires a strategy by Pelco to compete. “It doesn’t mean the sexy new technologies will displace Pelco as a market leader to take revenue away in the near term. But it does mean that Pelco needs a strategy for success over the next 10 to 20 years and they need more bulk to do that.”
Mike Jamieson, president of Ottawa-based Access Direct Sales, Pelco’s manufacturers’ representative in Canada is quick to emphasize that the deal is far from done until it receives the regulatory approvals, but adds he doesn’t see the Pelco name disappearing into the Schneider brand anytime soon.
“From a customer standpoint, as well as from a dealer/distributor standpoint, there really shouldn’t be any difference except down the road when there may be a lot more product offerings from Pelco, so there will be new products, existing products and integration. Aside from the fact that Pelco is the last of the big independent companies, which it’s always sad to see disappear, it was inevitable. There are likely people in Pelco who’s life goal was to get out of the business and move on and this is one way to do it.”
Because of Pelco’s name, no one anticipates the Pelco brand will disappear but will have its products rolled into other offerings. The integration of Pelco cameras into other product areas, particularly building automation which is seen as Schneider’s main mode of operation is seen as the greatest benefit of the pairing.
Jones says the Pelco name has been seen as a single technology company while the trend in the industry has been to more integrated systems that lead to “smart” buildings. “It (the acquisition) truly moves Pelco from a hardware business to a solutions business. If you think about it, every other business is no longer selling pieces and parts. Everybody is moving to a solutions business.
“It impacts a lot of people in the market but does it impact the customer. That is the real question and I think potentially the answer is yes because it rounds out their offerings and gives people an intelligent building,” she says. “I think video is a clear growth market so it’s going to help Schneider not only today but in the future to position themselves in other areas. The customer should benefit because it really is a global business.”
The fact that Schneider is a company based in France has not gone unnoticed, either.
“About the only thing I’ll say on the record is that it marks a significant change in how Pelco’s customers will think about Pelco,” says Hunt. “They’ll be harder pressed to think of Pelco as ‘the American company’ that they’ve grown used to.”
“I don’t think it will matter,” says Jamieson. “It does make good press. But like (electrical products) Square D, which is owned by Schneider and is made in the U.S., Pelco’s Clovis facility and all that will likely remain. The European manufacturers that acquire companies tend to do so very quietly and don’t change much in the way of rapid change. If you didn’t look up the tree, you likely wouldn’t know that any of them were owned by Schneider. But, if you look at all the companies that could have acquired Pelco, certainly from our standpoint this is going to be the best mix for us.”
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