Last week, video surveillance solutions provider Avigilon announced that it had purchased RedCloud Security, which provides Web-based, physical and virtual access control systems, for $17 million. I had the opportunity to speak with Avigilon President and CEO Alexander Fernandes for more details on the deal. Continue reading for insight on why Avigilon decided to enter into the access control space, what the acquisition means for both companies, and what integrators can expect from this transaction.
What prompted Avigilon to enter into the access control space?
Alexander Fernandes: It’s all for synergistic reasons. Our end-user customer base, which is for video surveillance, happens to be synonymous with the access control end-user base. This means that the majority of people that purchase and use video surveillance also use access control as part of their physical security program for their premises or businesses.
Since we’re already selling into that user base, we saw an opportunity for us to add value by providing more products and services to the same end-user base. We have a global reseller channel with more than 1,000 integrators, so we already have a ready-built sales channel, global footprint that’s ready to sell access control.
On the technical synergistic side of things, one of the trends that we see going forward is convergence. That may be a bit of an overused buzzword, but essentially the integration between what has been historically disparate systems will allow end users to manage and monitor their access and video from one user interface. This makes things more efficient because users can link the databases and extract better information from the two systems in a more effective manner.
There are plenty access control providers in the market. Why did you choose RedCloud?
We did look around for a bit, but we felt RedCloud was unique for Avigilon for a couple of different reasons. One reason was the company’s technology. Many of the access control products out there are what I call long in the tooth. They’ve been around for many, many years, and they are based on hardware rather than on software design. The RedCloud product is using the latest technology, which is sort of synergistic with Avigilon and how we’ve designed an IP-based video system. At the end of the day, we were really after a complementary product line.
Also, we weren’t interested in buying a company with a separate sales channel and marketing brand and big physical operations in terms of manufacturing because we have all of those things. RedCloud is a small company that doesn’t really have a big reseller channel established, and we have one ready to go. Moreover, the value that RedCloud brought to the table was this product that we can bolt on to our existing platform to make it an enhanced, one-stop shop experience. As a small, entrepreneurial company, we feel their culture will mesh well with ours.
What does this latest acquisition mean for Avigilon and RedCloud?
It means that in addition to our global video surveillance market that we’re currently selling into, which is projected to be about $30 billion by 2016, we’re now adding another $6 billion of access control business potential to our existing addressable markets. So we’re really adding a big, adjacent market, which gives us more runway for continued growth.
Will RedCloud operate as a standalone company?
It’s going to be a multi-phase process. We’re giving this a six- to eight-month integration period to put the two companies together. In the short term, we’re not going to do anything; RedCloud will continue to operate as a standalone business. But the idea over time is to integrate it with Avigilon. It could become RedCloud Access Control by Avigilon or something along those lines with Avigilon being the main brand.
What vertical markets will you target?
Right now, we sell in roughly a dozen verticals, everything from critical infrastructure to retail to campus environments, which includes schools and hospitals. We do casinos; we do financial institutions, airports, prisons. The answer is all of those verticals are heavy users of access control and so we feel it’s really just a natural fit.
Are there any products or services that Avigilon plans to roll out in the future?
The general idea is more and more integration of all of our products, so tightening the integration between RedCloud and Avigilon.
Our main business remains video surveillance and we plan to continue innovating, so we’re working on new enterprise features for large deployments; we’re constantly adding more enterprise level features to our platform. At the same time, we’re introducing new, lower-cost products to dig deeper into the entry level market and sort of take away market share from analog technology. There is a segment of the market that is extremely price sensitive. Our aim is to address that issue.
Ashley Willis | Associate Editor