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Do You Have a Convergence Strategy Yet?

Is your 2007 plan for a convergence business having trouble meeting its goals and objectives? If so, consider yourself ...




Is your 2007 plan for a convergence business having trouble meeting its goals and objectives? If so, consider yourself part of a respected group of business forecasters. Planning and meeting sales budgets in a dynamic, change-oriented industry, much like security, is not child’s play.

If your company sells nothing but IP equipment, the direction you give your sales force is easy enough. Find customers that are interested in “hybriding,” or totally replacing their existing analog systems to converge with their corporate IT network.

On the other hand, if you’re in the analog product business and have decided you’re not interested in convergent systems, your job is equally easy, but accept that you might find yourself on the auction block in the next two years. The real challenge to your planning skills is based on the decision that was made two or three years ago to develop a combination analog/ IP product line to suit the needs of all your customers, regardless of which way they decide to go. This presents you with the challenge of forecasting the continuing segmentation trend of the analog and IP sectors of the industry so that your product planning produces just enough of every model.

Comparing the Estimates

Last month we presented some information that might help in the development of these answers (see “Users Answer ‘How Far Traveled Is the Road to Convergence?’” in the August issue). It was based on research that we conducted with security users across the United States and it said 35 percent of user purchases were for security products oriented to some level of convergent system design. I also mentioned, due to some natural research bias that excluded smaller companies, we thought those purchase levels were more in the 20- to 30-percent range. The following information contrasts the estimates of security manufacturers with those user estimates.

Forty-three security manufacturers, including the leaders, provided their own estimates of convergence market penetration. It’s no surprise they contain just as much variability as the user estimates. After all, there are just as many different product lines made as there are different types of users. The following array of estimates in the chart on this page makes this point.

The overall market estimate of 32 percent assumes the estimates from each of the 43 manufacturers are of equal weight. While this is never really so, the dispersion of estimates is so broad that the 32 percent is not likely to be materially different from the actual fact.

This 32 percent manufacturer estimate is, on balance, an accurate barometer of the supplier side of the industry’s view of the convergence trend. It compares with the slightly lower estimate we calculated as between 20 and 30 percent among users. So everything considered, it looks like there is even some convergence in estimates between the supply and usage ends of the industry, which suggests security integrators and dealers should be experiencing the same percentage of convergence sales overall. Individually, this is not the case since the experience of middlemen differs widely according to the product path each elects to take.

By round numbering the analysis, it appears the convergence trend has penetrated approximately one-third of the industry in some way, whether partially through the use of hybrid systems or with complete IP transformations. It’s something for you to think about for your next business plan.


Article Topics
Video Surveillance · Analog Video · By the Numbers with Joe Freeman · convergence · All Topics
Analog Video, By the Numbers with Joe Freeman, convergence


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