Pending any regulatory issues, after seven some odd years, GE has bowed out of the security industry, having agreed to sell its GE Security holdings to United Technologies Corp. (UTC) for $1.82 billion. This marks the industry's most substantial deal since GE got into security in the first place when it purchased Interlogix in 2002. It also brings to a close GE's vision of making security systems as commonplace in American homes as appliances and other household electronics branded with the ubiquitous GE "meatball" logo -- and having them all communicate with each other.
Having been in this industry since 1998, I have closely followed GE's security operation from the outset. I attended and participated in several GE-sponsored events, befriended many current and former GE Security executives and managers, as well as members of the GE Security Pro Dealer Program. I also produced the industry's first major feature with then-CEO Ken Boyda following GE's entrance into the security industry via the acquisition of Interlogix, as well as introduced his successor to the marketplace, Louis Parker, in 2005.
With that, I have to say I was not surprised to hear GE Security was on the block earlier this year. However, I was surprised that the company found a suitor to take the entire operation as I figured, given the current economy and overlap of product lines and competencies with the acquiring suspects, that it would need to be broken up and sold piecemeal. Furthermore, although UTC makes about as much sense as any prospective buyer, it is curious from the standpoint that, similar to GE, its foray into the security space has not been without its challenges and missteps.
Why did GE fail in the security industry? Like many companies that have tried to enter and succeed in the electronic security business, GE made the fatal mistake of believing it could bend the industry to its whims rather than understand and respect its truly unique nature and pursue it on its own terms. The conglomerate largely ignored the leadership and managerial wisdom that came along with many of the established security brands and businesses acquired earlier this decade, to the point where the great majority of the talented, industry-savvy personnel who came along in those deals jumped ship. And while GE continued to search for answers on its own terms, constantly attempt to reposition the business and ultimately flounder, those who left went on to succeed with rival security suppliers. That group includes folks such as Steve Walin of GVI Security, Chuck Durant and Duane Paulson of Sequel Technologies, Jim Clark of Verint, Doug Marman of VideoIQ and Skip Haight of ComNet, to name but a few.
Unlike, say, Honeywell, which entered the security industry a year or two prior by acquiring Pittway, GE not only let most of its security expertise go elsewhere but also in most cases replaced it with industry novices (a notable exception was the recent hiring of Peter Boriskin, ex-Tyco). As had been the "GE way," individuals from other divisions and industries were often shifted into the new security business. The operation became a revolving cast of people unfamiliar to the security ranks. To its great credit and continued success, and for the purposes of comparison, Honeywell had the sense to respect and listen to the management of its acquired security businesses and empower them to continue doing what they were trained and experienced in doing. Building, nurturing and maintaining strong, loyal relationships with installing dealers, integrators and monitoring providers is critical to ensuring large-scale success in this industry. Honeywell gets it, GE did not, and that's why the two have radically diverged.
GE Security's internal disarray was fodder for many conversations over cocktails or dinner, wondering when and if the corporate giant would ever get its act together in this industry. Heck, I was among many who was excited about GE entering security because it seemed if anyone could help make security mainstream and expand its horizons and reach, GE could. Such a development would have benefited the entire industry, and for a while it appeared to be on its way as GE even ran a security awareness commercial during the Super Bowl and launched a major marketing campaign featuring a Lassie theme to emphasize safety. That devolved to the point where its marketing almost disappeared entirely and bounced around from person to person and agency to agency.
Looking back now, it almost seems like an experiment that went awry. Because as we close the books on GE's impact to the security industry I believe the company did more harm than good. Where it was supposed to bring greater value and visibility to the security industry, it ultimately has had the opposite effect. In addition, GE also derailed some of security's most promising technology companies as, along with losing key personnel in many areas, the products and systems have not kept up with the marketplace. With GE corporate being hit so hard by the recession it could no longer afford to tread water in the security industry.
Hopefully, GE's shortfall will come to benefit our industry as UTC sorts it all out, integrates those businesses into its own and attempts to once again make them as vital as they were before they were nearly crushed by the "meatball." However, although it certainly has proven itself in the security market with acquisitions such as Lenel, UTC is not without some serious issues of its own, having seen sales plummet double digits this year. I wish the company well. So long as it embraces the reality that it is the people, relationships, service and technology, in that order, that truly matter in this industry, it should do just fine.
As always, thanks for reading ...
Scott Goldfine
Editor-in-Chief
SECURITY SALES & INTEGRATION
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