Mergers and Shakers
A long time ago, in an industry far, far away there were many kingdoms, each with happy, content people known as the customers. These kingdoms were ruled, for the most part, by kind and benevolent manufacturers. The manufacturers enjoyed owning their own kingdoms, as it allowed them the freedom to make decisions according to their own customs, for the sake of their customers, who were kept happy.
Alas, a great darkness grew over the land, as giant multikingdom corporations from afar came forth and swallowed up the smaller shires. They combined them with foreign kingdoms and implemented policies that were strange to the independent rulers’ ears — with unusual phrases such as “maximize profits” and “downsizing for efficiency.” There was a great wailing and gnashing of teeth.
When the battles were over, there stood only a small number of the large, multikingdom corporations, with rulers who lived in faraway lands and were unfamiliar with the concepts and customs to which the people were accustomed. The customers were so very afraid. The end … or is it?
Effects of Mergers and Acquisitions
If you’ll forgive my silliness, the above story is fairly accurate in its depiction of the current state of consolidation affairs in our (and many other technology) industries.
It seems hardly a week passes without another report of a company we’ve been doing business with getting bought out by a larger corporation. The past few years has seen more merging than I can ever remember, although it has happened to some extent since the beginning of business.
The security industry is one of the few remaining untapped resources in a rapidly consolidating global marketplace. Companies that had no previous experience with security products saw an opportunity to increase their reach and portfolios.
It is very easy to immediately condemn a merger as a bad thing. You’ve heard the lines, “Oh, here we go again, another good company being swallowed up by some soulless corporation.” Knee-jerk reactions seem to be the norm lately, maybe because so many of those reactions have turned out to be justified.
There are three main kinds of mergers and acquisitions: 1) security leaders trying to buy their way into a new technological universe; 2) local alarm and security companies joining forces with larger corporations to survive; and 3) large global conglomerates fattening their diversification portfolios.
Riding the Convergence Wave, as we have been, a certain amount of consolidation was inevitable. As technologies combine, so must technology companies. For the traditional security industry, there was a great awakening about five to 10 years ago. The big players realized they weren’t so big after all. IT-centric manufacturers quickly demonstrated they were the true big fish in the pond, no matter what those security upstarts liked to believe.
The analog way of seeing the world had to go. Everything was headed for the network, and security equipment was no exception. The problem was that the existing talent pool had grown up in a world of matrix switchers and multiplexers, and now these companies needed to start providing network appliances and software packages. Either the manufacturers had to hire a talent pool from the new world or they had to buy a company that was already there.
This type of consolidation, for the most part, has been a great benefit to our industry. It has helped speed up the adoption of new technologies and inventions, and hastened the integration of IP products with the traditional security marketplace.
Not many years ago, for instance, the only wireless links we had for video were microwave. Aside from being flat-out expensive for the hardware, they also required licensing, which brought in a whole other level of cost. Choices for getting video across relatively large distances were limited and pricey.
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