Qolsys Aims to Fly Higher With Tyco Wind Beneath Its Wings
An undisclosed investment will allow the start-up provider of security and home automation products to greatly speed up its strategic roadmap.
From the company’s inception, Qolsys executives determined they would focus specifically on the security channel to bring their wares to market. Doing so would differentiate them from numerous technology providers, telecoms/cablecos and others that are viewed more as competing against the channel.
“I would say the primary route to market for all of these new entrants has been to go compete with the channel. Whether they are selling direct to the end user from their own Web site or direct to the end user through retail. Or it is direct through the solution provider through an MSO,” Hackett says. “We are big believers in the Internet of Things and the broader home space. But we believe the route to market for our product and our strategy is through the security channel.”
The emerging growth in basic home automation products and services is proving to be a momentous disruptor in the security channel, and especially among traditional installing security contractors. The market’s evolution – specifically, dealer consolidation – was eyed by Qolsys executives early on. When they first conceived the business they estimated there were roughly 15,000 dealers in North America. That degree of fragmentation in the industry bellowed opportunity. Yet with all the convergence going on, they projected much consolidation would ensue.
Qolsys views the dealer channel currently evolving in three distinct scenarios.
No. 1, entrepreneurial risk takers/early adopters are embracing change brought about by connected home technologies and related services, and are making the necessary changes accordingly to their organizations.
At the other end of the spectrum, the industry is seeing traditional business owners who have not been innovating and instead have maintained most of their focus on service. “They have just been focused on keeping their customers happy,” Hackett said. “I don’t besmirch that, but now they are seeing this tidal wave coming so what do you do?”
The answer? Oftentimes, get out of the business.
“We are going to see a lot [of business owners] sell because right now is a good time to sell. You are seeing really high valuations,” he said. “The long-term opportunity is very strong if you are going to embrace the technology and opportunity. If you are not, it is a really good time to get out.”
In the middle of those two polar opposites are dealers who are still trying to figure it all out. Some want to be early adopters; others are working on passing the generational baton to a child or business partner or trading hands between equity partners.
As the channel continues to develop, Qolsys is busy using its newfound funding from Tyco to ramp up much-needed dealer support efforts on a national scale. It is a building block that Hackett puts on par with overcoming new entrant resistance. He’s confident the company is on solid footing for success.
“We believe the channel is really hungry and very entrepreneurial and if provided the right solution it is a great opportunity and great timing to work with the security industry to bring a very robust home control solution to market,” he said.
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