Why ASG Security Isn’t Too Concerned About Consolidation or Competition

ASG Security executives knock around the topics of industry consolidation and competition.

The March issue of Security Sales & Integration includes my in-depth profile of ASG Security and interview of the super-regional’s executive management team. I spent a good chunk of time with them and they brought so much to the discussion that it is overflowing into this blog as well as additional content in the online posting of the magazine’s feature article. Here, ASG President & CEO Joe Nuccio (also an SSI Industry Hall of Famer and member of SSI‘s Editorial Advisory Board) and CMO Bob Ryan knock around the topics of industry consolidation and competition.

ASG Security is so skilled and active in mergers and acquisitions, and so I want to ask your perspective is of consolidation in the industry overall. Do you think it’s going to accelerate, and if it does, how do you think it could impact ASG?

Nuccio: It’s a really interesting question. If you take a look at the history and time, take a look at examples of the top five security companies, and then take a look at six through 100. Then you take a look at 100 all the way down to 12,000 dealers. Those numbers really haven’t changed that much in all the years. That six to 100 represents a nice-sized piece of the market. You have companies that are coming and going. And you have other companies that are being started and built, through consolidation. It’s pretty much been robust. And it’s been pretty steady. Those major percentages don’t really change that much, which tells you that a lot of the regional companies, like ours, really flourish in these environments, because there’s so many companies out there that are available to partner with, to be acquired, and to help kind of grow.

Now you fast-forward to today, you have the likes of the Googles, and large telcos, and all these companies. What is the speculation for what happens? Does that mean there’s going to be major consolidation? I think the short answer is I don’t think it’s going to be that much different. I think it’s still going to be the same opportunity. I don’t think that one player is going to gobble up the whole world. It doesn’t really work that way. There are a lot of barriers to entry, in a lot of different facets, and licensing, and other things like that. I think that you’re still going to see companies of all sizes continue to transact. I think an interesting dynamic may be some of the 2G sunsets, which may force a few more opportunities within smaller players, and that may force more acquisition opportunity because of that. I think players that are not really in tune with technology, and have a very old mentality of thinking are going to struggle greatly, which means there’s going to be opportunity for that. I think just in those two areas, you’ll see a bit of increase in consolidation.

For ASG, it’s like Nirvana. This is a huge opportunity for a company like us and our capabilities. I don’t think the sign of the times—I don’t think Google is going to be in this industry, but they may partner with somebody. I think there’s going to be more partnerships and more thought process, but I don’t think there’s going to be massive consolidation.

Is there any degree of competition out there that concerns you more than others? Is there heightened concern about competition coming in from the new entrants, other regionals, the small guys or the nationals? Or does it not matter because you just do your thing regardless?

Nuccio: It’s a great question. I’ve thought about it the same way before that I think about it today. We try not to focus on anybody but ASG. Are we doing the right things for our customers? Do we have the right processes in place to reach out to new customers, to secure sales, and referrals and so on, and so forth? We’ve always thought about that. If you look at the industry in totality, the average company, net of attrition, really doesn’t grow that much. As new players come in that may have a lot of access to capital and millions and millions of dollars in advertising, technically it just helps, and it raises the bar for everybody else.

Would we be naïve to say, “Wow, companies that have a lot of money are a threat to us”? No, we’re not naïve. Everybody is a threat to us. But we don’t look at it that way. We look at it in a positive way. How do we make the best out of that situation, to not only retain our existing customers, but create new ones, and have more opportunities? That’s how I think the whole sector truly does grow from 20% penetration to 30%-40% through those kinds of opportunities. The biggest key is to make sure that from a technology standpoint you are absolutely state of the art, providing the best services out there, and your customers know it, and customer service. If you do all those things, you’re never going to have a problem. You’re always going to grow at the level you want to grow, and you may lose some customers, but you’re the net sum is going to be zero because you’re going to be able to gain customers that you may never have had access to be able to reach out to.

I think it’s all in. I think it’s healthy, positive, and I probably worry more about a small, local competitor within a very specific geographic that may be able to spend even more time at customer service than a company our size or a larger company would do. But then on a growth level, they don’t really grow that much. It’s not going to really have that much of an effect. That’s the long answer to telling you we embrace it. We don’t think about it. And we turn them into very positive scenarios.

Ryan: A leading element that places us ahead of the competition is we are an early adopter and first mover of new technology. We try to find the most compelling new technologies that we can build RMR services around and then be the first one in the marketplace to offer these services. This gives our salesforce the advantage of time. In virtually every new technology out there, we have been able to give our sales force a head start on the competition in our local markets. Right now it looks like an easy decision that everyone gets into this connected home, home automation, cloud-based video and cloud-based access. We made those decisions when they were not easy decisions to make. We made some gutsy decisions, and we made them early, before anybody else.

We were one of the first companies with connected home. We were out with our solution before ADT was out with Pulse. We were one of the first security companies in North America with hosted video. We weren’t just on the leading edge, we were a bit on the bleeding edge. That’s really been our nature and our style. We’re willing to go out there and take a bit of a bruising to be the early adopter, and the first mover. What that has done for us and our salesforce is it’s given us a competitive advantage of time and technology. What I mean by time is we give our salesforce a head start, where a given service or a given solution they’re the only one in our business in their markets that offers a solution like we do. We’ll continue to do that to give them the advantage of time and to have a better narrative at the door than any of our competitors.

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About the Author


Scott Goldfine is the marketing director for Elite Interactive Solutions. He is the former editor-in-chief and associate publisher of Security Sales & Integration. He can be reached at [email protected].

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