GVI Leadership Offers Details of Samsung’s New Branding Strategy
Shortly before the end of the year, I had the opportunity to speak with Steve Walin, chairman and CEO of Carrollton, Texas-based GVI Security Solutions, and Lloyd Trotter, a founder and managing partner of New York-based GenNx360 Capital Partners, about GVI being acquired and taken private. The deal, which was finalized earlier this month, reunites former GE Security executives in a business focused on providing Samsung and GVI branded video surveillance solutions for markets including government, retail, financial and education.
This is the second of two parts of my conversation with GVI Security’s new leadership and dwells on Samsung’s unified rebranding plan for 2010, plus a host of industry issues from GE Security’s sale to United Technologies Corp. (UTC) to surveillance growth projections and much more. You can access the first part of the discussion, which touches on how the GVI-GenNx360 deal came together, what it means moving forward and hot new technologies such as AutoIP and the A1 camera chip, right here.
One of the ongoing issues with Samsung in the North American security space has been confusion between the Samsung Techwin and Samsung Electronics brands, which we’ve talked about before. Will GenNx360’s involvement and the new structure help provide some additional differentiation between the companies in the marketplace?
Steve Walin: You may not be aware that Samsung has announced the merger between those two businesses. There was an announcement done in Korea about two months ago, and I’m not sure that it made it here to any large U.S.-based announcement so you have the scoop! Effective Jan. 1, Samsung’s video surveillance business and Samsung Techwin’s CCTV business are coming together to form one Samsung security type business. Both companies are literally being merged together, so they are indeed organizations that are being combined and so on. So, where we see this eventually evolving to is that there will be one Samsung product line, and it won’t be called Electronics; it won’t be called Techwin. It’ll be called Samsung. And, we’ll play a major role in rolling that out for the Americas as we have for Samsung Electronics for the last 10 years. Those discussions are ongoing right now, and I think you’ll be hearing some news about how all that’s going to work and what it’s all going to look like in early January. We are really thrilled that this decision has been taken at the Samsung group level in Korea, and that these two businesses are going to be put together and end the confusion that has been taking place in the market for the last several years.
Lloyd Trotter: The good thing about it is I think they saw the same confusion and conflicts, and they took the action to begin to alleviate that. I think with that clarity it’s going to be, “Everybody, now let’s work on what’s important,” and that’s how do we grow faster?
Lloyd, given your background and vantage point, were you very surprised by GE selling off its whole security division?
Trotter: Surprised? No, because the rumor has been out there for quite awhile. I’m a little bit disappointed in that since I got them into the security arena and it’s a space that I still like. Unfortunately, our funds aren’t big enough, but we would have loved to do that transaction.
Did you think it would be UTC?
Trotter: Well, yeah. The normal suspect customers were hanging around. It’s a business that’s roughly $2 billion in sales and it had to be a large player to take it down. I think what I read in the press, they paid roughly a $1.8 billion for it. That’s a pretty big check to write in this environment.
Speaking of the environment, what are you each of you seeing, as we’re moving into 2010 here, for the business community from sort of the big perspective, and more specifically, the part of the industry that you’re focusing on?
Trotter: In general, I don’t think you’re going to see wild euphoric growth. There will be some segments that will fare better than others. Looking at the overall business environment, the good news is I think the worst is behind us, and that we will see some stabilization and some growth going into the future, but nothing that you can get too excited about. However, when I look at security, security didn’t see this collapse that a lot of industries saw during this downturn, and I think that bodes well going forward in the future as well. I think it’s been relatively more stable than some of the other segments that we have been watching.
Walin: From the GVI perspective, I break it down into a couple of areas. First of all, about a third or even a little bit more of our businesses are in Latin America, and I think we had a good year in Latin America. It did not suffer to the extent from the economy that the North American business did. We continue to see growth there, primarily in larger projects, city surveillance and some of the other infrastructure projects that we operate with down in Latin America. In the U.S., we’re starting to see a general uptick in activity and orders, particularly in the K-12 segment. It seems to have held through fairly well, and continues to be strong. But I would agree with Lloyd. I don’t think it’s going to be a fantastic year, but it should be better than this year we’re just finishing.
Are there any other opportunities that you’re kind of keying into? You mentioned K-12, obviously. Anything else out there in terms of market or technology that you think is going to be robust or a good growth area?
Walin: I think for a mid-mass market, it’s a small- to medium-sized business that has a couple handfuls cameras, or a series of those that are knitted together. We see good activity there and always have. This year  was off, but the whole retail vertical, we’ve always operated very well there. Our products lend themselves nicely, and AutoIP is perfect for that whole retail space. Another area we’ve historically done well in is branch banking for some of the same reasons, although we don’t see that as strong as what we saw in retail, even this past year.
So, we’re starting to see a lot of interest in AutoIP in convenience stores and smaller chains like pet stores and bookstores and things like that. It’s not only being used for things like safety and security, but some of these users are using the system for what we refer to as productivity solutions; you know, the ability to remotely look in and see what’s going on in their stores without having to visit. What do the lines at the register look like? How many people are in the store? Which direction do most people walk into the store? Do they go to one particular in end cap display versus another? Of course, it’s all kind of manual in terms of looking at it. But if you’re a regional manager covering 35 or 40 stores and you want to see what’s going on, you can do it from any computer today. So, we see that as a driver in retail that’s helping t
o cost justify these systems.
Do you think the company will get into areas to any extent beyond or outside of surveillance?
Trotter: Clearly, there’s GVI and then there’s GenNx, and we’re exploring all of our options from a GenNx perspective of what else do we do in the security space. It isn’t just going to be one acquisition. I think whatever we do it’ll be complementary to a portfolio of companies. How it all knits together? I’m not sure at this point. But access control is also important, that’s for sure.
Steve, what about under the GVI umbrella? Is that a company that could roll out things other than surveillance or is that purely its focus?
Walin: Well, you know, I’m a big believer in focusing and I have a little saying around the office, “Let the singers sing and the dancers dance.” So, for right now, our plate is pretty full with the launch of AutoIP, which just happened in the last few days, and driving the business with the mid-market. We’re open to other areas, other applications and other technologies that make sense that can help customers. For the foreseeable future, we’ll drive GVI and the surveillance base around AutoIP and the IP cameras while we continue to provide the A1 technology to analog, and eventually that’ll move into the IP. And then we’ll see what happens. We just concluded our deal on Dec. 9 with GenNX, so we’ve had one opportunity to get together and plan strategy, but as the holidays get behind us, we’ll sit down and figure all that out in earnest.
Maybe it’s a little too early in the game, but do you anticipate doing anything larger or different at ISC West to kind of really make a big impression?
Walin: I think you’ll see our normal good-sized presence. You’ll see a focus on AutoIP and IP cameras on A1. We’ll have our normal great spot and good presence. ISC West is our show and we invest significant resources, along with Samsung, for that venue.
Is there any other specific message you’d like to get out to the installing integrator and dealer market that I can provide the forum for?
Trotter: From a GenNX perspective, I think what we’ve found is a company that we liked, and we liked the products that they are selling and the approach. More importantly, we like the management team that we found there. We’re going to work hard at how do we support that team of people who we think are A players in running faster, growing faster with resources than they could have otherwise had as a public company. So that’s going to be our whole focus. How do we make this thing bigger and better faster?
Can you ballpark what kind of growth you would like to see in 2010?
Trotter: At the end of the day, I think we have an opportunity with some resources to more than double the size of this business over a three-year period of time. We just got to put the actions and resources behind it in order to get there. I think Steve and the team have some great ideas to how they would like to see that go forward. You know, we haven’t had a lot of time. We closed the deal on Dec. 9. We’re going to roll up our sleeves in the first quarter of next year and really begin to put some of those plans together. We’ve got great details, and we’ll figure out how to do them.
If you look at the industry, what kind of growth rate in video do you think is reasonable for 2010? Is it 6 percent, 8 percent, 10 percent?
Walin: My sense of it is analog will continue to run around flat or in low single digits. IP should be in the high teens. I’m not IMS or Frost & Sullivan, but that’s from all of the tribal knowledge you have around in talking to people and reading the reports. It’s kind of what we’re hearing.
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