Canon-Milestone Video Surveillance Deal to Impact Government CIOs

G00266669

Analyst(s):

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Summary

This deal will leverage and expand Canon’s presence in the networked and video surveillance market. However, product integration and cross-selling between Canon and Milestone will take some years to reach the government sector.

News Analysis

Event

On 13 June 2014, Canon’s European subsidiary announced an agreement to acquire privately owned Milestone, which focuses on open platform video management software. To date, Milestone's brand positioning has been built on being hardware agnostic. Terms of deal were not disclosed.

Analysis

Canon intends to leverage Milestone’s brand and products to shift from its current consumer-grade IP cameras to a more enterprise-grade video surveillance set of services. This market segment is consolidating as IP networks become more widespread, and senior-level executives and CIOs — especially in the government domain — gain more interest in and control over video surveillance tenders and deployments. Two recent examples are Tyco acquiring Exacq and Rovi acquiring Veveo.

As this transition to a new role of ownership occurs, it is encountering issues such as legacy technology integration, business ownership, varying procurement preferences, funding cycles and the geographic nature of use cases. CIOs within the government sector will demand more from platforms capable of integrating additional systems along with offering hosted or managed services.

Milestone technology interoperates with multiple proprietary camera and hardware devices, allowing clients to manage existing installations that contain a wide variety of network hardware and that must integrate with other systems. Milestone will be a good long-term fit with Canon's intention to enter this market segment, especially since Canon currently is not a recognized player in the video surveillance software management market.

Milestone will expand Canon's presence in the video surveillance market. Canon will also add Milestone’s capabilities to its IP-based camera offerings, and leverage other Milestone software solutions (such as its managed services).

The acquisition will not immediately affect Milestones clients and close OEM-type partnerships with companies such as OnSSI, but in the longer term, Canon will expect more results, such as deeper integration and selling of Canon products.

We see two areas that introduce complexity into this acquisition and will need to be monitored:

  • This acquisition will require an exchange of expertise between Milestones’ open platform independence and Canon’s camera offerings. However, due to certain legal and regulatory requirements, the two must maintain an information barrier between their respective market segments. However, when that barrier begins to limit activity, we expect both companies will introduce improved products and services to limit the impact of those constraints.

  • Milestone’s VC Index Ventures appears to have been bought out as part of the acquisition — relinquishing its board of directors seat. This will raise questions regarding the continued independence of such offerings, as we expect to see more proprietary integration with Canon products.

Recommendations

Existing and prospective Milestone users:

  • Expect Milestone competitors to seize on this to market themselves on integrating road maps to offer more competitive alternatives..

  • Take time to review your options. Milestone software is sold through authorized and certified partners and these arrangements are not likely to change over the next 18 months

  • Prospective Milestone customers: Evaluate solutions from competitors as well, but be aware that these market offerings are more end-to-end solutions based on interoperable partnerships and are not comparable open platforms such as Exacq.

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