Security Business

JUL 2019

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10 Security Business / / July 2019 SECURITY WATCH BY JOEL GRIFFIN, EDITOR, SECURITYINFOWATCH.COM Top Story Panasonic to Spin off its Security Systems Business Company to be branded as Panasonic i-PRO Sensing Solutions Co., with private equity group holding majority stake Panasonic is spinning off its Security Systems business division and selling a majority stake to Polaris Capital Group, a Tokyo-based private equity firm. The new company, which has been dubbed “Panasonic i-PRO Sensing Solutions Co., Ltd.,” will be comprised of the Security Systems business division as well as the industrial and medical vision camera divisions. In addition, the public safety sales and development functions of Panasonic System Solutions Company of North America and its camera manufacturing facility in China – Panasonic System Networks Suzhou Co., Ltd. – will become subsidiaries of the new company. The new company is expected to begin operations in October. “The new company will be able to utilize Polaris’ knowledge and experience cultivated from numerous investments into manufacturers and other large-scale enterprises,” according to a statement issued by Panasonic. “The new company will aim to enhance its revenue and profitability globally centered on the North American market.” Following the completion of the spin-off, the company’s cameras and software will continue to be sold under the Panasonic brand in the U.S. market; through Panasonic Systems Solutions Japan Co., Ltd. in its home market of Japan; and through existing Panasonic sales companies in other regions. ”The U.S. market presents an incredible opportunity for Panasonic Security, and this strategic direction will better position us to seize this opportunity together,” Bill Brennan, Director of Sales and Marketing for Panasonic System Solutions Company of North America, wrote in a letter to the company’s partners and customers. “As a valued partner and customer, you will experience little to no disruption, as we will fully maintain day to day operations.” Analysts Weigh In Danielle VanZandt, Security Industry Analyst for market research firm Frost & Sullivan, says the move is simply a “sign of the times” for what at one time seemed like “untouchable” video surveillance manufacturers. “Up until five years ago, surveillance companies were competing in terms of camera build, quantity of units sold, and overall image resolution,” she explains. “Once Chinese manufacturers like Dahua and Hikvision began to proliferate the global markets and win the sales battle through a low-price strategy, established and newer entrants to the market had to find newer ways to compete. “Companies such as Milestone, Genetec, and Axis Communications sought to move surveillance beyond the camera itself, introducing and expanding product lines to include advanced video management systems and analytics, which has helped these companies to weather the digitalization shift in the industry,” VanZandt continues. “(Other) vendors seemed to stay confident in just their brand names and bulk sales, neglecting the digitalization trends and focusing on just the camera. It is ultimately costing them market share.” Jim McHale, Managing Director of research firm Memoori, says the fact that private equity firms have now acquired both Panasonic and Pelco (read more on page 12) suggests that no other manufacturer saw a benefit in making a strategic acquisition; however, the reasons why these companies failed to maintain their industry-leading positions have proven to be quite different. “In the case of Pelco, they did not invest quickly enough in IP video technology. Schneider Electric actually has a good record of acquiring building services companies and successfully integrating them into its building automation business, but video surveillance is a more innovative and competitive business than building automation and they failed to catch up before the “race to the bottom’ hit them,” McHale explains. “Panasonic is still recognized as a respected brand but they have lost market share over the last four years,” McHale adds. “Their security business is a very small part of their overall $70 billion business, and it would appear they have lost interest in video surveillance, with its tight margins and fierce competition from China.” ■

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