We live in a competitive world. No sooner has cutting edge technology been developed than it’s shoe-horned into a matchbox of white plastic, its price shorn to the bone.
The chipset of today’s cutting edge video surveillance camera is the chipset of tomorrow’s retail or domestic cloud solution, leased to an end user at no visible cost, like some giveaway 4-zone alarm panel. And when I say tomorrow, I mean it literally. Right now the humblest $200 fixed mini domes and compact cameras are rumbling around powered by the most powerful HD processing engines. Can it go on indefinitely? I think not.
And in news this month, we’re seeing the advent of simple, unitised IP-based access control, designed to integrate with current IP video solutions without any of the usual fussing about. This development points to commoditisation across all market segments. Alarms, access control, video surveillance, software management solutions, the lot. Is the lower end the only part of the market that’s price conscious? No fear. It’s slash and burn at the top end, too. And talking about the issue recently I got to wondering whether the malaise that has long afflicted the alarms segment will infect major systems as well. What is that sickness? It’s a systemic collapse of sales ability with all the attendant ailments.
In the domestic and small commercial alarms market where techs spend 90 per cent of their time covered in spiderwebs and pigeon poo, you can understand a reluctance to prance about in board rooms up-selling fawning customers to enterprise solutions with no more than a whiff of Dunhill Apres Rasage and a flash of Rolex. But when it comes to bigger systems, an inability to sell based on features is harder to rationalise and much more dangerous for the industry as a whole, especially when time is added to the equation. The logical progression of a collapse in margin over time is the inability to invest in research and development vital to future sales.
The technical dormancy resulting from margin crash is most obvious when viewing ‘modern’ alarm systems whose last upgrade was undertaken in the 1970s, that wild decade when Fairchild Optoelectronics’ 5 cent LEDs blasted alarm panel keypads to technological heights previously only seen on Star Trek. In my view, the sales culture that underpins margin seems to have given way to a different way of winning business that’s based on relationships that are too often a one-way street. Part of the problem is intense competition, but an inability to win jobs based on presentation of the benefits of system performance is a key factor.
The impact of poor sales skills, or no sales skills, flows through the industry, from bottom to top. Integrators and installers selling on price, exist on virtually no hardware margin, making their profit from the installation itself. Distributors, hard pressed by integrators who cannot close a sale, offer the product ranges of more manufacturers, servicing each less. Manufacturers pressed by distributors scrimp on component quality and start dressing up less as more. Firmware tweaks take the place of decent lenses.
A mindset grows in which quantity, not quality is the primary business motivator. And to find the volumes they need to sustain turnover, manufacturers go direct, or start searching for cute new verticals, cannibalising their existing sales and isolating customers, who lose brand loyalty and purchase solely on price. Making matters worse, in Australia just now there seems to be a selection process driven by project managers or electrical contractors who win tenders using lowball quotes and then carve their margin from contractor’s hip pockets.
At all levels, the key element driving commoditisation is lack of sales ability. A failure to build in staff that particular skill of the sales animal, built on an intense and justified belief in the capability of our solutions, combined with an industry-wide self respect that demands buyers apply true value to electronic security technology.
By John Adams
