Adapt to the Shifting Landscape: Maturing Tech Markets Call for Platform Innovation
The IP video revolution has resulted in noteworthy levels of security industry growth and innovation over the last decade or so. Many companies were built, and a large number of innovative products and solutions were introduced to the market. We saw a wide range of great technologies, business strategies, and go-to-market models — each buoyed by the industry’s fast growth.
Along with the industry-leading companies and products, there have also been less-well-planned ventures and offerings that came along for a good ride. Now, however, as the IP video market matures, and the pace of industry innovation and growth begins to slow, these companies are finding the greater competitive environment very challenging.
What’s happening is that today’s IP security market is maturing and experiencing a natural consolidation. It is no longer easy to compete with average or below-average products and business strategies as the industry maturation and consolidation bring product price wars and other short-term competitive campaigns. Companies that lack any real differentiation or fail to deliver genuine value to the market often react with price reductions, resulting in race-to-the-bottom behavior. – Tim Palmquist, VP Americas, Milestone
This is a disruption to the business cadence our industry had become accustomed to.
Fast Growth and Easy Money vs Industry Life Cycle Stages
So, if it’s no longer fast growth with ‘easy money’ like the early phases in a life cycle, what are the new business strategies that must be developed to encompass the next generation of market disruptions? We believe an open platform community offers a framework to succeed — together with our partners — by leveraging each other’s innovations and successes.
Business research describes the four-stage progression through a consolidation life cycle that occurs for any industry: Startup, Scale (expand for more market share during market consolidations), Compete and Transition through alliances. The speed of this progress varies by industry for all stages but is going faster with the disruption of new technologies.
Ultimately, a company’s long-term success depends on how it progresses through the stages of industry consolidation… Most companies simply won’t survive. – from ‘The Consolidation Curve’ by Graeme K. Deans, Fritz Kroeger and Stefan Zeisel, published in the Harvard Business Review.
If you equate the so-called ‘easy money’ days to the ‘Scale’ stage of an industry life cycle curve, we see that the physical security market is maturing and we are nearing a ‘Compete’ stage. By defining the stage we are in, we can address it and map our plan to be stronger for the next phase. I believe that the open platform community of innovative, third-party solutions can greatly broaden the Scale stage of that curve.
An open platform delivers the ability to fortify the Scale stage of consolidation by leveraging innovation from many community partners to deliver value-adding, forward-thinking solutions to the market, together. For companies that can articulate the long-term value proposition of an open platform architecture and a community of innovative, complementary solutions, there is still a lot of good business ahead.
Whose Glory Days Are Over and Why?
In contrast, companies that go to market proclaiming stand-alone, narrowly scoped products, with ‘me-too’ features differentiated only by price, will have a hard time competing. For them, their glory days indeed may well be over, and their business models may lead them down the back side of the ‘Consolidation Curve’, into decline, as is already happening to some.
Many businesses talk about being open but fail to deliver on the true value proposition of this approach. They choose instead to battle it out on individual features and price, and this is their downfall. If they would instead articulate the value of a platform with a community of innovation to deliver on that message, they could differentiate themselves and change the conversation in the marketplace. – Tim Palmquist
As a consequence, it’s not that the IP video industry’s glory days are over, but rather that the easy money days are coming to an end. The maturing market for security in fact demands much more of our solutions. For companies like Milestone and our diverse global community of integration partners working together to embrace the open platform, we can meet these demands and define a stronger, longer future ahead.
By Tim Palmquist, VP Americas for Milestone Systems
(This article ran in the ISC West Daily on April 6, 2017.)