I had a great conversation with Dean Meyer yesterday and I thought I'd post some raw quotes. You'll see some of them in an edited version of the Pelco story on the front page, and some others of them in a little sidebar I'll put in the March paper.
Anyway, here you go:
Me: Why'd you close the access division?
Dean: â€œEveryone is seeing a slowdown. And I see no reason why thatâ€™s going to change in the first or second quarter of this year. Itâ€™s not just our industry, and thatâ€™s not earth shattering news.
â€œIn light of that situation, the short version of it is that [the access control business] represents a very, very small amount of our revenue, but we spend a lot of engineering resources on it, and so as times become more challenging, we say, â€˜Hey, we need to be more focused on what we know best, and that which contributes to the majority of our business: the cameras, and recording, and all the things that you know that we do. This is more about getting the whole team focused. And in all candor, [access control] was not something that just rolls off our tongue, and not something that everyone thought was easy to understand or embrace and really drive the sales. Itâ€™s a very small piece of our business, one on which we were spending more in R&D than we were getting in sales.
"And with the large number of product launches we'll have this year, to ask marketing and sales to worry about the small business of access, it was just a distraction that we didn't need. From a pure business standpoint it was an easy decision. In my mind, it was a bit of a struggle in another way, in that it provides a bit of a conflict in strategy. We do a good job with partnering with a lot of the access control providers. Weâ€™re very open with them, and we look for pull-through business with them, and this was a bit confusing to them once it became part of Pelco. They wondered, 'Are you going to start competing with us?' So we kept it a low-end entry-level thing, which didnâ€™t move well through our channel anyway. lt's more of a distribution channel vs. an integrator product. More of an add-on vs. a direct sale, although the access system could scale pretty well. But we always elected to position it as very low end because we didn't want it to compete with our strategy of partnering with the high end access providers."
Me: Can you tell me who's going to buy it?
Dean: â€œNo. But Iâ€™ve been surprised with how many people said, â€˜Hey, I might be interested.â€™â€
â€œIâ€™m confident that weâ€™re going to find a way to spin it off so that our customers will have a positive go-forward experience to have their installations sustained. Weâ€™ve had quite a few people come to us about it, and that will be good for customers. Itâ€™s not going to take a long time, either. I think weâ€™ll move fairly quickly.â€
Me: What about the market in general? How will it look a year from now?
Dean: "To a degree, I think it is a pretty, a very fragmented business, and we also know that Pelco has a lot of breadth in our offerings, and weâ€™re talking about getting more focused. We're fortunate in a couple of ways. Weâ€™re global, which helps us a lot. Not all markets are impacted the same way, and weâ€™re financially secure. So from a pure Pelco standpoint I feel quite good. I wonâ€™t speculate on our competitors, but I think it will do some separation. Some will handle more difficult times better than others. I think it will result in some consolidations, or depending on how band things get, there might be some who say, 'This doesn't make sense anymore.'
"Most people are going to continue to try to chase the money. Where is the money? Itâ€™s going to be where these stimulus packages all fall out. Is it infrastructure? Probably.
"It depends where ones strengths have been, as to whether you're going to definitely be successful getting through this.
"How far reaching are you? You can play differently if you have a global reach. Not all markets are being impacted the same way. Others still have fairly good growth, even though thatâ€™s slowed down. Weâ€™re trying to be prudent where the best opportunities are and Iâ€™m sure weâ€™re not unique in that regard. Everyoneâ€™s trying to figure out how to get through this. Itâ€™s a war.
"I think it will streamline the industry before itâ€™s all said and done."
Me: I read recently that angel investors are pulling their money back. Will that affect security?
Dean: "It will be interesting to see. A lot of niche companies many times advance the technology the fastest. Theyâ€™re the market leaders because theyâ€™re very focused. It will be interesting to see what we read about as the buzz next year. Start ups with new innovative approaches-will end users be willing to spend their money on them? I think customers will be less apt to take risks on the next new things-and Iâ€™m not talking about IP, that's not new anymore. It might bring our whole industry's focus back to, Where is the 80 percent? again. Weâ€™ll maybe get back to what the day-in-day-out needs are that drive the business, vs. some of the fringe stuff that some of, all of us, get enamored with sometimes.
"Our big message for 2009, and we had a really great sales meeting for our channel partners and our rep force in the U.S. a few weeks back, is that weâ€™re very excited about the breadth of offerings we're going to come out with, and the breadth of IP camera offerings. I donâ€™t think itâ€™s me speaking out of school to say we havenâ€™t necessarily been leading that aspect of the market, but weâ€™ll be right up there leading with the rest of them come ISC West, and that is very much our excitement for 2009.
"We donâ€™t hesitate to invest in technology and sales growth."