Inside Canon's acquisition of Milestone

Last week, surveillance camera manufacturer Canon stunned the surveillance industry when it announced that it had entered into an agreement to acquire Milestone Systems, one of the world’s leading VMS providers, through its subsidiary Canon Europa N.V.  Although Canon is currently a relatively small player in the video surveillance market, Jon Cropley, principal analyst for IHS, said that the company has big ambitions and plans to leverage its strong consumer electronics brand in the surveillance industry.

The acquisition of Milestone should provide Canon with a substantial jumpstart for meeting their CEO’s  previously stated goal of making video surveillance a more prominent part of their product portfolio. IHS estimates that Milestone was the largest supplier of video management software in 2013 with over 7 percent of a global market which was worth more than $900 million.

Canon, which currently only sells security cameras, will now be able to provide customers with a comprehensive, end-to-end video solution through combined offerings with Milestone. SIW recently spoke with Jacco Leurs, head of professional imaging at Canon Europe, to get his take on what this acquisition will mean for the company moving forward, as well as how they plan to integrate Milestone into their business operations.

SIW: With Milestone being one of the most widely used and respected VMS brands in the security industry, what kind of impact do you expect this acquisition will have on the adoption of Canon’s portfolio of video surveillance solutions not only in Europe, but around the world?

Leurs: Canon is making a significant step towards becoming a leader in the fast growing video surveillance market by acquiring Milestone Systems. Together, our two companies will become a formidable player in this market by combining the superior camera technology of Canon with the market leading VMS of Milestone. As a result, we expect a positive impact on the acceptance of our product portfolio on a global level.

Along with our partners, Canon and Milestone will accelerate our respective businesses through new product innovations, expansion into new markets and utilizing the global resources and channels of both organizations to further grow and develop our security business.  The addition of Milestone to the Canon Group is a natural step towards realizing our ambition of leadership in this market.

SIW: How do you plan to integrate the operations of Milestone Systems into Canon Europe? Will the company maintain its current headquarters in Denmark and will their personnel, including the senior management team, be joining Canon?

Leurs: Milestone’s success is built on the foundation of its open platform strategy, strong partnerships and entrepreneurial approach and this is firmly supported by Canon. Milestone will operate as a standalone company within the Canon Group.  Lars Thinggaard, chief executive officer of Milestone, will continue to manage the company, reporting to Rokus Van Iperen, president and chief executive officer of Canon EMEA.  The management team at Milestone has committed to remaining in place and is focused on making this transition a success.

SIW: What kind of an impact do you anticipate this acquisition will have on your bottom line and how will it help you to win projects that you might haven’t otherwise been considered for?

Leurs: The network surveillance market is a multi-billion euro industry which continues to show huge growth potential.  We are strongly committed to building a long-term presence as a leader in this industry and our acquisition of Milestone will allow us to realize this ambition faster. We are investing in the continuous development of new Canon products to expand our range and to meet the requirements of the market. This, combined with Milestone’s expertise and strong track record for growth, innovation and financial puts us in a strong position to establish a significant footprint for Canon in this market.

SIW: How much of a factor did Milestone’s strength in the EMEA market play into your decision to acquire them versus one of their competitors?

Leurs: Milestone operates in a number of regions and has a strong presence globally – the Americas make up around 50 percent of Milestone System’s market, EMEA is 38 percent and APAC is 12 percent.  The Canon Europe acquisition of Milestone fits well with Canon’s global strategy to increase development at its regional headquarters and this, combined with the close cultural fit of the two companies, made Milestone an extremely attractive company to join the Canon Group.

SIW: In recent years, Milestone had begun to branch out into the hardware market by rolling out a line of video recorders. What are your plans as it relates to the company’s surveillance hardware products moving forward?

Leurs: Canon fully supports Milestone’s diversification strategy and we have extensive experience in manufacturing and servicing hardware products. We will support Milestone in the realization of its ambitions with regards to its hardware products wherever possible.

SIW: What will this acquisition mean for your channel partners in both the near term and further down the road? Given the fact that many installers and end uses are already familiar with the Milestone platform, what do you believe will be some of the more subtle effects of this deal on the Canon channel?

Leurs: Existing customer and partners can be sure that support for their products – both Canon and Milestone – will remain unchanged.  In the future, we will be able to deliver a broader offering to the Canon channel.  Working with Milestone, we will develop value-added features, for example, as well as excellent technical support, and all of these capabilities will bring more value to the channel and ultimately to end users.

SIW: Speaking of security end users, what type of impact will this deal have on your brand recognition within the marketplace?

Leurs: The Milestone acquisition has already resulted in a real boost of confidence from channel and technology partners and positive reactions from customers.  The announcement demonstrates that we’re truly dedicated to this industry and we’re continuing to focus on the surveillance market.  People’s perceptions of Canon in this industry have changed and they can now see that we’re serious about becoming a leader in network video surveillance.

SIW: Have you given any thoughts as to what changes to the Milestone brand, if any, will be taking place as the company becomes a part of Canon’s security operations?

Leurs: There are no plans to make changes to the Milestone brand.

SIW: Does this acquisition give you any advantages in terms of vertical markets you’ve already seen success in within surveillance? Will it provide you a starting point for reaching out into verticals where you haven’t necessarily had a strong presence before?

Leurs: It is very early days, but we will of course investigate which vertical markets offer the best synergy potential for both Canon and Milestone’s hardware and software competency, combined with our sales channels, customer bases and partner networks.

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