In what the company is calling a "realignment," Bosch Building Technologies announced on Thursday morning that it is selling most of its product businesses, including video surveillance, access control, intrusion detection and communications. The fire alarm business will remain with the company.
In the future, the company’s Building Technologies division will focus on its regional integrator business, with solutions and services for building security, energy efficiency, and building automation.
“We want to become one of the global leaders for systems integration in building technology and to seize the favorable opportunities for growth in this market,” Christian Fischer, deputy chairman of the Bosch board of management, said in a press release statement. “To achieve this, we need to consolidate. This is why we will in the future be focusing on systems integration as our core business.”
According to the release, “Bosch is now looking for a buyer who will take on all three business units together with their associates and locations. The product business with fire-alarm systems, by contrast, is not to be sold. Because of its importance for systems integration, it is to be merged with the integrator business and continued.”
The Speculation Begins
Industry analyst Oliver Philippou, Omdia's Senior Research and Analysis Manager for Physical Security Technologies, says Bosch was one of the first companies to wrap "building technology" into the industry, and that includes high-tech products, integrations, and analytics. According to Omdia's estimates, Bosch has a roughly 55:45 split between equipment business and integration/services, and video surveillance is by far its largest equipment market, accounting for more than 60% of Bosch’s total equipment sales.
"They have had a focus on higher-end, larger contracts," Philippou says. "Given their size, I would suspect that Bosch will be targeted by a VC fund as opposed to an existing vendor. It could potentially become a target for Motorola, given their large EMEA business and limited overlap; however, that is purely hypothetical conjecture."
“We are confident we will be able to find a buyer who will take over all three business units, and who will further strengthen the business and give it a secure future,” Fischer said, explaining that, for strategic reasons, Bosch does not intend to develop this business further.
Thomas Quante, the president of Bosch Building Technologies, added: “The product business is excellently positioned for a promising future under a new owner: innovative products, highly skilled associates, and a market environment with attractive opportunities for growth.”
Following the realignment, the Building Technologies division will employ some 7,600 associates, and operate at 40 locations in 8 countries. As a brand-independent systems integrator with a large portfolio of energy and building solutions, the division intends to benefit in the future from digitalization and a growing customer demand for integrated, intelligent, and cross-domain solutions in the areas of building security, energy efficiency, and building automation.
This move comes on the heels of Bosch's July acquisition of massive Canadian integrator Paladin Technololgies. Paladin was merged into Bosch's Climatec business unit to create a large North American integration force of more than 3,000 associates.
Rumors of this turn of events were not unexpected in the industry, as a German business news publication reported the possibility in early October, which was then reported by IPVM.com.
"After the news hit about the article in Germany a few weeks ago, I was not surprised by this official announcement, as the rumor mill was running wild," says Matt Barnette, CEO of PSA Security Network. "Certainly, it is an interesting time in the industry with consolidation of integrators and sale of major product companies. I think ultimately, thriving industries see a lot of activity like this, so I view it as a positive."
In addition to Bosch's move to exit the security products space, Carrier has also publicly disclosed it is looking to divest its security products business, which includes brands LenelS2, Kidde, Edwards, Onity, Supra and others.
"LenelS2, among others, will probably be better positioned under new ownership, whether it is an industrial buyer, PE or an IPO, as the case may be," Barnette says. "I think specifically, in the Bosch scenario, they are avoiding the channel conflict issues that are certain to impact the product business after its purchase of Paladin. Bosch has a lot of great products, but the nature of a global conglomerate makes the task of having a coherent product and go-to-market strategy difficult. As such, we have seen 2-3 Bosch reorgs in 2½ years. That makes it difficult for Bosch employees to execute on a constantly changing strategy, and it makes it difficult for the channel and channel partners to be properly aligned. Again, I think the Bosch products division will be ultimately more successful under new ownership with the caveat that in some cases, the new owners don’t actually extract value out of the acquisition."
Paul Rothman is Editor-in-Chief of Security Business magazine, a print publication hosted on SecurityInfoWatch.com.