How does commoditisation impact the security market? How should manufacturers and/or integrators differentiate themselves?
How do you stand out in a world of commoditisation?
We live in a world of commoditised consumer goods. You probably own at least one item which would be considered "commoditised" by the majority of the population today, but you can probably also remember the days when it would have been described as "new" and "unique". Think about smart phones: most people you know are likely to own a smart phone. But remember when not everyone had a regular mobile phone? Now they're not only virtually ubiquitous but most mobile phones owned by people are smart phones.
Commoditisation is so prevalent in our everyday lives that consumers become inundated with options and manufacturers continuously endeavour to innovate and distinguish themselves from their competitors. We asked our panellists to give us their thoughts on what impact commoditisation has on the security market and how people can differentiate themselves in a commoditised market.
The greatest "caveat emptor" with commodity products is to be aware that, in order to produce the lowest price, what is thought to be an apples to apples comparison between two commodity products, one manufacturer has created an apple while the other created an orange. To differentiate themselves and provide customers with real choices, customers should verify if the products they are buying meet standards and are certified. For instance, if a card reader does not meet IP67, this is a reader that the customer does not want to use where there is water, dust and other impurities in the air. If a vehicle barrier is not certified to stop a 6800 kg lorry impacting at 80 kph, there is no assurance that the barrier will stop a car-bomber using that weight of lorry at that speed. In both cases, the competing lower cost product may not work as planned.
Any quickly growing market attracts a large inflow of new companies, and with increased volumes and competition comes lower prices. Fast development of technology makes it possible to build better products at a lower price, for example the first IP camera in 1996 was $1500, and a $150 IP camera of today is a lot more capable. As markets become more competitive a company can decide to compete on price, or value, and the companies that figures out the best combination of building long term value for the integrators and customers typically are the most successful. A camera that has a better image quality and overall quality, might be worth $100 more for a customer that plan to install it high up in a ceiling and use it to provide a safer environment over the next 5-7 years.
From a manufacturers’ point of view, commoditisation has pushed the industry towards increased innovation to ensure products stand out in a busy market. These innovations may directly improve the products themselves, but also be used to lower costs or improve the efficiency of the manufacturing process, whilst maintaining the highest quality. Equally, the drive towards commoditisation lends its self well to added value offerings such as software as a service. When security products are considered a commodity these extra provisions can drive your proposition, offering customers a full solution to address their complete security needs. An added value proposition is equally important for security integrators. This could be video as a service or access control as a service - where the integrator offers the solution as a complete offering. This can be offered along with the systems themselves, to really diversity business.
Commoditisation is an important aspect of our ever-evolving world in physical security. In the past 10 – 15 years the industry has aspired to move towards standardisation of hardware. That base is crucial for supporting security management systems that are both agnostic to standard platforms, while ensuring ubiquitous access via web-based solutions. While hardware becomes commoditised, technology is evolving rapidly, allowing organisations access to advanced, robust technology at an unprecedented pace. The implications for integrators are they are differentiated by expertise and service offerings. The key players in the marketplace will provide a perfect mix of physical security experience, progressive technology knowledge, IT system savvy, database administration and workflow/operational process management. Integrators who offer solutions and professional services that allow customers to capitalise on identifying the right software solutions will lead the market. Pair that with appropriate commodity hardware, configuration services and ongoing support, the sophisticated demands of today’s Enterprise users can be met.
Many manufacturers of video, access control and intrusion products are perfectly capable of making powerful hardware that can meet customers' requirements. That’s why only software makes the difference - not hardware. The security industry should develop standards and integrations together. Only then can the customer combine commodity hardware and terrific software into a tailor-made solution that fits into their business processes, or even improves them.
Commoditisation leads people to assume that different products are each of sufficient quality to satisfy them and, consequently, they think it ok to simply buy the cheapest one. Such a market leads vendors to shout louder and more frequently attempting to gain attention from potential buyers, leading to the constant cacophony of today’s marketing hype and untruths we now routinely ignore. So they shout more, having little effect because when so many suppliers bend the truth trying to gain advantage no-one gets ahead. Suppliers need to tell the truth, deliver what they claim, withstanding rigorous independent verification. In an industry of smoke & mirrors, snake oil, ignorance and quick-buck tactics, this would be the biggest breath of fresh air for decades. Someone needs to have the guts to quit the hype. For good. That’s how to differentiate themselves.
We have a very interesting and varied range of views from our panellists and they have provided interesting thoughts for manufacturers and integrators trying to differentiate themselves and for consumers making a security solution purchasing decision. As our panellists have pointed out, there are pros and cons to commoditisation in the security market. While it does mean lower prices and more choices for customers, it can also mean being inundated with a slew of "marketing hype and untruths" as Simon mentioned. For manufacturers, it forces a constant flow of innovation, which means improved products and quality for consumers. Some of our panellists have also mentioned the importance of software in the security industry and how this can be a key distinguishing factor for a security system. There's also the factor of the customer's specific needs for a particular project. Important differentiating factors aren't only about product features and quality, but as our panellists have noted, other factors play an important role as well, such as standards, certifications, and long term value.
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