Home > Manufacturers, Trends > Who loves Pelco? Pelco employees love Pelco. Pelco integrators love Pelco. New York City firefighters love Pelco.

Who loves Pelco? Pelco employees love Pelco. Pelco integrators love Pelco. New York City firefighters love Pelco.

I’m grateful to Pelco for inviting me out. As many of you know, I speak to vendors all
the time. At last count I had attended
over 250 vendor briefings this year. But
sometimes I’ll carve out a bigger chunk of time to wrap my head around a
company and its products. So naturally I
agreed when Pelco invited me to its Clovis, California headquarters. Pelco did not pay for my time, but did pay
for economy air (through Dallas),
one night at the Piccadilly Inn, a nice sushi dinner, and left me with a most
excellent Pelco pen.

Pelco is a great company. Really. You just gotta visit its Clovis campus sometime to get the full impact. Pelco has its act together. It knows how to design and build a product
that can last forever, and how to go the extra mile for their customer. Legends are told about Pelco’s commitment to
its constituents and its technology. Just take the tour and see the smiles.

And why shouldn’t everyone be happy? Business is good.
Profit is nearly as high as customer satisfaction. Revenues increase each
year. And new Pelco products like Endura
are bridging Pelco’s omnipresent cameras with IT best practices. Sounds like a pretty good time.

But the future holds some challenges for the video
surveillance powerhouse. Here are a few.

  • It makes and sells hardware. That’s a tough business getting
    tougher.
  • It maintains an expensive manufacturing infrastructure,
    potentially inhibiting agility.
  • It resists selling software missing opportunities to
    capitalize on its lifecycle management.
  • It sells to integrators who are not especially well known
    for their sensitivity and consultative sales approach.
  • It has next to no relationships with CIOs – important
    influencers in IT systems adoption.
  • Its channel thinks of it as a parts and products supplier,
    not as a solution provider.

Addressing these challenges will require new attitudes, new
products, and a new sales channel selling to new customers. Yikes. Talk about an uphill climb.

Can Pelco do it? Yes.
Definitely.
Can Pelco do it and still be considered a leader, especially
a thought leader? Unlikely. But it is
possible if the company commits to new ideas and forms new connections to new
channels and customers. (That’s a big
“if.”)

Will Pelco keep making loads of money? Without question.

Let’s all watch Pelco as it reinvents itself in the coming
years. I’m willing to cut the company some slack for the mistakes they’ll
undoubtedly make and the opportunities they’ll likely miss. Overall, Pelco is and for many years will
remain the quintessential stalwart American surveillance products manufacturer.

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Categories: Manufacturers, Trends
  1. Ringo
    November 28, 2007 at 9:03 pm

    Pelco of course has a great story. Their legacy is un-matched in the industry. Their brand should definitely help them move forward in the future.
    But. To say they are making exhorbinant profits is a big statement. Perhaps you would be willing to find the public disclosures of their revenue and EBIT and see how they compare to other firms? I’d like to see that backed up a little bit.
    They are no longer privately owned. They are a company that is owned by a public company that is perceived to have paid a handsome sum (albeit they used Euros to buy a good US company) to be the whole owner of Pelco. We all should try to calculate what the effect will be due to this? Will there be any more private jet rides to ‘wow’ customers to beautiful Clovis? Will there be the huge ISC West parties in Vegas?
    There may be, but I don’t see it. Now that they books are so open I suspect you can count on a transition of manufacturing over the long-term, a phase-out of the big expenses required to keep everyone loving Pelco; and a fresh focus on making a return on investment and paying for the $1.5B investment itself.
    Your comments are actually pretty close I think, but the big problem is that these changes (big technology changes, channel changes, etc) are long-term issues facing the company and require huge investments. Wouldn’t it be easier to stop worrying so much about being the nice guy and squeeze a big profit out for shareholders?
    I have little doubt this will turn out to be a good investment for the new parent company, but that doesn’t necessarily equate to the ‘same ole Pelco.’
    There are two sides of each transaction. Why did the sellers sell, and why did the buyers sell? Clearly the former owners sold at a good valuation and clearly the new parent sees ways to make the business more efficient. But inefficiencies are what the customers liked so much. There we no questions asked for returns, no expenses spared for great entertainment, etc… I doubt this stays the same over the long-term; especially if the economy gets a bit tougher.
    In the end I hope Pelco stays the story it has been – as it’s good. But… the industry is changing, technology demands are increasing, and large investments need to be re-couped. Every action taken in the future will be scrutinized and compared to the ‘old Pelco’
    Tough act to follow, no doubt!

  2. November 28, 2007 at 11:22 pm

    Great post Steve, and excellent comments from Ringo.
    Over the years, many of my clients have insisted that I specify Pelco – even though I thought that their product wasn’t necessarily the best for the application from a technical standpoint. The reason: the excellent after-the-sale support offered by Pelco.
    A recent example was a hospital that had two separate CCTV systems; one a Pelco system, and the other a GE (Kalatel) system. The hospital was building a new campus, and because the GE system was the newer and larger of the two existing systems, I had planned to specify GE for use at the new campus.
    The client came back to me and explained that they strongly preferred Pelco because of the company’s service replacement policy. With Pelco, an advance replacement for a defective camera can be obtained within 48 hours. With GE, the client had to send in the defective camera and wait as long as two months for the camera to be returned. Pelco also offers direct technical support and training to the end-user while many CCTV companies continue to insist that all training and support be provided exclusively through a systems integrator.
    But in the last year or two, Pelco has been unable to respond to the needs of a number of my projects because of their lack of ability to work with hardware and software provided by outside vendors. If you have an application that can use Pelco hardware end-to-end, great — but if you need to integrate with a client’s existing SAN or back-up system, you are pretty much out of luck.
    As I understand it, Pelco originally started out as a metal fabricator and I think that the “bending tin” mindset still exists at the company. What another company might sell as a piece of software, Pelco will embed in a piece of electronics and sell as a box in one of their beautiful rack-mounted housings. While this business model has worked well for them to date, I question whether it will continue to work as open systems architecture becomes more prevalent in the security world.
    Steve, I think that Pelco would be well advised to hire someone such as yourself to give them guidance as they move forward. While they will probably never become as progressive as you or I might like, I think that it would be a great benefit if you at least steered them in the right direction.

  3. November 29, 2007 at 10:27 am

    Thank you Michael and Ringo for excellent comments.
    Ringo, regarding profits, it is the wild profitability on sales that financed the plane rides and over-the-top customer support. Profit is not a problem for Pelco. If the new parent reduces services and costs, that could mean even more profit in the near term. Eventually, sales enthusiasm would of course decline, but profit is still not in question.
    Regarding the bending tin mentality, you are right, Michael. It is evident in spades. So maybe Schneider, with Dean Meyer on site, can navigate toward some of the big changes and make up for loss of services with improvement in innovation. Either way, assuming Pelco execs keep listening to securitydreamers like you and me, they won’t stay stuck in any potholes they fall into.

  4. Ringo
    November 30, 2007 at 3:20 pm

    Thanks Steve…
    If you read my post though, it clearly states that I believe the new parent will increase profits at Pelco. But as we all agree, the reason Pelco is so popular is their over-the-top service. This level of service is EXTREMELY expensive!
    The profits will someday be public knowledge, but I would bet anyone that as a %age of revenue they are more in line with a distributor margin than that of a true manufacturer’s. $1.5B is a lot of money to pay for a company that does $550M in sales, and the investment will be paid back through efficiencies and maximization of channels.
    Michael had a good point above regarding open-architecture technology. Pelco doesn’t control all of their technology and that makes this difficult. They haven’t been overly successful in engineering their own solutions either. It seems they’re more of a distributor than anything…
    The last couple of years I’d be willing to bet they were cleaning up the books for the sale and a large valuation. There have been more and more complaints on their service level going downhill – and if that happens it will get bumpy.
    So, in the end, the customers of Pelco depend on service, NOT profit, so the only folks that should care about profit is the parent that now owns them. Clearly if they don’t have their support/service, they have little going for them. When’s the last time someone raved about their technology for an extended period of time?!
    It’s a well-branded company, and the company will hold up fine I think. But business is business, and up to this point I can only guess that huge sums of money were spent to help people love and buy Pelco, in order to sell to a company with deep pockets!
    Great correspondence!

  5. Salvatore D'Agostino
    December 16, 2007 at 7:33 pm

    What is really expensive is winning a customer and then losing them through poor support or service.
    In a commodity business its the only way to differentiate, in any business its the only way to treat customers. Remember Peter Drucker saying the raison d’etre of business is to create customers. Add to that, its to keep them.
    Kudos to those that recognize this fact. I don’t have to worry about those that don’t.

  6. Salvatore D'Agostino
    December 16, 2007 at 7:34 pm

    What is really expensive is winning a customer and then losing them through poor support or service.
    In a commodity business its the only way to differentiate, in any business its the only way to treat customers. Remember Peter Drucker saying the raison d’etre of business is to create customers. Add to that, its to keep them.
    Kudos to those that recognize this fact. I don’t have to worry about those that don’t.

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