LG Poised for Strong Entrance into North American Security Market Through Partnership with GVI Security
GVI Security introduced partners from LG Electronics at ISC West on Wednesday.
After terminating an 11-year relationship with Samsung at the beginning of this year, GVI Security Solutions, Carrollton, Texas, a developer and producer of video surveillance solutions for the mass mid-market, announced it will embark on a similarly structured strategic partnership with LG Electronics, Seoul, Korea. GVI will serve as LG’s master distributor and will represent LG’s line of advanced video surveillance solutions in the United States, Canada, and Mexico.
LG is perhaps best known for extensive offerings in consumer electronics and appliances. In fact, the company has an established presence in the security market under its own brand globally, with the exception of North America. One of the primary drivers of this new relationship with GVI is LG’s deep interest in North American expansion. “LG’s senior management has made it corporate wide objective to become big player in the global security market which must include North America to be successful,” said Steven Walin, chief executive officer at GVI, in an interview prior to ISC West.
“The concept [of this kind of partnership] is that some companies that want to operate in the United States and the Americas realize they will be most effective if they utilize the resources of local companies that understand local markets, have relationships and industry contacts in local markets and understand the culture in selling and supporting products in their territory,” Walin explained. “Our role is to tell LG what the market needs in North America in terms of security solutions for video. They will then, develop and manufacture the products which GVI will sell and support in the marketplace.”
Silas Choi, group leader of the Security Overseas Marketing Group, LG Electronics, added, “GVI has a verified channel management capability in the security business, local technical support and service, which LG Electronics doesn’t have. In addition, GVI has a long-term relationship with a Korean company so that GVI may understand the Korean style of business, working and culture.”
On GVI’s previous relationship with Samsung, Walin related, “We were the strategic partner for Samsung Electronics for the last 11 years. A year ago Samsung decided to enter the market on a direct basis.” An important factor in the ending of GVI’s relationship with Samsung was a change in strategy resulting from the merger of Samsung Electronics and Samsung Techwin. Walin continued, “We were the master distributor for Samsung for 11 years. LG approached us about doing the same thing for them.”
Choi described LG’s strategy to break into the North American market as the result of careful consideration of Make-Buy-Partner options. He said, the “‘make’ option indicates LG Electronics would build channel structure for the business by itself. LG Electronics has its own subsidiary in the United States and Canada, so this could be an option by leveraging those subsidiaries. However, it would take a relatively long time and require a huge amount of investment. The ‘buy’ option is not a good option if a merger has no confident capability. LG Electronics selected the ‘partner’ option so that the company could take a relatively low level of risk in terms of money and time.”
Sandra Jones, principal consultant of Sandra Jones and Company, reflected on the announcement of this partnership with self-admitted excitement. “Steve Walin and his group at GenNx360 [GVI’s parent company] come from the market and what they’re good at is working with the channel. Unfortunately, things didn’t work out with Samsung. But at the end of the day, if the technology is good and the service is good, everyone wins. And good customer service is how you differentiate in this marketplace.”
Jones also provided some insight on supplementing good technology with a good understanding of the marketplace. She said, “Great technology companies don’t always succeed. I think LG has made a good decision by partnering with somebody who knows the industry. There are a lot of people in the industry that come from IT but don’t understand the expectations of the marketplace. On their own they would do terribly.”
She added, “It’s not just about great technology. Some of these companies miss the mark because they don’t understand end user or channel expectations.”
Choi noted a successful partnership requires roles that are defined yet allow both parties to work closely together, for which LG and GVI are well-positioned. “LG Electronics takes charge of the product side, and GVI takes charge of the market side, including local marketing, channel strategy and local support for customers. The linkage between product and market will be a crucial factor for the partnership. In other words, both parties help and collaborate with each other both in product and market area, in the mean time both parties should respect the other party’s area with a certain level of confidence.”
He went on to add that the partnership is heavily based on IP business, and the growth of that business will have a direct impact on the success of this new venture: “IP leads surveillance market growth recently. It will be a great chance for the partnership. Both companies have invested a lot in it. Whether IP business will succeed or not is a critical factor for the partnership.”
Jones believes that the industry’s expectations for the growth of IP coupled with growing trends in brand recognition among consumers will work in favor of the LG/GVI duo.
According to Choi, the short term goal of this partnership is to create a strong market presence and establish a meaningful market share for the LG brand in the security industry. Its long term goal is for the partnership to expand its business into business-to-business areas that both companies can cover.
GVI has launched a new web site at www.lgcctv.com which outlines the full set of products being offered. The product is now in stock and deliveries begin immediately. Walin described, “We’re launching a complete line of products from LG. Over time, it will evolve into a broader and deeper offering. As the weeks, months and years unfold, there will be more products added to the line.”
Walin related, “During the last couple of months after we stopped our relationship with Samsung on Jan. 1 until this announcement, people questioned: what’s GVI doing? What’s going to replace Samsung?” His answer, only a short time later, is that there is now a company “just as viable, if not more so, replacing Samsung for GVI, called LG.”