|Alexander Fernandes, president and CEO of Avigilon, says his company’s acquisition of RedCloud came about as a result of opportunity and synergy.|
In what the company’s president and CEO describes as an “opportunistic and synergistic” move, Avigilon Corp. acquired RedCloud Security Inc., combining Avigilon’s strength in HD and megapixel video with RedCloud’s Web-based physical and virtual access control systems.
“This access control opportunity came along and it just made good sense,” says Alexander Fernandes, president and CEO of Avigilon. “When we talk about growth, we ask, ‘What is our addressable market?’ With RedCloud, we’ve expanded that market, so this gives us more runway for growth.”
RedCloud’s access control platform was designed to allow organizations to easily combine physical security and identity management to help organizations manage who can enter and exit multiple facilities from one platform as opposed to separate systems, which can lead to added costs and complexity. The company’s patented Web-based physical and virtual appliance platform is open and has the ability to work easily with IT systems. Similar to Avigilon’s HD surveillance solutions, RedCloud’s products were engineered from the ground up for IT.
While Avigilon hadn’t necessarily been looking to acquire an access control provider, the company had considered getting into the space, which analysts project will be a $6 billion market by 2015. With its acquisition of RedCloud, Avigilon gained a bit of gravitas as it enters the access control space by reducing or eliminating the learning curve, Fernandes says.
“We consider ourselves at the forefront of HD video, but at the same time, we weren’t at the forefront of access control. And you can spend many years getting up to speed on a particular product or company,” he says. “With this acquisition, we gain, through [RedCloud founder] Terry Neely and his team of developers, decades’ worth of industry experience. That makes us very confident going into that business.”
According to Fernandes, in addition to the “right place, right time” factor, there were three main reasons Avigilon chose to acquire RedCloud at the end of May for $17 million in cash. The first of these was the complementary nature of access control and video.
“The end user base for video is essentially synonymous with access control. What that means is that almost everyone who uses video to protect their perimeter or their business also uses access control. So we’re already selling to some of the same customers,” he says.
The second reason has to do with Avigilon’s large, established sales force and sales channel, which RedCloud didn’t have.
“We have a global sales force of more than 1,000 resellers, and the vast majority also sell both access and video, so we have a ready-set channel to sell access control,” Fernandes says. “At the same time, most of our salespeople have sold access control at some point in their career.”
The third reason, Fernandes says, is the potential for Avigilon to offer seamless convergence and integration between video and access control with RedCloud’s technology.
“A lot of systems and buildings are not very well integrated or if they are, it’s almost an afterthought. So you have all these patchwork systems out there,” he says. “We currently have an integration with RedCloud and we want to strengthen that even more. The value to end users is that they can administer and operate their video and access control from one system.”
Founded in 2006 by Terry Neely, RedCloud has recently made waves in the access control space with its Web-based approach to physical and logical access control through partnerships with HID Global and others. Its position as a young company was a perfect complement to its innovative technology, Fernandes says.
“As an early stage company, RedCloud didn’t come with a lot of baggage. In other words, they didn’t have a large sales force or marketing or branding that would be redundant to what we already have at Avigilon,” he says. “We wanted the product and the technology. A lot of access control equipment is old-school hardware-based. RedCloud is cutting-edge IP-based, which is also very complementary to the way we operate.
“It’s a nice bolt-on business. They’re big enough and established enough that we view it as very little to no technical risk,” he adds.
It didn’t hurt that Avigilon has experienced the benefits of RedCloud’s service firsthand.
“Our head office has been running RedCloud for over a year, and we have hundreds of customers using it, so we know it’s proven in mission-critical situations,” Fernandes says.