How Tyco/Intellivid Will Impact Retail Video Surveillance

Tyco's acquisition of Intellivid has the potential to be a great solution for retailers. While it certainly will take time and there are definitely questions to be answered, the fundamental fit is good. Over the next 3 years, this may have a substantial impact on customer's selections and the competitive dynamics within the retail video surveillance market.

This report examines the impact of this acquisition. For background information on the purchase, see Intellivid's Acquisition Announcement. For an extensive review of Intellivid, read my report my June 2008 report on Intellivid.

Key Findings for the Tyco / Intellivid Acquisition

• The fit between Tyco/American Dynamics and Intellivid is strong
• How the integration works and how well it does are key questions
• This solution has strong potential for medium sized and big box retailers
• The solution is a major threat to March, Verint, Milestone and Genetec
• The solution may be less strong for small box retailers
• The solution should be less of a threat to Clickit and i3DVR

Background of American Dynamics

American Dynamics, the division of Tyco, that manufacturers video management systems is one of the top selling DVR companies in the world. Their main line, the Intellex, has been a top seller for more than a decade. The product is widely regarded as one of the easiest to use DVRs. According to Tyco, more than half of the top 50 retailers use Intellex. This is consistent with my own experience as an integrator, where more than half of the stores in any given mall used Intellex.

American Dynamics is attempting to catch up to the trend of network video and video analytics. While they have had an IP Intellex version for a few years, it is limited in functionality. Recently, Tyco purchased Trident Tek to enhance their network video offering. Combining Trident Tek and Intellivid provides solid foundations for both of the key trends.

Background of Intellivid

From its founding, Intellivid has been focused on the retail market through the use of video analytics (see my Intellivid review for details). Intellivid is widely regarded as one of the most sophisticated video analytics solution with an emphasis on providing an end to end workflow optimized for retail stores. Intellivid offers a full suite of loss prevention and business intelligence analytics. The most unique aspects of Intellivid's offerings are likely Computer Aided Tracking. Intellivid uses analytics to simplify operators tracking suspects from camera to camera - a very common use case for retailers.

Strong Fit

The fit is strong because you have the market leader in retail video systems combining with the technology leader in retail video analytics. They complement each other very well. American Dynamics has a very strong customer base with a large installation footprint within retail. This gives Tyco an advantage on expansions, upgrades and new deployments. With Intellivid, this gives American Dynamics the most sophisticated video analytic solution for retail.

Just because the fit is strong does not ensure that it will have a significant impact or be the right choice. It clearly depends on the implementation and details. The remainder of the report examines what these issues and elements may be.

Questions on How it Will Work?

I see two key issues that will determine how significant an impact this acquisition has.

• How seamlessly does this work with Intellex appliances?
• How seamlessly does this work with the Intellex User Interface?

The risk is essentially that these two systems are bolted on together rather than seamlessly integrated. I am not saying this will happen but this will be critical in maximizing customer value.

Retailers have tens if not hundreds of thousands of Intellex units deployed. To the extent that American Dynamics can make it cheap and easy to add Intellivid to those Intellex units, it becomes extremely attractive to stay with American Dynamics.

Key questions include (1) Can Intellivid be loaded on Intellex DVRs?, (2) Can Intellivid use video from existing Intellex units, (3) Will Intellex offer a unified user interface for video management and video analytics?

I talked with Senior Managers at the companies today and they are understandably still defining the roadmap and the product plan of the integrated offering. As they define that plan, I hope to share such answers. To the extent that they can deliver on these elements, the impact will be maximized.

Strong Potential Mid Size and Big Box Retailers

At the very least, I think the American Dynamics / Intellivid combination will be very attractive to mid size and big box retailers.

For larger stores, Intellivid's camera tracking will be very attractive as it solves a core Loss Prevention problem of tracking suspects across numerous cameras.

Also, larger stores accept more complicated, costly solutions so even if the integration is not especially tight, it will still be quite competitive given the comparable cost structure of a Verint Nextiva.

Furthermore, most of the big retail vendors (Milestone, Genetec, March) are fairly light when it comes to video analytics. They all support third party analytics add-ons but none of them are anywhere close to the sophistication of Intellivid. Given American Dynamics stronger customer base and Intellivid, this may have a major impact in blocking the expansion of Genetec and Milestone.

Less Strong for Small Box Retailers

For smaller box retailers that max out at 16 cameras, how viable the American Dynamics solution will be depends on how tightly they can integrate with Intellex. Those retailers get the most benefit out of a single appliances that combines analytics, video management and encoding in one. They usually have small footprints so network cameras do not offer cost savings. Plus, they want to minimize cost and complexity of deployment. Companies like Clickit and i3DVR are being selected by many retailers in this application. While Intellivid's offering is certainly more sophisticated than either of the two, the cost of the Intellex/Intellivid solution will need to be close or most retailers will not select them.

I do not know how this will work out but I think it will be challenging to be competitive in this segment at least in the next year or two.

Concluding Thoughts

I think this is a good deal that should benefit customers and the companies involved. It has the potential to deliver an excellent video management solution for retailers. Of course, we must continue to watch carefully to see how the integration is executed and how the overall solution is delivered to the market.