The integration of building automation systems with physical and logical security systems is pushing for the convergence of both technology and competition. UTC’s acquisition of GE Security is clearly in line with recent acquisitions made by other corporations in the building automation, such as Schneider, or networking side, such as Cisco, trying to get a foothold in the physical security market.
According to Matia Grossi, industry analyst for Frost & Sullivan Physical Security group, “UTC had already made a few acquisitions in the security side which gave the company great integration capability and in the fire space with the acquisitions of companies such as Chubb, Red Hawk, Kidde and Lenel. The company needed to gain access to a full product portfolio and GE Security is providing that to UTC. With this acquisition, UTC has made the giant leap in the attempt to widen its capabilities and fulfilling the need of providing a real ‘one-stop-solution’ to its clients.”
The company can now compete in the market with companies such as Tyco and Schneider, which have moved aggressively in recent years in the M&A field. “If we look at Tyco, the similarities between the two companies are staggering. Tyco acquired ADT, which would be the equivalent of Chubb for UTC, and Software House of Lenel. Then the company proceeded to a number of acquisitions in the physical security space of companies such as American Dynamics, Sensormatic, DSC and many others. UTC was able to fill in the gaps in its portfolio in one stop,” adds Archana Rao, senior research analyst for Frost & Sullivan Electronics Security group.
From a GE Security perspective that was in line with a divestment process from its security space started with the sale of GE Security’s Homeland Protection Business to Safran only a few months back. In a converging market these moves only make sense if the long term plan is to exit it.
“Frost & Sullivan expects the consolidation process to continue in the coming months and years because of technology changes in the market. We are going to see new players coming from the telecom market such as Alcatel Lucent, Nokia (Siemens) and others looking at the huge potential of leveraging their network infrastructure capabilities in the fast growing security market,” concludes Grossi.
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