Canon to buy VMS provider Milestone Systems

Updated June 16, 2014 with an information from an interview with Jacco Leurs of Canon Europa

LONDON—Camera manufacturer Canon announced today that it will acquire VMS provider Milestone Systems. Terms of the deal were not announced.

“A significant player in network video surveillance was created today,” Karl Erik Traberg, head of corporate communications for Milestone, told Security Systems News.

Mark Wilson, technical assistant to the CEO of Milestone, added, “Canon has 200,000 employees. They are very profitable, cash rich and an innovation powerhouse. In 2013, they applied for 3,800 patents, making them No. 3 in the world. [Having Canon as an owner] really changes the game for us.”

Milestone was founded in 1998. In 2013 it did $72.5 million in overall revenues and it had $6 million in net income. It employs 400 people globally. In February, rumors surfaced that the VMS provider would do an IPO.

“An IPO was one option, but this turned out to be the right thing to do,” Traberg said.

Under the terms of the deal, Milestone will remain a stand-alone company. The management and structure of Milestone will continue unchanged. “We will operate completely independently. We will retain all of our offices and continue under the Milestone brand,” said Traberg.  

Wilson and Traberg emphasized that Canon is committed to Milestone's open platform. “They understand that we have a large partner network, and that some of those partners are competitors to Canon. They understand that we need to manage those partners and the need for confidentiality when, for example, we work with other camera manufacturers,” Wilson said.

Jacco Leurs, head of professional imaging, Canon Europe told SSN in an email interview that Canon has identified the network video surveillance business as an important driver for future growth of the company globally. "This acquisition is a strategic step which significantly enhances our offering and capabilities in this market sector. The network video surveillance market is a multi-billion euro industry which continues to show huge growth potential and Canon has a strong commitment to build a long term presence as a leader in this industry. Acquiring Milestone allows us to realise these ambitions faster.”

"This acquisition gives Canon a significant footprint in the NVS market, which is expected to be worth $13 billion by 2017 [according to IHS]. While we are relatively new to the market, Canon has made a significant commitment to the market by acquiring the leading video management software provider and this strategic step underpins Canon's intent to become a leader in this market," Leurs said.

Asked about the deal, Jon Cropley, principal analyst for research IHS Technology, said in an email interview that Canon is currently a small player in the video surveillance market but it has big ambitions.

“Back in August 2013 its CEO, Fujio Mitarai, spoke about security cameras becoming an important pillar for the company and the market having limitless possibilities for growth. This acquisition shows that Canon is serious in its intentions," Cropley said.

Noting that Canon currently only sells security cameras, Cropley said the acquisition of Milestone allows it “to offer customers a security solution combining cameras and either video management software or network video recorders. It also provides the company with access to Milestone's large customer base, particularly in regions outside of Canon's home market of Japan. IHS estimates that Milestone was the largest supplier of video management software in 2013 with over 7 percent of a global market worth over $900 million.”

Traberg said that Canon will invest in Milestone so it can develop more partnerships and accelerate the speed with which it brings products to market. Areas of strategic interest for Canon include the convergence of video surveillance and other business systems.

Milestone helps businesses use video for purposes other than security, such as training, quality control, thermal cameras for regulatory compliance, transportation and retail applications, Traberg said. “What we call video enabling. It's such a big thing and [with Canon's help] we can pursue this on a [bigger] scale,” he said.

Canon has existing cloud services in its other business units. Longer term, it is interested in helping Milestone develop more cloud services, Traberg said.

The fact that “Canon is a leader in consumer optics” is another potential advantage for Milestone, he said.  “They have vast resources that we will utilize together,” Erik said.

IHS's Cropley pointed out that that Canon is well known as a supplier of digital cameras, camcorders and professional broadcast cameras. “It plans to leverage this brand reputation in the video surveillance market,” he said.

Asked about who owns Milestone's competitors, Cropley noted that Exacq is owned by Tyco, and that many “companies offer both cameras and VMS. Hikvision, Avigilon, Verint are all examples.”

Milestone, which is based in Copenhagen, Denmark, will be acquired by Canon Europa, which is based here.
Amy Canfield contributed to this story.