Access to Market: HIDs Craig Sandness
Q: Hughes Identification Systems was the pioneer of proximity technology in the 1980s and 30 years later it is now one of the most recognisable names in global access control – would you say that HID is market leader?
A: We do believe we are market leader. As time has gone on the business has expanded from prox to 13.56 iClass – which continues to grow as a percentage of our business. In addition we have expanded other parts of the business – one of the most significant expansions was in 2006 when HID acquired printer manufacturer, Fargo. The HID business has a global footprint, the widest portfolio of products and lifetime warranties to back them up. We also think we are the market leader in terms of the benefit we bring to the customer.Our IDS business, which includes things like passports, is also continuing to grow. Governments want more capability from their cards. On that side of business we are involved in so many things, from e-government applications to animal ID and industry logistics. We are famous for our cards and readers but we have evolved a lot over the past 4 years. HID’s mission is to be the world leader in the delivery of secure identity and therefore you see Fargo printers, you see e-ID, animal ID products. We have expanded beyond traditional physical access control.
Q: ASSA ABLOY as a parent – sometimes you find acquisitions of technology companies stifle the business downstream but that doesn’t seem to have happened with HID – the business seems stronger than ever. Would you say the name and the business clout of ASSA ABLOY has pushed the HID business ahead?
A: Definitely. I come from the Fargo side of the business and when you look at the power of the company like ASSA ABLOY behind you it allows you to take advantage of acquisition opportunities, investment in new technologies. I think ASSA ABLOY has handled HID very well considering HID is under the global technology portion of the business not a part of the regional structure of ASSA ABLOY. Yet an increasingly good job has been done teaming HID with those regional ASSA ABLOY businesses allowing them to leverage off each other.
Q: Growth – is the HID business growing?
A: Absolutely. We are very happy with the performance in 2010. I think everybody feels positive, the customers I have spoken with in the last couple of days certainly do. Obviously we are in a new global reality, coming out of the GFC. I can say that on Sept 1, 2010, I feel a lot better than I did on Sept 1, 2009 – our customer base feels the same. My activities are in the Asia Pacific and we are strong in that region. I feel good about the business and the market.
Q: What’s the basis of the HID business in Australia? Cards, readers, controllers – passports and ID?
A: All those areas and the printer side of the business as well. The cards and readers are the core of HID’s business and that’s where we continue to push. Increasingly the business is about complete systems that include printers, including our benchmark high definition models.
Q: The access control industry has been going IP for the last decade and especially the last 5 years. HID has made that move to IP with its excellent VertX product range. Have you noticed as a manufacturer that your installer customers are repositioning themselves to handle IP?
A: We’ve had VertX for about 5 years now and in the last 2-3 years in the Asia Pacific it seems like there’s been a sudden jump in acceptance with more of our partners focusing on VertX. We are happy with the growth we see – I think that’s one of the fastest growing areas of the business. In terms of acceptance I think it comes down to evolving the product line to bring value to the customer.
Q: Are there smaller access control installers who can handle both analogue installations as well as complex networked access control solutions or are there now different tiers of installation companies in the market?
A: I think there are tiers in the market to some extent – it depends on how much on the front end do companies want to be in terms of integrating and installation solutions. The other element of this is convergence of logical access control relating to products like HID on the Desktop – using physical access control cards for physical and logical access control applications. We see varying degrees of adoption of that type of product from the integrator and installer channels.
Q: In the real world are you seeing a lot of convergence between physical and logical access control systems?
A: We are seeing it. We recently won a good size project in another country that combines physical and logical access into a single card and a single solution so we are seeing more and more of that in the marketplace. There’s a long way to grow but we are seeing more convergence than we were seeing a year ago.
Q: Moving into the next decade, in which direction do you think access control technology is going? Will the same technological status quo be maintained or will there be significant advances in reader and card technology. What’s in the pipeline?
A: In many ways that’s the big question – what’s next? I think what’s next is that customers are going to continue to want a solution that is more sophisticated yet increasingly simple to use. There’s lots of talk around Near Field Communication and what will be the credential of the future. Will it be a card, a mobile phone, some other device? What will be the form factor? A lot of the answers remain to be seen.
Q: Have you ever looked at the electronic security market and feared the commoditization of everything from readers to door controllers to free plug and play control software?
A: From our standpoint we focus on what we can do to bring more value to the customer – we certainly believe we bring value to the customer and we back this confidence in our product with lifetime warranties. We try to be on the front end of innovation – offering more secure solutions, such as iClass cards and readers. We try to bring the channel more pieces of a complete solution they can offer their customers. We believe there is a way to bring more value while making sure all these pieces operate seamlessly together. All these things separate us of our competitors and from commoditisation of our technology.
Q: From a manufacturer’s points of view, where do you think the profitable future of the access control industry lies? Will it ultimately go beyond hardware and software to the point of actively partnering with installers and integrators in support of their major systems? Or will a technical edge always bring a sale?
A: The important aspect of this question, whether it’s this industry or any other industry, is the truth that things are going to change. How we respond to this relates to what we can bring to our channel partners to make them more profitable, as well how we back up our products and ensure their superior performance. We would approach this from the point of view of how we could help our channel partners be more profitable. If they are profitable, so are we.
Q: In terms of our local market here in Australia, how would you so it compares to the rest of the world?
A: 2010 has been a very strong year for HID. Talking specifically about the Asia Pacific region where Australia and New Zealand are, not unlike other companies, this is the region growth is expected. We’ve long had a good position in the Australian marketplace, we have great partners and their businesses are growing with us and we certainly want to invest our time and resources in building on that. It’s an important and growing market for us.
Q: Falling product prices in the access control industry – can price continue to be such a big issue in the market indefinitely? Are consistent price falls for devices sustainable?
A: This is why we have to keep innovating. Obviously if we stop doing that and stick with the same products that are then mimicked by other manufacturers then price pressure will be there. We have to find ways to keep healthy margins available to our channel partners through innovation. At the same time prices must be fair and there has to be a cost of ownership benefit to the end user. That’s going to happen as we increase the function of the product, make it simpler to install and operate, and focus on delivering what the customer sees as value.
Q: Quality components and quality design have a major impact on the capability and reliability of access control equipment. As a rule, low cost products sacrifice quality somewhere along the line. Do you think all access control solutions are created equal or are there real differences in access products?
A: I think the market would tell you there are a range of product levels available. We have always tried to position ourselves as a high quality provider and that position is reflected in our warranty. Internally in addition to engineering and innovation team that we have, we also have focus on quality – not just at the component level but in terms of the customer experience when they do business with us. We have local service, we have easy access to our sales people and technical people on a global level and all those things impact on a positive user experience and on giving customers the comfort of knowing that they’re back by a major brand offering consistent support.
Q: Tough times always allow strong players to gain market share – does HID have a plan to increase its footprint in the Australian market over the next 18 months?
A: We are always looking at opportunities. As a part of ASSA ABLOY we are financially very strong and ASSA ABLOY at the corporate level has certainly made acquisitions and looks for opportunities actively. That’s the benefit of being part of a strong company.
Q: What new products can we expect from HID in the next 12 months?
A: We have several new products we are showing at Security 2010 – HID on the Desktop. We have a new line of card printers, the DTC (Direct to Card) lineup. The models are 1000, 4000, 4500 – everything from single side printing to dual side printing with secure laminate. There are also new readers and integrated door solutions. Those are some of the new things we have today.
Q: We can’t talk about the future without considering future markets like India and China.
A: We are already there and we have full offices handling sales, operations, HR and everything else. We certainly see business there like everybody else. There’s a lot of construction.
Q: What about from a customer’s point of view – what does HID bring its customers no one else can offer?
A: Globally we are a trusted brand. Customers know we are backed by the best channel partners in the industry. They know the product is the highest quality product backed with a lifetime warranty, a product that can grow with their needs. It’s simple to use and simple to operate. There are multi-user applications. We offer technology that can grow with the company. The same applies from an installer’s standpoint.