"We will become more international"

Fast growing German IP camera manufacturer Mobotix has employed Magnus Ekerot as its new CEO. In this interview, Magnus Ekerot stresses that with him at the helm, Mobotix will become commercialised and more international.
Ralf Hinkel started Mobotix in 1999. Since then the IP camera manufacturer, well known for its high resolution, hemispheric security cameras, has grown to become an 82 million Euro revenue business. Three years ago, Ralf Hinkel started to look for his successor. Magnus Ekerot was hired as CSO in 2011 and since 1 October, he is the new CEO of Mobotix.

Magnus, how will Mobotix develop with you as CEO?
"We will become more commercialised and more international. We will continue to maintain our strong focus on technology, but will be aiming to make it more understandable and accessible to customers around the world, allowing them to see it as a non-complicated product. We will continue to focus on high resolution picture quality and the decentralised concept. I have four key phrases: organic growth, geographical expansion, operational excellence and market driven product development."

Mobotix has been growing very fast, do you expect it to continue?
"Yes, I do. But the volume will never take priority over the value. Mobotix and our partners must make money, because the money is invested into developing new projects. Creating good margins for both Mobotix and our partners is the biggest value for us. But I believe that growth will continue due to the geographical expansion that we are experiencing right now."

What regions are you expanding to?
"We are looking at Asia and South America. People say you need to have a low cost product to succeed in China and India. I do not believe that is the case."

Which are your major markets?
"25 per cent of our sales are in Germany. USA is our second biggest market and we are growing rapidly in Asia. We also have some tremendous growth in regions that are affected by the Euro crises."

Are you growing faster internationally rather than on the domestic market? Why?
"Yes we are. We have growth in Germany but we are growing faster internationally. Basically, our focus has been on growing internationally. We have put more resources into that, both in terms of marketing and sales."

How would you describe the German market for video surveillance?
"We have just a few major players on the German market but there are also a lot of small local vendors. Germany is an industrialised country with good infrastructure when it comes to cabling, which means, it is not easy to gain market share here. For new companies coming in it is difficult. The German market is not one of these countries where low cost Asian manufacturers can come in and make good money. Germans are used to quality and are prepared to pay a premium price."

How is Mobotix positioned in the market right now?
"We are positioned in the high-end segment. We do not have a single product that is under 1 megapixel. Right now we are in the segment of 3 to 5 megapixels and image quality is absolutely essential for Mobotix."

How would you describe your business model?
"We have a very strict distribution model. We only sell through Mobotix authorised distributors. We never go direct, but we try to help the distributors to train and educate system integrators and end users as much as we possibly can."

What is most important, gaining market share or growing the market?
"It is growing the market. I actually do not care about market share to be honest. It is easy to gain market share, because you can buy it. I do not care if I am number 5 or number 6 in an IMS report. I want growth, but if the growth is 7 or 10 per cent, I would rather have 7 per cent growth with healthier margins than 10 per cent growth with lower margins. And this explains the Mobotix strategy, that is, long term growth and profitability for our partners."

What is Mobotix biggest strength?
"We have a core technology concept based on our own software and hardware. We have our own security codec. We do not use H.264 in the cameras, but what we believe is a better codec, where you can achieve better images from the system. We also use the same platform in all of our products. Another core strength, is that everything is made in Germany. We test every camera individually and that is how we can justify the high price, because you are buying a premium product. We are one of the few vendors on the market that try to create a common IP platform. Today we have security cameras and an IP door station. In the future there will be more products launched that we can build into the platform, like home automation and building automation."

What kind of products?
"Door stations, smart boxes … it would not be out of the question to see Mobotix launching products that allow you to control building automation, such as heating, curtains, etc. I also believe it is not too farfetched to consider that perhaps in the future, we will have alarm systems and smoke detectors. However, I am not saying that this will be the case, but those are some examples of the types of products that we have the potential to bring to market. The common denominator is that it will all work over IP."

What is your view on acquisitions?
"We have focused on organic growth. The door is not closed, and sometime in the future there could be discussions regarding acquisitions. But there is nothing under consideration right now. My strategy is that the competence must be in house and capacity is something that we can rent."

What is your view on Security-as-a-Service as a business model?
"As a vendor, I will not sell my service. The margins for hardware for system integrators is creeping down so much they cannot make money on just purely hardware. They need to make money from two things, and those are, one, the installation of projects, and two, the servicing on projects. We do not want to get into a conflict with our system integrators on the market, we want to support them on their endeavour to be able to make money on security-as-a-service."

What drives the market for video surveillance?
"I always say there are two generational shifts. The first is from analogue to digital and that is still happening in many markets. The second generational shift is on markets that were early in adopting IP. Now they are looking for a second generation of products. They have had IP for 7 years or so and now they know a lot more about what they are looking for. There are new possibilities with the technology and there lies good potential for us."

Which are the biggest video surveillance trends?
"People are looking for intelligent applications. They would like the camera to be more intelligent and to be able to handle more things. We take care of all the intelligence in the camera."

Do you think that the race for more megapixels will stop?
"I have written a series of articles on how the surveillance market will look in 2020. I believe that there will not be a huge megapixel race. In 2020 I believe the majority of the market will be between 5 and 10 megapixels. Of course there will be technology with much more megapixels but the problem is all about bandwidth. The benefits will not satisfy the investment required."

What is your biggest challenge?
"Managing growth. It is a delightful headache to have but it is not always easy. The founder’s intention was never to become the biggest company in the world. We will have long term growth, but we can live with having quarters with no growth if it benefits our values. That is a wonderful position to be in as a CEO."

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