Rob Lane talks to Benson Chan, VP business development at Pakedge Device & Software about how the company will work following its acquisition by Control4, and what the future holds for the partnership.
What is the history of the conversations that took place ahead of this groundbreaking deal?
It all started around a demonstration of our Connect+ network platform and an exploratory partnership discussion between Control4 and Pakedge in June 2015. As the discussions progressed and Control4 began to understand the significance of the technology and engineering capabilities that Pakedge had, the scope and vision of the partnership began to evolve. We realised that we both shared the same vision and solved the same problems, but from different perspectives. Our discussions shifted to a strategic re-imagination of a new connected experience that required a deeper level of integration between our two companies, and we realised that we both shared synergies beyond the vision, technology and customer base. We also had very similar corporate cultures, complementary engineering capabilities and management styles. It was a perfect convergence of technology, vision, culture and timing that made the decision to join together a logical and natural one.
Would this acquisition have made sense, say, five years ago, or has the current state of technology development made it more meaningful now?
No. At that time, our two companies were in two different stages of evolution. We were trying to perfect our technology, and so were they. More importantly, our industry was still growing up and maturing. Many of the applications and services did not exist, nor were they as mature. Customers did not use technology as they do now. While businesses understood the importance of the network, many customers did not understand or feel the same.
Today, the world is a different place. Everyone and everything is connected, and will continue to be so, especially with the emergence of Internet of Things (IoT) technologies. Customers consider connectivity to be the fourth utility, behind electricity, gas and water. Customers connect with each other not only through computers, but also through mobile devices and smartphones. Technology is not a luxury, but a facilitator of everyday living and working. The network has evolved to become the most important thing that no one thinks about but cannot live without.
Control4 saw where the connected experience was headed and began building out the smart home infrastructure. At Pakedge, we saw where everything was headed and began building out smart networks through development of the next-generation Connect+ network platform. Our coming together was a perfect convergence of customer expectations, a critical mass of applications and services, industry maturity and technology readiness.
Would it be fair to say that the acquisition is part of Control4's wider push into the connected business market?
Control4’s focus is, and will continue to be, in its current markets – residential, hotels/hospitality and light commercial (fitness centres, restaurants, bars, small offices, etc), where it has a differentiated solution and competitive advantage. The merger of Pakedge with Control4 will create new solutions that will solidify and strengthen its value to this existing base, and allow it to grow. Pakedge has solutions for both the residential and commercial AV market and will continue to extend its reach in the commercial markets where Control4 does not participate, with its new line of networking solutions.
What would you say are the main markets for the Control4/Pakedge combination?
In the short term, the current markets – residential, hotels/hospitality and light commercial – that Control4 serves are the main beneficiaries. The immediate integration of Pakedge enterprise-grade network solutions into Control4’s smart automation solutions creates instant value. These markets are looking for an integrated solution that works well together, sold and supported through a single channel, easy to install and maintain and cost effective to own. In the longer term, with a deeper level of integration, the market possibilities are endless and exciting and one that we will explore at a later point in time.
What do you think the two companies can do together that they would not have achieved separately?
The acquisition gives Control4 a true integrated end-to-end smart home/automation infrastructure solution. It allows our customers to buy a full solution from one source. If they need product and technical support, they can now get it from one place. This integrated solution addresses several issues that have long plagued our industry: firstly, ‘Frankenstein’ systems cobbled together with products and applications from different manufacturers. These products are often not well integrated, nor always compatible with each other, and thus limiting performance and scalability.
Secondly, overly complex systems have long since been an issue. Each vendor component has a different installation and setup procedure, may be functionally redundant, difficult to integrate, optimise, diagnose and maintain. When tech support is needed, the installer will need to call different vendors trying to figure out where the problem is.
Systems are expensive to setup, maintain and troubleshoot because of the complexity of integrating components from multiple vendors and operate inefficiently. While ‘Frankenstein’ solutions provide basic functionality, their limited integration means that the individual hardware is acting on its own with no awareness of other hardware and valuable device information that could be used to optimise the system is ‘marooned’.
Incompatibility is a major issue. Different vendor technology release cycles, misaligned roadmaps and different interfaces result in continuing incompatibility and non-compliance with customer needs – plus an inability to support new class of devices.
With the acquisition, Control4 and Pakedge will be able to offer a single integrated system platform that neither of us could do on our own. As an integrated solution, we are able to offer an integrated end-to-end infrastructure that is seamless, scalable, reliable and optimised for performance, as well as being much simpler to install, configure, service and support – dealers go through a single source for technical support. In addition we are more cost effective over the solution’s life cycle, as it takes less time and expense to set up, maintain, operate and service.
Individual system components are aware of each other and work together as part of a team with other components while leveraging individual device information to improve overall system performance – a much smarter approach. And finally, we’re better future-proofed. The network and automation components have aligned requirements, aligned product technology release cycles and modular architecture to ensure continuous compatibility and operation.
Pakedge president and CEO Victor Pak mentioned a shared "corporate philosophy and strategic vision". Can you expand upon this please?
Although we develop different products and come from different perspectives, our two companies are very similar. We share the same vision for the technology, where the market is headed and where we want to go, and the customer connected experience. We are engineers and infrastructure builders – Control4 for the smart home and Pakedge for the connected experience. Although we sell hardware, we both consider ourselves software companies. It is through software – the engineering, intelligence, and the integration – where our differentiated technology and functionality, manifests itself.
Beyond the engineering, we share the same level of energy and passion for the technology, customer satisfaction, dealer focus and user experience. Our people are similar: we are engineers and enthusiasts, we are dreamers, and we are doers. With so much in common, it is no surprise we were on the same page from day one and came to the same conclusion. The synergies between our two companies – the vision, the management style, the culture, the technology – were a perfect fit.
How will Pakedge operate within Control4? How much autonomy will it have?
Pakedge will become the Networking Solutions organisation within Control4. Our mission remains unchanged: to develop high-performance networking platform solutions for residential and commercial AV and automation applications, regardless of brand. Control4 is one of many customers that we support to ensure our products work well together and Control4 is committed to ensuring that Pakedge remains true to its mission.
We will continue to work with Control4 and non-Control4 dealers, and provide them with the best and most robust network for their needs. We recognise that many of our Pakedge dealers sell, install and service a variety of automation systems other than Control4 and we have no intention of disrupting that. They do not have to be Control4 dealers in order to buy Pakedge, and unless they are already Control4 dealers they do not automatically become Control4 dealers through the acquisition of Pakedge by Control4.
Will the Pakedge brand remain, or will it be subsumed within the Control4 brand?
The Pakedge brand will continue to exist separately from the Control4 brand. Over the 12 years, we have built up a lot of brand recognition and trust within the industry and we don’t want to disrupt that nor cause confusion in the marketplace. Equally important is that Pakedge will continue to expand into underserved markets, such as commercial AV networking, where Control4 is not participating in nor established in.