Earlier this week, Canon and Axis Communications announced that the Swedish security device manufacturer would be acquired by Canon for US$2.8 billion. The move, which surprised many industry observers, is expected to put Canon in a position to become the most influential video surveillance company in the industry. According to IHS, this would make Canon the largest video surveillance company in the US and the third-largest in the world.

The move is a logical continuation of Canon’s recent strategy for the security market. The company acquired video management software provider Milestone Systems in mid-2014, allowing the company to offer a hardware and software solution, which is further boosted by its Axis acquisition. In fact, Milestone and Axis have been long-term business partners, and bringing them both in house made sense.

Does this deal mark the end of consolidation in the video surveillance industry, or a trend towards further consolidation? According to Jeff Kessler, managing director of Imperial Capital, LLC in an interview with Security Info Watch, “You once had dedicated discreet VMS players, camera players, storage players, and the analytics companies. What we’re seeing now is a collapse of these various discreet elements into a single solution, which for the integrators… makes it a lot easier for them to go to a one-stop solution and create a better relationship between them and the end user…There is no independent leader in the security industry that’s not part of a larger company that’s too big to acquire.”

The deal also probably makes a good deal of sense for Axis. According to IHS, while Axis is a titan within the industry, it also was responsible for only 5 percent of market share. Chinese rivals Hikvision and Dahua have been growing more quickly than Axis in the US$15 billion video surveillance equipment market, and the ASP of network cameras has been halved since 2010. As a result, Axis had to change its strategy and become more of an integrated solution supplier – something that Canon can now offer the company.