PARCS Marketplace in a “State of Flux”
In the past few weeks I have had face to face discussions with senior members of five revenue control manufacturers. We talked about the marketplace and from their view, it isn’t a pretty place. But it should be.
We are told that due to the recession there has been a tremendous pent up demand for revenue products, both on and off street. Key buys had been put off, and projects that were shelved that are finding their way back to life. The next two years should be super if you are a supplier. So why the long faces?
One told me that he felt that they had become a commodity. “Price is everything. We really low balled a job because we wanted market share in a certain area, went in basically at our cost. A competitor came in at 70% of our price. How can you compete in a market like that.” With so many deals going to public sector owners, with strict bidding rules and requirements, product quality, features and benefits, and one’s track record often take a back seat to price.
I know of one very large, established distributor of parking equipment in Europe that has left the market. “Its just no fun any more.” He has changed his product line and moved his focus out of the EU. Remember Europe leads the US in Parking Equipment by a few years.
Technology is moving at light speed. The advent of electronic purses, the ability to pay with a near field communication (NFC) equipped smart phone, GPS and video enabled enforcement technology, QR code scanners in everyone’s hands, transaction based business models, “apps” that “run” parking garages, the marketplace is awash with startups and new technology that can leave customers and many legacy suppliers scratching their heads.
I just read in Parking Today that one expert said: “Many vendors even tried for some time to simply adapt what they have and call it a ‘cloud’ offering or an online system … to prolong the life of a non-cloud architecture under a new cloud logo or product name.”
It is difficult for a company that has been following one business model (hardware/software sales to solve parking problems) to move to a pricing system where fees may be charged on a per transaction basis and the use of hardware and local server based software is limited. Company “A” may have invested three years in R and D coming out with the latest and greatest Pay on Foot or Pay in Lane, only to find out that during that time technology had outpaced it and its offering is obsolete before the device is on the market.
Plus, severe business model changes often leave traditional sales forces shaking their collective heads and trying to figure out just what it was they are trying to sell. “Liken it to a parking operator that has sales staff in the field selling the quality of their on site personnel and the need for good people to meet and great a customer’s clients,” one manufacturer told me, “and in one day they move to selling operations with no personnel, no staff, and a centrally located control system sometimes a thousand miles away. Its a paradigm shift many cannot make.”
And its not like many of them have a lot of time to make the move. If a dozen new companies come on the scene, providing high tech solutions to parking problems, and half fail, that still means half succeed. And even though there will be start up problems, and bugs in the systems, they can be solved quickly and the successful companies will do so. Plus, there seems to be a lot of venture capital out there, looking for technology to support. Did you ever think you would hear the term “burn rate” related to a parking supplier?
Legacy companies still have thousands of systems installed and hundreds of dealer/distributors that they have to support. Moving in a completely new direction will require a nimbleness that few may have.
Add all this to a market that is struggling to recover from the recession and you have a lot of uncertainty. “You have to be very smart right now,” one supplier told me, “you are being forced to make a series of decisions and if one is the wrong one, you go down the wrong path, and there is no recovery. A lot of companies just don’t have the management expertise to handle this ‘state of flux.'”
We have seen the face of the parking industry change from cigar boxes to where we are today in 30 years. The next face we see is on the way, or perhaps already here.