Selling of Voting Machine Firms

by Christopher Wilson
February 07, 2007

A lot of chatter has been floating around lately that several voting machine vendors are looking to get out of the business. We already know that Smartmatics has Sequoia up for sale.   It appears that other large firms may also be shopping for buyers.

All of this is to be expected.  After all, most jurisdictions have purchased voting machines.  Some states, such as New York , are the exception.  And some vendors may be hanging on to the hope that New York pans out.  The money has all been made, along with a ton of controversy even for the best of firms.  No one has remained unscathed, though some have been burned worse than others. 

The problem for these firms is going to be trying to find a buyer.  There is precious little new business out there.   There are some areas of new technology such as electronic pollbooks, but even then most of these firms have a spotty record with these new products.  Many of them appear to be just slapped together without any real thought or understanding the voting process and what actually takes place in a polling location.   Plus we still don’t know what course the federal government will take, but it appears likely they will mandate some kind of paper trail for pure DREs.  Some money can be made with this, but it is also a nightmare to re-configure machines, provide new training and on going support for VVPATs.

Any company that does its due diligence will exercise caution in thinking about entering this business.  What worries me is that the firm that does buy out one of these vendors will likely be someone that didn’t do their homework. In a lot of cases you find out they didn’t fully understand the industry.  This much is true for Diebold.  In the recent article in Fortune magazine you can see the quote where they admit they really didn’t understand elections.  Some people take this terribly naïve view of it; after all, counting votes is just simply addition—right?  Wrong!!  The truth is that it is a brutally unforgiving market to be in.  Just ask IBM.  Here is firm that is the essence of counting and computation, and they got their head handed to them when they tried this market several years back.

The truth is that the most successful players have been small firms that are really dedicated to elections.  They may have a few other markets that they pursue, but elections have to be a large part of their main business.  Many of these firms have been in business for over 100 years.  They have employees that have worked there for a long time and they know the election business; many employees came from the ranks of elections administration.

None of this should discourage those who truly want to enter this market.  There is place for new blood; boy is there ever.  But you will have to keep several things in mind in order to be successful.  And those are:

1. You have to treat the business more like a calling than simply a line of business.  This business requires a real dedication.  Anything short of this will result in quick failure and a tainted reputation.
2. Carefully review existing employees.  Some should stay, and others should go.  I would be wary about keep around these high price former state officials that Okayed purchase decisions, then quit in a year or two in return for a job.  There are several of them out there, and what they bring to the table in terms of technical experience or public relations is questionable at best.  Send them packing.  Keep technical staff that have long track records and really understand the election process.  Also be wary of subject matter experts that come from the state level; as a general rule day to day elections operations are conducted at the county (or local) level and the most knowledgeable people come from those ranks. 
3. Be very cautious about financial predictions.  This is tough business that eats up money like no tomorrow.  Sales cycles are long; they are measured in years not in months or days.  Don’t believe there is a pot of money out there waiting to be found.  There isn’t.   When I worked for Fidlar and Chambers I asked then President Ralph Anderson why they didn’t sell voting machines.  His answer was (and he had been in the business for a long long time), “No one has ever figured out how to make a damn dime selling voting machines.”  Less than a year after that remark, they made a touchscreen DRE, and lost their shirt on it.  He should have listened to his own advice.
4. There is room for success in this business, but has be driven by some new thinking.  It needs to think much more about product design and usability (and hire folks that know that).  It needs to think creatively about new products and services that can truly serve the needs of elections administrators.