Volume 140

Let me be clear about what this Brief is and what it is not. This is not an attempt to blow anything up or stoke controversy for its own sake. There are no gotchas, or if it bleeds, it leads headlines. What it is is an honest account of what I am hearing, seeing, and thinking about one of the most consequential brands in our industry at a moment when that brand is largely letting the market tell its own story without any help from the inside. When an organization goes quiet and stays quiet, the narrative does not disappear. It just gets written by everyone else. So I will write my part, as someone who genuinely wants this to end well.

Because here is the truth about Honeywell and LenelS2: this is, all at once, an industry love story, a source of frustration, a disappointment, and a real source of hope. It is the kind of story that only exists when a brand actually matters, and there are not many brands in this industry…from manufacturer to distributor to integrator to specifier to customer… that matter the way these two names do. That is what makes it worth writing about, and if I am being honest, a little bit fun to write about too.

There are a few companies in our industry that polarize people the way certain names do, like HID, ASSA ABLOY, AMAG, Milestone, Axis, Honeywell, and LenelS2. Globally, everyone has an opinion about these brands, and not always a bad one. But right now, the opinions swirling around Honeywell and LenelS2 carry particular weight because the stakes are so high and the window of opportunity is so visible to so many people watching from the outside.

I have been tracking this story from the beginning. I wrote about the acquisition when it happened. I sat down with Jeff Stanek, and at the time Sergio Castillejos as well, though that portion of the conversation was cut when Sergio left the company before we released it. What I heard in those early days was genuine optimism. There was real energy around the idea that LenelS2, which many believed had been starved of investment during its time with Carrier, was finally going to get the resources and attention a platform of its caliber deserved. The conventional wisdom was straightforward: you do not spend $4.95 billion in an all-cash deal for Carrier’s Global Access Solutions business, which included LenelS2, Onity, and Supra, without expecting meaningful growth on the other side of it. Juergen Timperman had been a difficult counterpart, and both parties were ready to move on. The story that LenelS2's entry into Honeywell would open international doors and inject urgency into a platform that needed both was compelling.

My read at the time was that Honeywell recognized what its own ProWatch business could not become. ProWatch still carried historical scale, a deep integrator network, and an install base most manufacturers would love to have. I jokingly say, “They have problems others wish they had.” But after the Resideo spinoff, Honeywell’s access control business had shrunk considerably, and the people running the numbers knew it. So when LenelS2 became available, the acquisition made sense on paper. A great brand, a defensible enterprise install base, roughly $100 million in cash flow, and the kind of multinational presence that ProWatch was never going to recapture on its own. I believed they had about two years to make it work, and I thought they understood that. I said at the time that the person who had the worst day when the acquisition was announced was the ProWatch product manager, and I meant it affectionately, because the logic of the deal made ProWatch’s future pretty obvious.

And then came the silence.

I remember watching Honeywell’s CEO discuss the business on Mad Money and thinking that he did not fully understand what they had acquired. After that, the company largely went dark on LenelS2. What trickled out were stories of meetings about meetings, of young MBA analysts requesting slide decks and forms while the people who actually understood the product and the market grew frustrated and, eventually, left. The institutional machinery of a large conglomerate had wrapped itself around a business that needed the opposite of institutional machinery. Key figures started to leave. Ryan Kaltenbaughwas one of the first high-profile departures, and he represented something specific: not just market credibility, but the kind of cultural glue that holds a team together through hard transitions. When those people go early, it usually tells you something important about what is happening on the inside.

What I hear from people, both those still inside and those who have moved on, is not anger. It is something closer to exhaustion mixed with genuine sadness. These are people who believed in the brand, who built careers around it, who still think the platform has the bones to compete at a high level. The frustration is not that Honeywell acquired LenelS2. The frustration is that the acquisition came with so much promise and has so far delivered so little of it. The sentiment externally, across integrators, ecosystem partners, and customers, follows a similar shape. Conversations about Honeywell LenelS2 now come with a sigh. Not a dismissal, a sigh. There is a difference, and the difference matters, because sighs still contain hope.

To be fair, some integration challenges are expected. When two large organizations with years of embedded process and culture come together, friction is part of the deal. Engineering overlap, redundant product lines, competing incentives… those are normal problems. What was less forgivable was the absence of a clear signal to the market. Silence creates a vacuum, and vacuums get filled with speculation. Every concern that went unaddressed became a boogeyman story about Honeywell doing what Honeywell has historically done when it absorbs a business: optimizing toward financial targets while the product quietly loses momentum. The ERP switchover became its own chapter in the story, well documented across the industry, during which customers went weeks without being able to place basic orders. That is not a minor operational hiccup when you are trying to build confidence in a $4.95 billion acquisition. And announcements that should have generated momentum, like the partnership with Rhombus, landed with more confusion than conviction, because nobody had been given enough context about the strategy to know what it meant or where it fit. Even the good news felt disorganized, which is perhaps the most telling detail of all.

What we are left with today is a company that still matters, surrounded by an industry that is no longer sure what it is supposed to become. More leadership from the LenelS2 side and from Honeywell’s sales organization has departed (its also worth noting that the external market knew this before internal team did. Again, another example about how communication is clearly not being considered during the transition), and the conversation in the market has settled into that familiar and disappointing register of frustrated loyalty. People who want to root for this brand are running out of reasons to do so out loud.

I want to be direct about something, because I think it gets lost in the criticism. This does not have to be the end of the story. There are very few globally recognized brands in this industry with the kind of install base and integrator depth that Honeywell LenelS2 still carries. We watched AMAG begin a real transformation under new leadership, and it has been one of the more interesting and encouraging stories in the industry over the last two years. There is no structural reason Honeywell LenelS2 cannot make a similar turn, except for the will and the strategy to execute it.

The market context makes the opportunity even more obvious. Access control is not the same industry it was when this acquisition closed. Cloud-first platforms have moved from interesting experiments to baseline expectations. Open ecosystems are no longer a differentiator; they are a requirement. AI is beginning to collapse configuration complexity, permanently changing what customers expect from their vendors. The companies winning right now are the ones iterating fast, tying themselves to the identity layer, and making it easier for their customers to generate value without requiring an army of certified installers to unlock it. The platform squeeze is real, and standing still inside a large corporate structure while the market accelerates around you is not a neutral position. It is a losing one.

Honeywell also announced it would separate its Automation, Aerospace, and Advanced Materials divisions into three distinct publicly traded companies, driven in part by Elliott Management’s $5 billion stake. The pattern across Honeywell’s history is fairly consistent: roughly every 10 to 15 years, there is a major structural shift, driven by market pressure, activist investors, or a new CEO with a different vision. The 2018 Resideo spinoff was the move that, in my view, set everything else in motion and ultimately led to the LenelS2 acquisition.

What the current reorganization means for the future of the building automation segment, and specifically for LenelS2, is a question only one person can really answer right now, and his name is Billal Hammoud, President and CEO of Building Automation at Honeywell. Billal has not been particularly visible in this industry, making it genuinely difficult to gauge his priorities or appetite for the kind of strategic change this situation calls for. I cannot yet tell whether he is the person who sees the $100 billion opportunity in front of him or the person who manages toward this quarter’s targets. The path forward is not complicated to describe, even if it is difficult to execute. It requires acknowledging what went wrong in the first two years, building a leadership team that actually knows this market, killing the product lines that exist only out of institutional inertia (Blue Diamond and Elements come to mind), rebuilding the channel and ecosystem programs that have lost their energy and credibility (LenelS2 OpenAccess Alliance Program or OAAP) has needed serious attention for a while), and investing in what LenelS2 can become as a platform in a keep bad people out while also letting the right people in, enterprise software, data, and identity-first world, rather than defending what it has always been as a hardware-anchored system.

Honeywell and LenelS2 are not companies our industry needs in order to survive or grow. We have demonstrated that the market can move forward even when it is not operating at its best. But there is a meaningful difference between needing something and wanting it. As we move toward what I believe is the mainstream moment for this industry, the transition from a $10 billion hardware business to a $100 billion software and identity business, having globally recognized brands making the right bets accelerates everything. It signals to adjacent markets that physical security is serious about its own transformation. It gives the whole ecosystem more credibility and more momentum.

I still want them to get this right and that has not changed since the day the deal closed. The love story part of this is real (so is the frustration and the hope). Color me hopeful, but with a much shorter runway for it than there was two years ago, and a genuine desire to see Billal prove everyone who has given up on this story wrong.

Click on the above image and use code sxst3gkbkn to hear the audio version.