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On the Editor's Desk

by: Martha Entwistle - Tuesday, December 11, 2007
Very close to a good story by Jason Knott in CE Pro today. As the new-build market has fallen apart and lies in shambles, a number of integrators and alarm guys who depended on that market for new business are struggling. Knott does a nice enterprise story by wondering if that isn't a good thing in the long run, citing integrators who've had bad experiences with program builders and other who don't like the margins in the new build market. That's actually confirmation of what I found in looking into the financial markets for a special report that will land in January. Gail Scannell at U.S. Bank told me that with "that whole builder segment, it's always been tough for them to do that profitably. That's always something that we have kept an eye on: what percent of new revenues is associated with builder programs." However, I'm disappointed that Knott didn't get a single integrator on the record with a single gripe. I can understand not wanting to attribute the phrase, "They're all scum bags," but couldn't he get a single integrator to talk on the record about why he or she prefers the retrofit market? And this paragraph is troubling: As one integrator described it: “Whenever I get frustrated dealing with large builders, I remember that most of the guys I deal with at these companies don’t even have high school educations. So, you can’t present them with logical solutions and expect them to understand.” That's mudslinging, and not the sort of situation I would use to protect a source. If somone wants to disparage an entire industry, he should have the balls to attach his name to it. I think Jason is a good reporter and I like that Jason offers the caveat wondering if that's "sour grapes," but I think not finding a quotable source for this story was a bad decision.

by: Martha Entwistle - Tuesday, December 11, 2007
In one of those stories that would seem like an April Fool's prank if it wasn't so easy to believe, Wired has a story today about the new "pain beam," which uses microwaves to zap people and cause their flesh to scream out with burning pain. They're talking about using it on the battlefield, to quell riots, and, you know, for residential home security. Check the story's lead: Burglars break into an apartment, hoping to pick up some expensive electronics or jewelry. But they're out again, empty-handed, within seconds, howling with pain and surprise. They've been driven back by waves of intolerable heat: Entering the apartment is like stepping into a furnace. It's the Active Denial System, or ADS, at work, the ultimate in home protection ... among other uses. Yeah, well, better hope your teenager doesn't try to sneak into the house in the middle of the night. He'd get some surprise! And just think what happens when you key in the wrong passcode! Yizz-ow! Here's how Raytheon sees using it in commercial/industrial settings: In one implementation, beam projectors are "located on the ceiling, at an angle, behind wall panels," and a series of metallic reflectors, also concealed, ensure that the beam covers the whole room. "In some embodiments, the energy may be directed to protect an item at one or more particular locations," the patent reads. "In these embodiments, systems may be used to guard a valuable item such as jewelry, weapons, or works or art. Luckily, these things still cost millions of dollars. I'm not sure I'm ready for residential pain beams.

by: Martha Entwistle - Monday, December 10, 2007
Rudy Giuliani's security consulting firm has come under some questioning from the fourth estate recently. And he only fanned the flames by stepping down from heading the operation. It will be interesting to see how Rudy balances his strong security background with the fact that many Americans know very little about high-technology security and might not necessarily like the security industry's heavy investments in the Middle East and abilities with digital video. Check this bit from the Washington Post: But many of the firm's clients have never been listed on its Web site or identified publicly by associates, and two of the most controversial arrangements among them surfaced only in recent weeks. One involved a 2005 agreement to provide security advice to the government of Qatar. The second stemmed from a deal to assist a partnership proposing a Southeast Asian gambling venture. Among the partners were relatives of a Hong Kong billionaire who has ties to the government of North Korea's Kim Jong Il and has been linked to international organized crime, according to a Chicago Tribune report. Um, yeah, people (especially foreign governments) sometimes kind of like to keep their security plans secret. It's more than likely that Rudy has some other ties to foreign governments and giant corporations that might not necessarily be flattering for a presidential candidate.

by: Martha Entwistle - Sunday, December 9, 2007
I don't have a link to a release, as it was only emailed to me via Word file and I can't find anything official on the web, but Linear has now confirmed that the deal agreed to in May to acquire International Electronics, known as IEI, has been consummated. However, the release doesn't indicate whether the initial financial terms remained the same. Anyhoo, here's the relevant piece of the release, if you're interested: The Home Technology Group of Nortek, Inc., a group of home and commercial convenience and security electronics companies lead by Linear LLC, a wholly-owned subsidiary of Nortek, has made a move to significantly strengthen its presence in the access control industry with the purchase of International Electronics, Inc. IEI, headquartered in Canton (Boston area), MA. IEI has been in the security and controlled access systems business for over 30 years. The two companies have very much in common with their line offerings but very little actual product overlap. The IEI line ranges from its Door-Gard stand-alone and entry-level access control products to its flagship product, eMerge, a browser managed integrated security management system. Linear has traditionally been in access control for perimeter security, including telephone and gate entry. Linear Chairman Grant D. Rummell noted the opportunity for synergy arising from the complementary Linear and IEI product lines. “IEI is a market leader in access control stand alone keypads, locksets, and systems access control products and this will greatly broaden the over-all Linear offering,” he said. “At the same time,” Rummell pointed out, “IEI’s experience and innovation in the areas of access control software adds substantially to our systems depth.” IEI President and CEO John Waldstein stated: “We look forward to the added market presence the association with Linear affords us and the opportunity for growth it provides. Being part of a strong access control and security industry leader allows us to continue to broaden our access control offerings as well as continuing to assure our commitment to excellence in service and support.” Plans call for IEI to continue at its Canton, MA, facility and to maintain and expand the IEI brands. Don't they know that all we care about is what they paid for IEI?
by: Martha Entwistle - Saturday, December 8, 2007
It's IPOs all over the place, all of a sudden. While Cross Match contemplates prices (see below) and waits for SEC approval to go forward, ICx raised $80 million yesterday by selling 5,000,000 shares at $16 a whack during its IPO. They appear to be up for trading on NASDAQ today. Call your broker. ICx is an interesting company, with a lot of technology in the sensors, surveillance, and software fields, which has been accumulated through a number of acquisitions, but they ended up selling beneath the target range for the IPO, which was between $17 and $19. Does this mean the stock was a good value? Maybe not. It opened at $14 today (and is lower as of this typing). Follow its progress, if you'd like. I'm no investment expert, but news like this would keep me away: For the first half of 2007, ICx had reported a net loss of $16.5 million and forecast a net loss of $5.8 million to $7.8 million for the quarter ended Sept. 30. Maybe that's unfair. Here's the bigger picture, from the company's registration statement with the SEC: Our revenue grew 187% from $31.4 million in 2005 to $90.2 million in 2006, primarily as a result of acquisitions in 2005 and organically grew 54% to $94.6 million in the first nine months of 2007 as compared to $61.6 million for the same period in 2006. Our net loss increased 764% from $14.8 million in 2005 to $128 million in 2006, primarily due to a goodwill impairment charge of $66 million and a loss from discontinued operations of $18.9 million in 2006. In the first nine months of 2007 as compared to the same period in 2006, our net loss decreased 38% from $37.8 million to $23.3 million primarily due to increased revenue in the first nine months of 2007. As of September 30, 2007, our accumulated deficit was $170.9 million. I'm still not sure if that seems attractive.

by: Martha Entwistle - Friday, December 7, 2007
Sorry, but I can't help myself. Here's a press release I received just now: A new dummy dome has been launched by Bosch Security Systems as part of its FlexiDome camera range. The dummy is intended for use in applications where multiple, working models may already be installed, but where further deterrents may be desired. The product resembles the FlexiDome VF and is delivered, ready to install, with a Surface Mount Box. Each product has a three-year warranty. Sweet! A three-year warranty on a dummy dome. I mean, is there a chance it could break in three years? What would happen? the words, "I am a fake camera," appear on the outside glass?

by: Martha Entwistle - Friday, December 7, 2007
A very well done story in the student paper of small liberal arts school Bowdoin College (in my back yard here in Maine) is confirmation of many of the trends we've been identifying lately in the paper and in the school security white paper we presented back in July. During the school's recent renovation of its museum, it used a continuing relationship with museum security guru Steve Keller to effect a significant upgrade, in the process helping its marketing department and adding to its overall building awareness, beyond traditional security matters. Exhibit A: "What good security does is allow us to borrow a lot of items from other museums. The people from whom we are borrowing want to make sure that the museum is the correct environment for their pieces," she added. This is security acting on behalf of the marketing department, right here. Good security means important art coming to the school, which means more headlines in papers local and national and means a higher profile for the school in general, which may mean more students willing to pay the ungodly amount in tuition Bowdoin's now charging. Exhibit B: "Among its security features are motion and vibration detectors throughout the building, and 24-7 video-surveillance monitoring of about 45 cameras. This surveillance monitoring occurs on-site, in the Communications Center, and at the headquarters of the museum's security company, Boulos," Nichols said. Here's that video monitoring and remote guarding as a service we've been harping about for the past six months. No doubt, Boulos gets a nice monthly payment for monitoring that video from its headquarters. Exhibit C: Keller's system takes all aspects of this environment into account, including temperature, air-quality, and humidity levels. Additionally, the museum's security guards play a large role in the process of monitoring these levels. Here's the security system being integrated into the building controls, as companies like TAC are pushing more and more often. If you can get the security budget to take on some maintenance duties, you're more likely to get a sale. Sounds like Bowdoin and Steve Keller are right on the edge of current security thinking. Good to see in little old Maine.

by: Martha Entwistle - Thursday, December 6, 2007
I had a chance to attend an IQinVision event on Tuesday (hence the no blogging) that was organized to push the concept of using pixels per square foot to spec video surveillance needs. There were about 12 people there, all integrators and consultants, and it was a good chance to talk shop. IQinVision VP and co-founder Paul Bodell (not pictured) delivered a concise presentation that seemed to make a lot of sense. The crux? If you want forensic quality video, you should spec the surveillance system so that you've got at least 40 pixels per foot of area being watched. So, if you've got a one megapixel camera, with field of view 1280 pixels wide by 1024 pixes high, you can cover about 32 feet wide by about 25 feet high/deep (if I'm doing my math right and understanding the concept correctly, which I think I am). If you try to cover more area, you'll be setting your customer up for some blurry pictures of bad guys. The good news (for IQinVision and their resellers, anyway) is that you can use the same calculations for all cameras and show that fewer megapixel cameras cover more space than the equivalent analog cameras (which use TV lines instead of pixels) and thus justify their cost. But don't trust me, IQ will do the calculating for you here (well, it will pick the camera and lens you need for the space you're looking at).

by: Martha Entwistle - Tuesday, December 4, 2007
I try not to get too much into the guarding market, except for when it overlaps with systems integrators and installers, but this is a crazy story. Many security firms work with the GSA, and it seems as though the GSA isn't always on the straight and narrow. Here's the nut graph: According to court papers filed in the case, [Michael] Holiday, a former Montgomery [Maryland] police officer, plied a government contracting official with $100,000 in cash and paid for her $7,000 Caribbean cruise. In exchange, prosecutors said, the General Services Administration employee granted favorable treatment in the bidding process to Holiday's company. Holiday's firm, Holiday International Security, went on to acquire $130 million in government contracts. Pretty good return on that $107,000 investment, no? Among the agencies that awarded contracts to Holiday International Security was the Social Security Administration, which continues to use guards from the renamed company at its Woodlawn headquarters and several other buildings in the Baltimore region, federal officials said. ... The Silver Spring company, which changed its name to USProtect when it was sold in May 2003, provides armed and unarmed security guards for 18 federal agencies at 120 installations in 32 states and territories. So, I'm guessing the company won't now lose all of its contracts. While the prosecutor called the case the largest government corruption case in Maryland history, it's not clear that you can really ascribe all $130 million in contracts to the bribery. Theoretically, Holiday/USProtect were really providing the services, so maybe it's only the amount of the bribe that should be evaluated. That's semantics, though. In general, I love it when real life is just like the movies: Prosecutors allege that the former GSA contracting official, Dessie Ruth Nelson, 65, of Oakland, Calif., received a shopping bag filled with $35,000 in cash and an envelope stuffed with $10,000 from Holiday, in addition to the cruise, among other benefits. In turn, between 2000 and 2003, Nelson steered millions of dollars worth of contracts to Holiday's company, federal authorities charged. I mean, where did that happen? In her office? In a shopping mall parking lot? Did Holiday just waltz into the GSA with $35,000 in a shopping bag and hand it over like he had just picked something up at the grocery store for her? Oh, and I can't believe this paragraph was left for last: In addition to the bribery and tax charge, Holiday also admitted as part of his guilty plea that in April 2004, he sent a video file depicting a young girl engaging in sex with an adult male to an undercover FBI agent in New York. He could be sentenced to a maximum of 15 years in prison for bribery and 20 years for transporting child pornography. Holy smokes! So, the guy's involved with Maryland's largest-ever corruption case AND he's into kiddie porn? Does anybody else feel like this is bad PR for the private security marketplace? Wow.
by: Martha Entwistle - Monday, December 3, 2007
So, I have continuing interest in this USProtect story. You know, the one where a couple ex-cons landed $150 million or so in government contracts thanks to a little bribery? Well, Richard Hudec, who "served as chairman and chief financial officer for Silver Spring-based USProtect Inc.," "yesterday pleaded guilty to charges of lying about his criminal background to win contracts with the FBI, Social Security Administration and Air Force." Which is all well and good, but then I got to thinking, hey, don't I know a Richard Hudec? Turns out I was thinking of Richard Hudak, whom I'd just seen speak at Securing New Ground. Oops. If I was Richard Hudak, war hero and respected security director and consultant, I'd be none too pleased that there was a lying fraudster with ties to the physical security industry in the news with the name of Richard Hudec. So this is me doing a civil service and letting everyone know that Richard Hudec is not Richard Hudak. Totally different guy. But you know that. If anyone hears of a journalist who sells his sources down the river named Sam Fifel, make sure you let me know.