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SIA pushes for full funding

Monday, March 16, 2009
On Friday, the Security Industry Association called for full funding of the Transit Security Grant Program. Currently, the president’s fiscal year 2010 budget proposal is being reviewed by the House Appropriations Subcommittee on Homeland Security. From the release:
“With nearly 11 million Americans taking trips on public transportation to save time and money every day, there is no greater moment for Congress and the federal government to reaffirm its commitment to safeguarding our nation’s public transportation infrastructure and protecting the Americans who ride these systems,” SIA Director of Government Relations Don Erickson said. “This can be accomplished by fully funding the Transit Security Grant Program at $900 million in FY2010 and ensuring that these critical resources are sent directly to transit authorities without a match requirement."
The program provides grant funds for bus, rail and ferry systems, and SIA's press release notes that several witnesses at a Homeland Security subcommittee hearing on March 12 talked about he importance of the funding to keeping passengers safe.
Transportation Security Administration Assistant Administrator John Sammon told the panel that the program "makes transit systems more secure by expanding the deployment of surveillance, monitoring and detection technologies to improve intrusion and anomaly detection, strengthen access control measures and otherwise add layers to harden facility security."
According to SIA, Congress appropriated $388.6 million for the program in fiscal 2009, about half of the amount it had authorized. Lawmakers have authorized about $900 million for fiscal 2010, but have yet to decide how much to appropriate.

Change at the top for Diebold

Monday, March 16, 2009
Strange. Big day for executive notices today. In this case, it's Dennis Moriarty out at the top of Diebold's security division, and long-time Diebold man Bradley J. Stephenson in. Not sure if that link will work, so here's a few paragraphs:
NORTH CANTON, Ohio, March 16 /PRNewswire/ -- Diebold, Incorporated (NYSE: DBD) today announced leadership changes as part of an organizational realignment within its security division. Bradley J. Stephenson, vice president, physical security solutions, has been promoted to vice president of Diebold's security division with a focus on increasing the value of Diebold's security solutions to customers and accelerating market growth in the Americas. He is now responsible for the company's enterprise security and fire services operations, government solutions group, monitoring services, security research and development, product management and security marketing and business development functions. Dennis M. Moriarty, senior vice president, global security division, is leaving the company to pursue other opportunities.
This is one of those times when corporate titles make my head hurt (actually, my head hurts anyway - thanks flu!): vice president, physical security solutions, has been promoted to vice president of Diebold's security division. So he got promoted from vice president to vice president! Congrats, Brad!
"This change is designed to drive efficiencies through defined business processes, targeted geographic focus and organizational optimization," said Thomas W. Swidarski, Diebold president and chief executive officer. "We have an enormous amount of confidence in Brad Stephenson's ability to deliver results in his new responsibilities," Swidarski continued. "His wealth of experience in running various businesses within Diebold across a number of different industries will prove to be valuable in this broadened leadership role."
Does drive efficiencies in this case just mean eliminate corporate overhead?
Swidarski added, "During the time Dennis Moriarty led our security division, he expanded our security offerings and raised the visibility of the company in the industry and with influential decision makers in emerging markets. We thank Dennis for his contributions to our company and wish him well in his future endeavors."
I've spoken with Dennis a few times. I'd think he'd be a good hire for a growing integrator looking to make a splash.
Stephenson has been with Diebold for more than 35 years, serving in a variety of senior management and technical positions including general manager of card systems, fire services and Nexus Software. Stephenson led the company's electronic security division from 1996 to 1999, developing security products to meet the needs of financial services and retail clients. Prior to moving to the security division's corporate headquarters in 1995, Stephenson had more than 20 years of experience in various customer-facing roles.
So, not exactly bringing in a young gun to shake things up.
Moriarty was appointed vice president of Diebold's global security division in 2005. He joined Diebold in 1996 as Eastern Division vice president, where he led the sales, service and systems organizations. He also served as vice president of Customer Business Solutions within Diebold North America. Prior to joining Diebold, Moriarty served in senior leadership positions at Pitney Bowes Corporation in Stamford, Conn. A native of Stamford, N.Y., Moriarty holds a bachelor's degree in English from Iona College in New Rochelle, N.Y.
Hello! BA in English from Iona? I knew I liked him. Who says an English degree gets you nowhere. I mean, just right here, we've got a VP at Diebold and, you know, a guy who blogs about the physical security industry. Buck up, recent grads! (I'd like to apologize for all the exclamation points - I'm feeling a little punchy.)

Arecont picks up a Pelco exec

Monday, March 16, 2009
No link, but here you go:
Glendale, CA (March 16, 2009) – Arecont Vision, the industry leader in megapixel IP camera technology, has appointed Scott Schafer as Executive Vice President of Sales and Marketing. In the new position, Mr. Schafer will manage the company's global strategy to market IP-based high-resolution megapixel video surveillance solutions throughout its domestic and international markets.
Is Arecont the "industry leader?" I honestly have no idea. They're claiming to be the leader in technology, I guess, not sales. These kinds of statements drive people like me crazy.
Mr. Schafer brings extensive executive management sales and marketing experience to Arecont Vision. For the last four years, Mr. Schafer held the posts of Senior Vice President of Americas and Global Marketing and North American Sales at Pelco. His experience also includes Senior Vice President of Sales, Marketing and Service at The Reynolds and Reynolds Company, and managing global networking and high availability services for NCR Corp., where Mr. Schafer held numerous global general management, sales leadership and marketing management positions during his 19 year tenure with the company.
Solid resume. Arecont did well here. If Arecont has struggled with anything, it's being seen as a bit of an outsider. Everyone knows Scott, especially because of his high-profile role at Pelco.
“We are excited to have Scott join our dynamic team and look forward to his contributions to Arecont Vision's mission of establishing our state-of-the-art megapixel surveillance cameras as the industry’s primary means of image capture,” said Dr. Michael Kaplinsky, Chief Executive Officer, Arecont Vision. “Scott is well known in the professional security industry, a proven leader and a prominent advocate for IP technology. As the leading supplier of megapixel video cameras, we are delighted to have someone of Scott's stature on-board to help us further our goal of transitioning the video surveillance industry to megapixel technology.”
I wonder if anyone has ever read a paragraph full of quotes like this all the way through, other than the copy editor in the marketing department. I really tried to get through it. But I failed.
While at Pelco, the company grew substantially. By focusing on vertical markets, Scott brought the company closer to end-users and major projects. He also expanded the company's large systems business to concentrate on enterprise-class digital network systems. He increased Pelco's business capabilities related to architects, engineers and consultants, which increased major design wins with specifiers around the world. “Early in my career, I learned how important it is to recognize business opportunities as they develop, and to quickly execute a strategy that takes advantage of those opportunities,” said Schafer. “Arecont Vision's unique position in the megapixel camera market presents numerous opportunities in the professional security market. As successful as Arecont Vision has been in developing the megapixel technology market, the previous success represents only a fraction of our potential for growth. I am excited to join Arecont Vision and look forward to the challenges that lie ahead as we continue to expand market share with innovative imaging solutions.”
I think all of that is true, but I also think Scott and Dean Meyer didn't exactly share the same vision for the future of Pelco. These moves will happen with management transitions. Probably good for the industry as a whole - like when a great band breaks up and all the players form their own side projects and you wind up with three or four great bands.

Sam is laid up and Axsys is cheap

Monday, March 16, 2009
If I'm not getting back to you right away or posting anything of value recently, it's because I have wicked case of something like the flu, thanks, of course, to my children (whom I love dearly). This sickness has nothing to do with going out on the town Friday night. That is a nasty rumor. I'm not sure how these things get started. One thing of interest I'll hopefully have for the newswire on Thurs.: Axsys is ready to get out of the surveillance market. And one guy thinks a defense contractor will buy them. And this other Fool thinks Flir's gonna buy them. This is one of those things that can only be happening in this economy, where everyone's crazy. It's not like the company is in the tank. Their most recent financials are pretty awesome, really. I think most companies would be alright with a greater-than-10-percent net margin and sales growing at 34 percent. But, because people are irrational (and because hedge funds do 25 percent of all trading and people are freaking out and calling in their cash), Axsys' stock is down by half. So, that makes them rather attractive to buy. Hence the overtures. Now, who are Axsys (other than Axis' homonymic nemesis)? Well, they do pretty high-end stuff. Their cameras aren't cheap and aren't on the mass market. I can see why Flir would want some of their infrared technologies and, more specifically, accounts. Now, nothing may happen. But if the offer is well over where the stock is (irrationally) trading, the board is going to have to accept it.

Shareholders approve Tyco move

Thursday, March 12, 2009
The shareholders said yes yesterday to Tyco International, parent company of ADT and SimplexGrinnell, regarding a relo. Pending some government filings, Tyco International's "home" will no longer be Pembroke, Bermuda, but rather the canton of Schaffhausen Switzerland. Here's the Tyco press release.

It's time to renew your CSAA Five Diamond certification

Thursday, March 12, 2009
The CSAA wants you to know that it's almost time to renew your Five Diamond designation. If you're a Five Diamond central station, that is. If you're not, then you don't need to worry. But seriously, if you are a central station that isn't Five Diamond certified, it might be something to consider. The CSAA and the online training administrator CMOOR Group make the training fun and engaging (I enjoyed it, anyway, and now have a really cool looking certificate that I'm going to frame and hang somewhere in my cube), and it will move your central station into the elite top percent of certified centrals out there. The renewal date for Five Diamond certification is April 30, 2009. Information on how to renew as well as a download of the renewal form can be found here. The form must be signed by a company officer, notarized (except for Canadian centrals), and accompanied by a copy of your 2009 UL Listing certificate or FM Approval good through 2010, as well as the completion certificates (printed from the online course) of any new operators hired since the initial certification. The CSAA will also be sending out renewal packets in the mail, so keep your eyes open. Further questions can be directed to Becky Lane at 703-242-4670 ext. 18.

OzVision teams with CMOOR Group to provide online training

Thursday, March 12, 2009
I had a chance to speak with OzVision founder and president of security Avi Lupo and CMOOR Group president Connie Moorehead recently. They wanted to talk to me about an exciting new feature being offered through the CMOOR Group at the OzVision website. Regular readers of SSN will recall the CMOOR Group from a story I wrote back in Dec. '08 on the online training offered by the CSAA forcentral station operators. The new training modules, which are currently under development will be available for perusal here. According to Lupo, since OzVision is an embedded part of the platforms used by many 3rd party monitoring centers, such as Guardian and Rapid Response that do video monitoring, the training modules needed to cover three areas: Sales, technical, and operations. An excerpt from the original release follows.
The first course will be focused on sales and the features and benefits of the OzVision suite of products. The second course is a technical course geared towards the installation and technical features of the product and the third course in the series will be an operations course designed around user features, operations and function of the OzVision product. OzVision has partnered with The CMOOR Group to develop this online training series. CMOOR is widely known throughout the security industry as being the premier custom content and media development solution provider to trade associations, manufacturers, integrators and dealers. Built with the latest technology, these courses are highly interactive and engaging for the students. Each student is provided a certificate of completion at the end of the course and continuing education credits will also awarded to participating students upon successful completion of the training. Each courses is anticipated to be approximately 60 minutes in length. To pre-order your training, contact The CMOOR Group at 502-254-1590. The course is $50 per student and volume discounts are available.
Online training is obviously pretty cool, and the fact that students will get continuing education credits is a major plus. I've received my official certificate for passing the Central Station Operators Online Training Level I and have completed the educational modules for the CSAA Advanced Operator Online Training Course... Unfortunately, true to the modus operandi I adopted in college, I've waited a little too long to start the test at the end now, and am really nervous that I might need a serious cramming session to review all the notes I took before submitting to the assessment. Good luck to all future online students.

One of these things doesn't look like the other

Wednesday, March 11, 2009
I've written before how much I dislike projections. Mostly because they're always wrong. And especially in this economy, I'm dubious of any revenue projections. No one (well, mostly no one) saw this huge downturn coming, no one really knows how long it will last, and no one really knows which sectors will be hit for how long. So there's that. But here's another reason I dislike projections: They very rarely take into account anyone else's predictions. Let's look at a couple of predictions that have been put out there this week: 1. IMS says spend on video analytics might reach $140 million by 2012. 2. Steve Hunt says spend on PSIM software will reach $3 billion to $4 billion annually by 2012. How does that old Sesame Street song go? One of these things doesn't look like the other? Let's take the first. IMS says $50 million was spent on analytics in 2008 (which seems reasonable to me, though I'm always skeptical of such a round number). And they think that might get to $140 million by 2012. So, that's a $90 million increase in four years. It's a CAGR of 30 percent (sick of doing math? Use this handy online CAGR calculator). Now that's a pretty healthy growth rate. But the technology is still young, and the numbers are somewhat small, so percentages sometimes look big in those kinds of environments. For example, here's an article from the government about the geospatial industry growing at 35 percent annually, and 100 percent in the commercial subsector. Here's a nanotechnology company growing at 150 percent plus. Mostly these sorts of predictions are wrong. I don't think anyone believes the access and surveillance market grew 37 percent annually over the last three years. But they're sometimes right. I'd certainly buy that smart phones grew 44 percent year over year from 2006 to 2008. So, let's get to #2. Now, just the language of "$3 billion to $4 billion" gives me the willies. But let's start with this:
A top-down estimation of the potential PSIM spending would normally take total security spending and parse it out based on certain assumptions. For example, of the, say, $50bn annual spend on security products and installation services only a portion would be spent in organizations considered candidates for PSIM solutions, like corporate facilities, airports and the like. Further percentages would be peeled away assuming the adoption lifecycle of PSIM-like technologies in those environments (long sales cycles, integrator reluctance, etc). That sort of estimation could very reasonably find $1bn to $5bn or more of expected spending on PSIM products over the next few years. One magazine published a quote by a vendor claiming $10bn by 2012.
So, it's very reasonable that (using a fairly ambitious 6 percent overall growth rate for the industry during a brutal global recession) of the $60 billion spent on security products and installation that about nine percent of that would be PSIM software? What? Even take the $1b number. Is PSIM software going to be more than one percent of the overall industry spend? That doesn't seem right to me. But, moving on:
How many of those $1bn+ organizations will spend $100,000 or even a million dollars by 2012? To determine that, we interviewed end user executives in 15 more companies and described scenarios where PSIM solutions could produce value (see Table 1). For example, we described specific uses of technology to handle situations involving three or more data types in corporate, transit and government environments. ... For every Global 3000 candidate able to spend $100,000 and more, there will likely be three or four candidates in the much more populous mid-sized corporate or government categories spending $50,000 or more, effectively doubling the total spend of the large organizations.
First, there's a big difference between a company willing to spend $100,000 and $1 million, but say every single one of the Global 3000 spends $100,000 on PSIM software (that seems pretty ambitious, right?). That's only $300 million. So then let's say there are 12,000 of those smaller companies willing to spend $50,000 each (again, pretty good market penetration, I'd say). That gets us another $600 million. So, if the PSIM companies out there today - Intergraph, Orsus, Proximex, Lenel (do they even count?), VidSys, CNL, etc. - deploy 15,000 systems in the next four years we're talking about total spend of $900 million. Double the costs of the systems across the board. 15,000 systems for $1.8 billion. Unless we're including the cost of all the other technology involved in a system run by PSIM software, or we're including all the installation and service, I just don't see how you get to something like $3 billion. And nowhere in Hunt's post is what he thinks those companies' revenues are right now. Doesn't that matter? You'll see the question by John Honovich on the bottom of Hunt's post. He posits their sales at $200 million in 2008. To get to $3 billion, that would require a CAGR of 97 percent. Even if it's $500 million, we're talking a growth rate of 57 percent. Why would it be so much faster than analytic growth? Why would we be spending $140 million on analytics and $3 billion on PSIM software. Aren't there a lot of applications where a couple analytics might make sense but a full-blown PSIM installation might not? The real point of all this is that I just don't see how these two guys could come to these two conclusions independently of each other. They seem wildly disparate. I guess that's why you shouldn't bother asking me for a prediction. What's the market going to be in 2012? I have no idea, really.

What do the UTC layoff numbers mean?

Wednesday, March 11, 2009
I've read through the 2008 annual report that UTC put out recently, and I think I've got a pretty good handle on what those layoff numbers will mean for their Fire & Security business. (And, yes, I did call and ask them what they would mean, and this is the only comment they're making: "The restructuring will affect all UTC business units to some extent, but the exact number of jobs at individual buisness units and locations has not yet been determined.") However, these layoffs aren't that new or dramatic for UTC. It's just that most people weren't paying attention to layoffs last year when the economy hasn't yet totally nosedived. First, here's where you can find their annual report yourself. It's one of the most detailed and well put together annual reports you'll find, I must say. I recommend downloading the pdf, as the interface online is a little slow for my taste. Now, on to the analysis. See, in 2008, the company announced $357 million in "net pre-tax restructuring and related charges," which the company predicted would translate to 6,300 hourly and salaried employees. So, for 2008, they were basically valuing an employee at about $56,666 (obviously, not all of that restructuring cost is laying off employees - it's also closing facilities and doing away with assets, etc., but I think you'll see it basically works for my reasoning). UTC recorded $63 million in charges for the F&S segment, which is 17 percent of the total charges. So, if you take that 17 percent and apply it to the 6,300 jobs, you get 1,071 jobs, or, if you take $63 million and divide it by $56,666 you get 1,111 jobs. So a ballpark of 1,100 jobs lost at UTC F&S makes sense to me. Now, for 2009, they're predicting $750 million in restructuring and 11,600 jobs eliminated. So, this year, they're theoretically valuing jobs at $64,655 each. But what percentage of the restructuring will be attributed to UTC F&S? In 2007, the company attributed 23 percent of $166 million in restructuring to F&S, and in 2008, as I said, it was 17 percent. So, should we average the two and go with 20 percent? Well, it might be higher than that. If you look at UTC's six business segments right now, F&S has just about the lowest operating profit margin at 8 percent. Further, while they only contribute 11 percent of the company's revenue, they make up 19 percent of its workforce. Further further, if you divide revenue by employees, each employee only creates about $150,000 in revenue at F&S, vs. an average of $260,000 for the whole company. This is likely because F&S is the most in-the-field-oriented of the business units (I'm sort of guessing here, as Otis does a lot of installation) and maybe employs a lot of lower-wage techs across the globe. So maybe we just take the high side of the 2007 and 2008 percentages and say 23 percent of the restructuring will affect F&S. So, 23 percent of $750 million is $172.5 million, and that divided by $64,655 is 2,668 jobs. Or 23 percent of 11,600=2668. So, I think a ballpark of 2,500 jobs lost in F&S is fair. What percentage of that is in North America? Well, 83 percent of F&S' revenues were generated outside of the US last year, but they do a lot of business in Canada, so maybe 70 percent is outside of the U.S. and Canada, so maybe 30 percent of those job losses are in North America? That works out to about 750 jobs. Not too dissimilar, actually, to what ADT just announced. This is very rough, obviously. If anyone sees major holes in the reasoning, let me know.

NationWide Digital partners with Xanboo for remote video monitoring and security controls

Wednesday, March 11, 2009
I got a release from Xanboo recently. NationWide Digital Monitoring Co., Inc., a central-station monitoring outfit since 1979, announced March 5 it will partner with Xanboo, Inc., for its line of remote security control devices and video monitoring technology. The partnership will immediately enable NationWide’s dealer force to distribute, install or integrate Xanboo’s products for new and existing customers throughout the United States. Xanboo’s remote security solutions provide an end-to-end technology platform that enables access and control of devices locally or remotely over the Internet via a mobile phone or PC. Residential and commercial subscribers can use Xanboo’s systems to control and monitor devices in their home or business from anywhere in the world with a standard Internet connection.