NAVCO launches DVR-rental program

Thursday, October 19, 2006

ANAHEIM, Calif.-NAVCO, a systems integrator with 12 U.S. offices specializing in the finance sector, has announced a new DVR-rental program that will charge a flat monthly fee for the DVR, plus service and maintenance, and will automatically upgrade each DVR every three years. Initially, DVRs will be rented starting at $150 a month.
The plan arose from NAVCO's Diagnostics Server software, which the company developed to integrate all of the different DVR manufacturers' diagnostic programs into one application. With that ability in place, said executive vice president of sales and marketing Jim Kauker, "being an integrator that services nationally all these different DVRs, we're finding that more and more manufacturers are not able to tell us that parts would be available past the fourth or fifth year ... and our customers wanted a migration path.
"I said, well, jeez, these things aren't lasting. The cabling is working, the cameras are working, but our customers need to have the mentality that they need to flip their DVRs every three years."
The new sales model does increase RMR , but that wasn't the main goal of the program, Kauker said, as 20 percent of NAVCO's revenue already comes from service contracts. However, said PSA president Bill Bozeman, this model has been discussed and is being developed in the PSA Security offices as a way for physical security integrators to build equity in their companies.
"You also need a plan," Bozeman emphasized, "which shows the salesman how to sell it, shows the owner how to finance it, shows the accountant how to make it look on the balance sheet. You need a whole program that will allow them to become educated about how this works."
It's also a model the IT and office-equipment reseller community is familiar with, as many companies already lease everything from servers to copiers.
One thing Kauker emphasized is that NAVCO's program is designed as a rental program, not a lease program, which changes the tax implications. "They're renting the ability to get the pictures," he said, "so it becomes a 100 percent operating expense, that's 100 percent deductible," rather than a capital expenditure, which might be taxed as part of a business equipment tax in some municipalities.
"We're hoping that through this process," Kauker said, "whether [security directors] rent the DVR or manage it themselves, they do need to make sure they have a process in place and they need to realize that we're going through a major technology change right now and they'd be foolish to think it's going to last five to seven years."