ESX, day 1 (for me)

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06/17/2010

Every show needs an identity, right? Something that separates it from the myriad industry events that populate the landscape?

ESX may be getting there. Maybe first and foremost, there is the Club Crawl. Is it a little ridiculous that a large industry event would define itself with a frat-party-like atmosphere on the first day of its show floor? Maybe. Do people seem to really, really enjoy themselves at this Club Crawl. Hell yes.

While it’s true that I thought my soul had gone completely black after watching back-to-back requests of the DJ for playing Vanilla Ice’s “Ice, Ice, Baby” and Salt-n-Pepa’s “Push It” (seriously, I questioned my will to live there for a little bit), I had to remind myself that this is not a conference for the music industry, or, really, for people who could be expected to give much of a crap about music created in the last 20 years. Rather, it was a large group of people who all do basically the same thing (talk about security all day) letting their hair down in a major way.

I think that kind of common experience is powerful and it’s going to leave those particular club crawlers with an indelible urge to return to this event, I’d wager. I have no doubt that Charlotte, next year, has plenty of bars.

The PSA-TEC jam is similar, if maybe a little more to my taste (the songs are 40 years old, sure, but at least we’re actually playing them).

And I know that Bill Bozman, head honcho at PSA-TEC, would love to transport some of this event’s focus on RMR to his event.

This event lives and breathes RMR. It’s an alarm industry show more than it is a security industry show, to tell the truth, and I don’t think there’s a single conversation or presentation here that doesn’t eventually wend its way back to RMR in some shape or form. It’s what makes this industry go ’round, and no one here is going to let you forget it.

Remember that ill-fated failure of mine, Security Business Development? Well, at least all of this makes me feel like I had the right idea for the content. As integrators struggle to find new ways to create RMR, these “alarm guys” never have and never will need convincing that setting up more recurring revenue streams is the way to run a successful business.

That’s what just about every educational presentation boiled down to: How to use mobile devices to generate more RMR; how to create RMR in the fire alarm biz; how to use video to create more RMR; what’s your RMR worth?; how can you make your RMR worth more?; how to use verified alarms to make sure your RMR doesn’t go away; how to leverage your RMR so you don’t wind up broke and penniless like Vanilla Ice and Salt-n-Pepa!

Okay, I made that last one up, but you get the idea.

Really, I should have just called that Security Business Development conference “How to make more RMR,” but I guess that wouldn’t have been overly catchy, and probably hard to fit on a big banner.

Anyway, though, I know you’re all like, “how’s the show, how’s the show,” so I’ll get to some of that.

Let’s just say when I saw this scene at the continental breakfast yesterday, I was a little fearful for the show:

breakfast at ESX 2010

And then I walked over to look at the show floor, and it looked like this (before anyone was allowed in):

the ESX 2010 show floor

But it wasn’t as bad as it looked. Firstly, no real programming started until 9:30 yesterday, so when I was there just after 8, there wasn’t much reason to have come over from the hotel yet unless you were going to the CSAA Awards breakfast, and if you were going to that breakfast, you didn’t need to hit the continental breakfast outside. And the CSAA Awards were pretty well attended, with maybe 100-125 people there to see people pick up hardware.

I’ll let you hit Dan’s blog for all the CSAA details, as that’s his beat. We’ve got some video, too, but I’ll have to get back into the office to boil it down properly. It isn’t going to happen on this laptop.

And when the educational programming started yesterday, they were pretty well attended. This is what my room looked like about five minutes before I started my social media presentation:

conference room, ESX 2010

Quite a few people rolled in after that, too. I’d say there were more than 50 people in the room, easily. They were rabid for social media, too. There were very few blackberries being attended to, and there were a ton of questions, many of which I didn’t really have the answers for. Part of my presentation centered around the uncertainty that surrounds the big four social media platforms: Facebook, Twitter, YouTube, and LinkedIn (assuming you can still call those the big four). My message: Anyone who tells you they know exactly how this is going to play out, and exactly how you should use these platforms to grow your business is a flat-out liar/charlatan. It’s chaos out there.

But I did give people some background on how people use these platforms today, what people seem to be having success with, and where they should start their efforts. The attendees were pretty positive. I even had one guy from Vector accost me in the aisles of the show floor afterward desperate to know how to get rid of those Farmville updates in his Facebook feed. THAT I could help him with.

But, of course, the question must be asked: All that work for 50 people? Imagine if I was the woman originally scheduled to speak alongside me, who works for SWARM or some other silly name and actually sells social media services. If I wasn’t a journalist covering the industry, would it be worth my time to fly to Pittsburgh and speak to 50 people? I guess if one of them hired me and I could charge them some outrageous fee for my time. But that’s not a great way to staff an educational program is it? With people who are presenting in the hopes of landing a client? Or am I being naive and this is how it’s always been done and that’s just how the world works?

(Also, yes, I know this is the pot calling the kettle black, what with me running TechSec, but I’m just not sure this is a rational way to do things anymore - show floors and educational sessions paired up and all of us standing around in business casual dress with roller bags back in the room that we stuffed extra tight so we wouldn’t have to pay the $25 bag fee (well, not me on that last one, since I always fly JetBlue, but JetBlue gets their money in higher ticket prices now, which is crazy considering people used to call them a budget carrier). But maybe that’s just the kind of thinking that happens in a crappy hotel room at 6 a.m. blogging about security. And by the way, Westin, I love that we’re saving the planet by having us put the key in the little slot to keep the lights on and having them go out when we take the key out, but what happens when I have to pee in the middle of the night and I’ve taken the key out of the slot and the lights in the bathroom won’t turn on?)

Let’s just agree, for now, that everyone here isn’t thinking quite as deeply about the value proposition involved in attending a show down to the last penny. There’s clearly a huge benefit to seeing everyone face to face, in fraternizing with your industry colleagues, in picking up industry gossip, and in sitting in the educational sessions. Listening to a guy from Imperial Capital talk about how they value companies in M&A deals? That seems valuable. Listening to how Bob Ryan and Pat Egan make a killing selling fire services? That seems valuable.

Also, there are some new and different things happening here on the show floor. One of the most interesting, which I really didn’t get when I first learned of it, is this e-Store that IQinVision has set up. On my way to talk about it with Paul Bodell, I actually couldn’t find it because I was looking for the traditional teal color-scheme of IQ, and this is what I eventually found:

IQinVision's paul bodell at ESX 2010

Paul Bodell in orange?!? Will the sun rise in the West tomorrow?

But, seriously, this is pretty interesting. Basically, IQinVision is selling its IQEye basic product line over the Internet directly to any reseller with a credit card, with factory-direct discounts and published MSRPs. Previously, you had to either to through distribution or be a volume-buyer and be a certified dealer and buy directly from IQinVision. Now? You just need a credit card.

They admit this isn’t targeted toward the guys doing 1,000-camera airport jobs. This is for the IT reseller, maybe, who wants to put in a couple of cameras for a client who wants to monitor who comes in the front door. Or for an A/V guy who wants to tack a couple of $500 cameras onto a $20,000 home audio installation. Or, they hope, for an alarm guy who’d like to try out a couple of IP cameras in some installations and see how it goes before diving in whole hog.

Seriously, though: Is this the beginning of the breakdown of the channel? When everyone’s buying through the internet, why would the large manufacturers still sell through distributors? Why not just set up an online store and have people buy directly from them?

Think about a public company like Axis, with huge name recognition and a global reseller network. Why do they need distributors at all? Aren’t the shareholders eventually going to decide that there’s a bunch of margin going out the door for no good reason?

I thought shipping and handling would be a pain they’d want to avoid, but Bodell tells me they’re doing most of the drop-shipping for their distributors anyway, because it’s not like the distributors stock up on a huge inventory of IQinVision cameras. They just pass along the orders. And a larger company like Axis could just contract through a shipping fulfillment house and give up less margin than they’d give up to a distributor, right?

I don’t think it’s going to happen tomorrow, and I don’t necessarily think that IQinVision is setting up an end-around, but I do think online retailing is going to have a continuously bigger impact on the way this industry does business.

Speaking of end-arounds, keynoter Rocky Bleier wasn’t bad yesterday, and the A/V set up was probably the best I’ve ever seen at a security event:

rocky bleier at ESX 2010

His message was kind of rambling and didn’t have a whole lot to do with security, but he told a bunch of funny stories and he had a crazy, sibilant, loud way of speaking that was more than a little entertaining. All the old-time security guys were buzzing about the way he called Terry Bradshaw a pea-brain. I can tell you the association honchos also got a major kick out of being allowed to put on Rocky’s Super Bowl rings. They were like little kids at the ribbon-cutting ceremony where it happened. Good for them. I would have liked to wear one of those rings, too.

Finally, there is Pittsburgh. If you’ll remember, I was an early proponent of the city when ESX announced they were coming here, and if this picture from the beautiful ballpark they have here doesn’t make you want to come, I don’t know what will:

the view from PNC Park at ESX 2010

Add in the fact that you can drink Yuengling at your seats, and that great seats can be had on StubHub for $25, and that the Pirates are entertainingly bad (6 errors!), and you’ve got yourself a recipe for a damn good time.

Just look at how much fun Dan, Martha, and I were having:

Dan, Martha, Sam, at PNC for ESX 2010

Clearly, not too much fun, though, as here I am blogging away at, well, now 8:30 a.m., but it took me a while to write this all, you know. And I can guarantee you I’m up earlier than a lot of those club crawlers…

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Comments

<p><span style="font-size: x-small;"><span style="color: rgb(153, 153, 153);">June 25th, 2010 at 1:58 pm<br />
</span></span>[...] Every show needs an identity, right? Something that separates it from the myriad industry events that populate the landscape? ESX may be getting there. Maybe first and foremost, there is the Club Crawl. Is it a little ridiculous that a large industry event would define itself with a frat-party-like atmosphere on the first day of its show floor? Maybe. Do people seem to really, really enjoy themselves at this Club Crawl. Hell yes. FULL STORY [...]</p>
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<p><span style="font-size: x-small;"><span style="color: rgb(153, 153, 153);">June 22nd, 2010 at 3:36 pm</span></span><br />
And anyone who wants a Macbook can just go to Apple.com and buy one, yet my Apple department somehow manages to sell a boatload of them every week. So why do people shop with us? Beats me. Possibilities: massive selection, good customer service policies that have evolved over 25 of selling high end electronics to end users, aggresive pricing.<br />
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Personally, I think it&rsquo;s great that IQeye has an estore, but they&rsquo;re betting on a customer who wants to do IQeye end-to-end. Not a lot of wiggle room there if the customer wants to buy cheaper cameras for lower priority areas. Still, I bet they pick up customers they&rsquo;d never have access to otherwise just by being accessable.<br />
It&rsquo;s interesting that Fredrik Nilsson is sceptical. Axis is the rare &ldquo;name brand&rdquo; in the surveillance space, and customers will demand Axis product even if that means jumping through hoops, and going through mulitple layers of distributorship at the channel. I get RFQs specifically stating Axis (or Pelco or Honeywell or whatever), but never specifically stating IQeye.Axis can afford to remain aloof and ignore the possibilities inherent in direct distributorship over the web. IQeye cannot be picky.<br />
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Would a customer ever pick IQeye over Axis? Maybe, maybe not. But add IQeye&rsquo;s estore into the equation, and suddenly IQeye becomes more attractive than Axis to a certain type of customer. The question then becomes, what happens to Axis when enough manufacturers follow IQeye&rsquo;s lead? Will Axis still be relevant? I hope so, because they make a terrific product.</p>
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<p><span style="color: rgb(153, 153, 153);"><span style="font-size: x-small;">June 22nd, 2010 at 12:07 pm</span></span><br />
But Ari it&rsquo;s not whether you can buy it over the Internet or not. It&rsquo;s whom you can buy it over the Internet from. You, yourself, are a distributor. You don&rsquo;t make the cameras, etc., you sell. You buy them from someone else, add some value (essentially, you), and then resell those products to other people (sometimes they, too, are resellers).</p>
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<p>The channel breakdown I&rsquo;m talking about screws you out of the picture, too. The cameramakers cut you out of the equation entirely and sell through their own web sites, completely ignoring the distribution web sites, etc. That&rsquo;s what IQ&rsquo;s done. You want an IQ camera? Go to their site, give them a credit card, watch it appear on your doorstep. That&rsquo;s the new and different here.</p>
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<p><span style="font-size: x-small;"><span style="color: rgb(153, 153, 153);">June 22nd, 2010 at 11:02 am</span></span><br />
The channel has already broken down. There is literally nothing you cannot now buy online (seriously, I dare you to find me something that someone, somewhere, won&rsquo;t sell to anyone with a credit card and a US address, ITAR 22 be damned).</p>
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<p>Adapt or go out of business.</p>
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<p class="comment_author"><span style="font-size: x-small;"><span style="color: rgb(153, 153, 153);">June 22nd, 2010 at 8:37 am </span></span></p>
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<p>Sam,<br />
You asked &ldquo;Seriously, though: Is this the beginning of the breakdown of the channel?&rdquo;<br />
I would say that it is. The distributors that adapt will survive, while those that stagnate will eventually fail. Every industry in the world has had to evolve because of the onslaught of the Internet. Anyone that thinks our industry is immune may be in for a surprise.</p>
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<p class="comment_author"><span style="font-size: x-small;"><span style="color: rgb(153, 153, 153);">June 18th, 2010 at 10:23 am </span></span></p>
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<p>Hi Sam,</p>
<p>Hope you are doing fine and that Pittsburg treated you well!</p>
<p>Glad to hear that ESX went well &ndash; we&rsquo;re obviously excited about the RMR potential for our partners with video hosting and monitoring. I caught the second half of your post a few minutes ago and wanted to make a quick comment regarding your assessment of IQinVision&rsquo;s e-Store and how it could signify a breakdown of the channel.</p>
<p>While we all agree that many channels are going to a more direct sales low cost model (e.g. buying books from Amazon, or laptops from DELL, etc), we think that whether that channel model is efficient or not depends on what kind of product and/or service is being sold. As Larry said during your conversation shortly after ISC West, Axis firmly believes that the best way for us to succeed and deliver a complete surveillance solution to our end-customers is to stay true to our channel partners. Our distributors and integrators really bring great value to the end users by ensuring that they get the properly designed, installed and maintained system tailored to their needs. That means security departments and business owners will be better positioned to take advantage of all the additional benefits that only network video can deliver. In the end, happy customers with help grow IP installations &ndash; so we all win.</p>
<p>Another point that might be overlooked here is that, by working through a distributor, integrators will be in a much better position to offer (and sell) a complete, integrated security solution that includes access control, alarm systems, network, storage hardware, and have ample availability and staging of products when they need it. At the end of the day, main reason Axis partner with distributors is that all the value they add (e.g. education, inventory, bundling, credit to resellers), they do much more effectively than Axis could, hence bringing value to our shareholders. Same reason we do not want to do our own shipments, FedEx is pretty good at that</p>
<p>It is all about partnering and focus on what you do best; our partners remain focused on shipping, stocking, site evaluation, installation, and service, so that Axis can remain focused on what we do best: manufacturing high-performance network video products with exceptional image quality, scalability and intelligence.</p>
<p>/Fredrik Nilsson, Axis Communications</p>
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