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On the Editor's Desk

by: Martha Entwistle - Tuesday, November 27, 2007
might decide I have thoughts on this later, but for now, check out what the New York Times has to say about the slow-moving Registered Traveler program.
by: Martha Entwistle - Monday, November 26, 2007
Once you start looking into this kind of thing, you see it everywhere. I've been harping on guards (especially those employed by alarm companies for the purpose of pre-police response) being armed, and the possibility for mistaken killings that could lead to tragedy along with public relations disasters. This doesn't appear to be one of those cases, but it's indicative of the type of situation that would be better handled by the police, for a variety of reasons. Basically, a guard noticed something fishy, entered a vacant apartment, encountered two thieves hiding in a closet, got attacked with a power saw, and killed one of the thieves, allowing the second to escape. That's all well and good, and I'm pretty confident that the guard was justified in defending himself against what was probably a drug addict desperate enough to do just about anything to escape, but these paragraphs give me pause: Indianapolis-based Trinity Security had given a security guard who shot and killed a power-saw-wielding intruder at an Eastside apartment this week about four hours of general guard training and at least another two hours of specialized firearms training. That is more training than required by the state. Wow. Six whole hours of training? I'm not sure which is more scary, that a guy is working with a concealed weapon with only two hours of weapons training or that the state of Indiana doesn't require more training than that. And I'm not really scared for the potential thieves the guard might encounter, rather for the guard himself. Poor aim, poor handling and cleaning of the weapon, any number of factors could lead him to real harm in a future confrontation. Maybe in this situation the thieves were a total surprise and there wasn't opportunity to call in police who would have had second and maybe third officers ready for backup, to possibly both disarm without deadly force and catch the fleeing second man, but I'd much rather have representatives of the people killing criminals than private security guards. Dying for copper just seems so sad and pathetic and police officers have extensive training on when and where to use deadly force. It's possible a death in this case could have been avoided. In the case of a vacant apartment, there are definitely portable and temporary cellular-based intrusion systems that could be used to set off an alarm when the thieves enter and send a signal back to a central station, which could then dispatch police to the scene. I doubt that would be much more expensive than a contract guard, and it would certainly avoid situations such as this one, where a young guard making less than $12 an hour, and still enrolled in school, now has a death on his conscience.
by: Martha Entwistle - Tuesday, November 20, 2007
Here's reason #354 why I should never have been handed the keys to a blog: A prolonged rant on compliment/complement. This particular rant has been triggered by a release posted by Imperial Capital, an investment bank that just bought another investment bank, USBX (one of their four vertical interests is security). Here's the offending sentence: "The addition of the USBX team is the perfect compliment to our existing professionals and will increase our M&A capabilities and expertise. So, basically, the deal is a way of saying, "good job," to the existing professionals. "Hey, guys, you've done such a nice job with that whole merging and acquiring thing that we're going to go out and buy another banking firm. Sound good? Good." Why is this particular homonym pair so difficult for people? I even recently discovered that if you google "compliment" and "deal" (don't ask why I was doing that) it returns pages with the word "complement" as well. And vice versa. I find that to be messed up. It's wrong in press releases more often than it's right, I'd swear. (It's ironic that USBX CEO John Mack is quoted using "complementary" correctly later in the release.) For reference, here's the Oxford American's explanation of the conundrum: USAGE: Complement and compliment (and the related words complementary and complimentary) are frequently confused. Although pronounced alike, they have quite different meanings. As a verb, complement means 'add to (something) in a way that completes, enhances, or improves,' as in: Janet's new necklace complemented her pearl earrings nicely. Compliment means 'admire and praise (someone) for something,' as in: They complimented Janet on her new necklace. Complementary means 'forming a complement or addition, completing,' as in: I purchased a suit with a complementary tie and handkerchief. This can be confused with complimentary, for which one sense is 'given freely, as a courtesy': You must pay for the suit, but the tie and handkerchief are complimentary. Try not to hate me.

by: Martha Entwistle - Monday, November 19, 2007
Well, it looks like the rumors and speculation had merit: Panasonic has made a formal offer to purchase Sanyo. Not surprisingly, the WSJ doesn't mention either company's security divisions, as they are small pieces of a very large puzzle, but I found this paragraph particularly interesting: For Panasonic, the deal comes down to Sanyo's green technology products. Sanyo, the world's largest producer of rechargeable batteries for laptop computers, digital cameras and mobile phones, is poised to capitalize on the auto industry's shift to hybrid and electric cars. Maybe people remember Sanyo's solar-powered "green" cameras at IFSEC 2007? I'd of course love to see Panasonic embrace green practices in the security industry as part of this greening of the company in general. Still, this deal isn't exactly done yet: Panasonic said it will commence by the end of February a tender offer for Sanyo shares at ¥131 ($1.50) each, a 4% discount to Sanyo's Friday closing price of ¥136. Panasonic plans to issue up to ¥400 billion in debt from next year to finance part of the acquisition. A lot of things can happen between now and February.

by: Martha Entwistle - Sunday, November 18, 2007
On Oct. 25, I wondered about the wisdom of advocating for armed private guards as the appropriate first responders to burglar alarms. Lone Star Security Regional Manager Bruce Boyer asked: Why have high-trained, highly-skilled police officers responding to burglary alarms when their time could be put to much better use? Then offered this nugget: The gun stays in the holster and only comes out when an officer faces deadly force. And that deadly force must have the ability to deliver it against an officer or customer, said Boyer. "If the deadly force is across the street holding a knife, the gun stays in the holster," he said. "Our job is to investigate alarm calls. If there's criminal activity, we call the cops. We are not Rambo." I was pithy at the time and said, "Well, not only are you not Rambo, you are also not a police officer. Let's hope deadly force is never used, but it's hard to rely on hope in that potential situation. ... What happens to a community when a private security company shoots a kid reaching for a cell phone? If a police officer does that, it's one thing. In this case he was placed on leave. I think it's a very different situation if it's a private security officer, where the city doesn't have recourse and the company is not accountable to the citizens." Well, look at the response to this police shooting today. Would you want this photo to have your yard sign in the background? I'm thinking not.
by: Martha Entwistle - Friday, November 16, 2007
While our December issue content is still a week or two away, you can check out our December source book, covering access control and biometrics, right now, right here. It's easy to put up, because all we do is post a pdf, which you can download or print out. Eventually, we'd like to get the product grid working online so that you can quickly search for which companies make which stuff, but that ain't happening yet. Also, for those of you who are wondering why your company isn't listed, here's how we put together the product grid: First, we make up a survey that we host online. Second, whichever of our papers is running a particular source book first, in this case Security Director News, sends out an email to every company we know of in the marketplace, using both our editorial and sales databases of email addresses. Yes, people quit and we don't know and emails get sent to nowhere. Yes, our emails sometimes get caught by spam filters. These are things we can't help. It's impossible for us, with our current staffing, to either individually call every company or to send individual emails. Further, it is a fact that most of you manufacturers don't return our calls anyway, for reasons we're not clear about, unless you've already sent out a press release. So, what you can do to make sure you're included in the future: 1. When we send you a survey, fill it out. 2. Add our email addresses to your "not spam" list. 3. When a product marketing person quits, make sure their email stays redirecting to a new person for at least a year (a pain, I know, but then again I'm still getting Chelsie Woods' emails, and she quit more than 16 months ago - I still get 10 emails a day from marketing people, often people I've spoken to recently, addressed: Hi Chelsea (because they apparently think Chelsie not only still works here, but also spells her name like the part of London)). Dear integrator readers, if you have suggestions to make the source books better, leave them under the comment button below.

by: Martha Entwistle - Thursday, November 15, 2007
The mainstream press is finally coming around to the fact that security companies exist. A couple weeks back, American Alarm got a glowing write up in the Boston Globe (check the archives), now Stanley Works gets a write-up from their home-town paper, the Hartford Courant. The general tack is that, hey, Stanley does security now, as message that Brett Brontrager said at Securing New Ground he was still having a hard time putting forward, especially amongst the investment analyst community (which lead me to wonder how good these analysts can be if they can't realize that Stanley's doing $1.4 billion in security sales, which is fairly significant and seemingly worth paying attention to). Anyhoo, this Courant article is lengthy and you might not make it through the whole thing, so let me draw your attention to a few graphs: John F. Lundgren, the CEO of Stanley Works continues to monitor Lisle, Ill.-based HSM Electronic Protection Services, which Stanley purchased about nine months ago for $544 million in cash, making it among the two largest acquisitions in the company's history. The other was French industrial toolmaker Facom, which Stanley purchased Jan. 1, 2006, for $477.6 million. HSM, which came with 50 offices, 175,000 customers and about $200 million in revenue, is seen as a key addition to Stanley's security segment because it provides security-alarm monitoring services, including video surveillance, to commercial customers. The move brings Stanley into the monitoring service business and provides a recurring monthly revenue stream that Lundgren called a missing piece of the puzzle. The automatic doors unit, Stanley Access Technologies in Farmington, was the foundation for the security division, which produced and installed doors, locks and other security equipment. "Our problem was we were taking on too many installations, period," said Lundgren, who said there isn't enough margin in that business. HSM gave Stanley a far better cost-estimating model and the "mind-set that you don't do installation without service," said Lundgren, 56. HSM enables Stanley to sell lucrative service contracts along with future upgrades, Lundgren said. "We love office buildings. They tend to pay their bills and not move," Lundgren said. "At HSM we like the business and service reputation and the management team and we like the business model. It's very service-driven and there is the recurring monthly revenue." Today Stanley's security business is $1.4 billion; of that $800 million is mechanical doors, locks and hardware and $600 million is service and install, repairs, upgrades and monitoring, Lundgren said. Does that ring any holy-crap-service-is-important bells? It's weird how everyone's finally jumping on board with this. Definitely makes Cliff Dice look smart in this op-ed from 2002 (yes, five years ago). Our editors were on top of remote video five years ago, too. I could find 100 examples if I tried hard enough. When everyone agrees that recurring service revenue is way better than living installation to installation, and that just sort of makes a priori sense, who are these integrators who are in love of the installation revenue and low margins? I don't seem to mee them very often. Feel free to use the comment button to tell me what I'm missing here.

by: Martha Entwistle - Thursday, November 15, 2007
Two of the leaders in video monitoring have teamed up as of yesterday, when Westec Interactive bought Digital Witness. Both have made digital video into business continuity plays, mostly in the retail and restaurant verticals (or maybe restaurants are in the retail vertical?), and while they are happy to talk security, they're mostly an ROI sale. Sound like anything I reported from Securing New Ground? Let this serve as a reminder that there are a number of companies out there working with digital surveillance that don't see themselves as part of the "security" industry, but aren't IT players either. They're simply security folks who don't make the rounds of all the secrurity conferences, necessarily. Go look at their web sites (here and here) to get the full picture, but these companies are definitely on board with recurring service revenue. Just look at Digital Witness' subscription model. They're getting plenty for the install, I can assure you, but then they're tacking on service/monitoring revenue of, at least, $264 per month on their basic system for a chain restaurant. Are you getting $264 a month from the last quickie-mart install you did? Our monitoring editor Leischen Stelter will have more on this deal for the newswire next week.

by: Martha Entwistle - Wednesday, November 14, 2007
Attendees here largely woke up on time to catch Jeff Kessler's presentation at 8:45 a.m. He was bullish, to put it in Wall Street terms, saying, "This is about the most positive I’ve been about the industry in a long time." His big message was that he sees the security industry finally moving from a situation where it's simply seen as a necessity, like an insurance policy, "to a situation where people need the applications that are being offered to them by the security companies." However, his brand of positivism is geared toward the performance of public companies, remember. The market as a whole could do poorly while the public companies happen to do well because of irrational investor exuberance, for instance. Just because, to quote, "the stocks that we cover, the security index, has continued for five of the last six years to outpace the S&P 500 [and] we believe those will continue to outpace the S&P for the next five years," doesn't mean the bottom line of every integrator will show positive results. Kessler generally seems to be of the belief that the large public companies, the Brink's and ADTs, will recognize the need to provide additional services, or already have, and will therefore get the margins they're looking for. "There will remain a lot of people who are satisfied being just installers," he theorized, "but you’ll have to get used to 25 percent gross margins." To get 40 percent gross margins, integrators are going to have to show customers an ROI case, or, rather, "help people save money. That is where the 40 percent margins are going to come in the integrator community. A material portion of these integrators are going to get it, the others will go out of business or be satisfied with the lower margins." This again represents optimism on Kessler's part, as this time last year he was more of the gloom-and-doom mentality that security integrators will never be able to keep up with the IT resellers entering the market and taking advantage of networking ability. Now, he's changed his tune. "I was part of the Steve Hunt camp, the Dan Dunkel camp up until the last six months," he said. "I thought there was extreme danger to almost every systems integrator, but I thnk that the IQ of intergators is going up now." Is this wishful thinking? A drinking of security conference Kool-Aid? Or reality? From my conversations with integrators, I generally agree with him, and was never as negative as Kessler was last year in terms of the impending IT takeover (remember that Kessler was just as bullish in terms of stock performance last year as he was this year - he just thought the security integrators were going to be left behind).

by: Martha Entwistle - Tuesday, November 13, 2007
Securing New Ground, right here on Madison Avenue in the Roosevelt Hotel, just couldn't be more New York. If there's a higher Blackberry density at any other security conference I'd be shocked. And it somehow seems very appropriate that the Brooks Brothers store is right across the street. Anyway, the mix of attendees is very heavy with manufacturers and financial types. I'm told this was once more of an alarm conference, where medium-sized companies came to look for buyers/buyees. Now, it's largely dominated by companies with new technology, along with a slew of high-ranking industry types from both manufacturers and integrators. Some notes: • Securitas Direct president and CEO Dick Seger was supposed to present but he was too busy being bought out. Oops. Sure does look good for Securing New Ground, though, as they've clearly identified industry players that the venture and capital world is interested in. Or maybe it doesn't look so good - if they know so much about the M&A market, shouldn't they have known their speaker would be busy today? (Sorry, that was a bad joke - I'm a little punchy down here in the Roosevelt bar, the only place I can get Internet, since the hook-up in my room is busted). • Joe Nuccio, head of ASG, and Robert Farenhem, head of Devcon, presented together, and it was kind of amusing that Nuccio had just this past Friday bought Matrix and leap-frogged Devcon in annual revenues. Nuccio seemed postively elated. Farenhem looked and spoke like a guy who just escaped a year in the bush. I think Devcon's fortunes are looking up, but it's pretty clear the last year hasn't been a fun one. • Brett Bontrager, head of Stanley's Convergent Security Solutions business, is a smart guy, without question, and has a good sense of humor, but has a way of talking where his voice rises at the end of every sentence like he's asking a question. I'm not sure why I find that notable, but I do. • Julie Donohue, head of IBM's security business, predicted sales would jump from $.5 billion to $1.5 billion next year for IBM's security offerings (according to notes taken for me by Anixter's Severin Mulligan - I was busy ironing my suit). That seems ambitious until you realize they group IT and physical security, and they are spending money like drunken sailors. • The lending professionals did not make me feel good about the economy. The basic message from Gretchen Gordon (CIT), Bill Polk (Capital Source), Ed Perry (Murphree Venture Partners), and Steve Sebastian (Nogales) was that capital is going to be harder to come by, you should be selling stuff off right now to increase liquidity, and lenders are going to expect stricter covenants going forward. "If you got a loan this spring," said Gordon, "good for you. You should keep it." • Robert LaPenta, head of L-1, leads a charmed life. Not only did he start a $500 million company from scratch two years ago, but this year he bought a horse, War Pass, for $180,000 that proceeded to win a Breeder's Cup race, among others, and is now worth $20 million. "Now that's a good investment," he bellowed. I'd be shouting, too. You can find him in Kentucky this spring, I'm sure.