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False alarm ordinance compliance push tied to utilities

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Monday, December 8, 2008
It struck me as a little odd this morning when I read that the Cordele, Ga. city commissioners had decided to add false alarm fines to alarm users' utility bills, and that failure to pay the false alarm fines would result in loss of utilities. An excerpt of the story, from the Cordele Dispatch, follows: CORDELE, Ga. According to the Cordele Dispatch, city commissioners here voted on Dec. 4 to adopt a new ordinance that will result in fees for excessive false alarms. The move comes from concerns that false alarms generated by alarm systems in city residences and businesses often lead to a misallocation of police manpower. Once the ordinance takes effect on January 1, 2009 alarm users will be allowed five false alarms for the year. Any false alarms past five will result in the user being charged a fine. The sixth and seventh false alarms will carry a $50 fine each. False alarms 8, 9 and 10 will result in a $100 fine for each. Alarm users will be fined $250 each for the 11th and 12th false alarm, and a $500 fine will follow 13 or more false alarms. Fines will be added to the utility bill of the user. Failure to pay fines will result in loss of utilities. The ordinance extends to churches and schools as well as residences and businesses. Alarms installed on motor vehicles, fire alarms, domestic violence alarm, or alarms designed to elicit a medical response are not covered by the ordinance. Users will be required to fill out an application and register their alarm systems through the Cordele Police Department and pay a registration fee of $10. Anyone failing to register an alarm system will be fined $100. Now keep in mind, I live and work in Maine, where right now it is a crisp 20 degrees out. It seems kind of scary to me that the city could take away my utilities, my heat, even though I've paid my obscene oil bill. Don't get me wrong, I know that the city needs to recoup losses due to excessive false alarms, and attempt to implement some sort of system to hopefully encourage people to make sure their systems work properly, but messing with people's water, electricity or heat seems a little over the top to me. Well, I guess that's one more reason to be sure your alarm systems are registered and in proper working order.

G4S eyes Brink's, Garda

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Monday, December 8, 2008
Though it's a little more interesting to the folks on the armed-guard/cash-handling side of the business, take note of this Bloomberg article saying G4S considers Brink's and Garda World possible acquisitions. If nothing else, it shows G4S, the second biggest security company in the world, is thinking aggressively in the current down market, and it wouldn't be crazy for them to also think about aquiring a big integrator to supplement the newly expanded integration and security system services arm. If they're coming to the Americas, don't expect them to come tentatively. G4S has spent more than 530 million pounds ($788 million) this year on acquisitions, including the U.K.-based prisoner transport company Global Solutions Ltd. and war-zone security firm ArmorGroup International. Of course, in the same article, we find out: CEO Nick Buckles expects the firm to be "very quiet" in the first half of 2009.

Sneak peek of January's finance special report

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Monday, December 8, 2008
As loyal readers know well, each January we publish in the paper our special report on the financial state of the industry. Lately, it's been targeted most at the availability of capital - while there are many ways to judge an industry's health, many of them don't apply well to the security market, since there are so few public companies with open books operating here. Especially on the integration and installation side, the books are particularly opaque. However, if lenders are still bullish on the market, that speaks to the overall health of things. Lenders are generally not in the business of making loans to companies they think will fail. As money gets more expensive and difficult to get, it says the industry is less of a clearly good investment. This year is a little different, of course, since money is more expensive and harder to get no matter what industry you're in. But the fact remains that the security industry (and here I mean the traditional RMR-based security industry most of all) is seen as something of a safe port during the storm. Take a look at last year's report. My headline was "Business as Usual." My sources accurately predicted that times were getting tight, but that well-run alarm companies should be unaffected, in terms of borrowing power. This was, to some extent, vindicated by the Pro One. They managed to add to a $275 million credit facility with Bear Stearns and Lehman Brothers, by taking on another $110 million to pay off some notes, back in March, just as Bear and Lehman were totally falling apart. To quote CEO Richard Ginsburg: The fact that Pro One was able to get the deal done at a time when "the debt market is effectively closed … says a lot for our industry and for Protection One." He said, "Market conditions are particularly harsh; existing debt is trading 70 to 80 cents on the dollar … A lot of companies are having a difficult time financing anything." Things are even more difficult now, and there was general agreement that even in the alarm industry, especially as the deals get bigger, it's going to be hard to find money. Both Capital Source and CIT, big traditional lenders to the industry, have had their difficulties, to different extents, and both companies told me they're having a harder time finding partners to go in with them on large deals. There just aren't as many big lenders around with any cash. That's why many of them, CIT and Capital Source included, are looking to become, or have already become, bank holding companies, which means they can take deposits. Problem solved, right? Deposits are the cheapest of all money - they give it to you for free! Unfortunately, those lenders now come under far more federal scrutiny and have less ability to get creative with the deals they make, so their prices and covenants will come to more closely resemble the traditional bank lenders (Bank of America (LaSalle), BankNorth, and CitiGroup), and there will be less variation in the deals that are done. This could be a good thing. Conservative deals are often successful deals for both parties. However, if you've got a shaky system for reporting your finances, or are not profitable, it's going to be majorly difficult now to find any money at all. That may have always been somewhat true, but it's the gospel now. Many different people have told me that a company's best investment for 2009 is in hiring, or giving a raise to, a top-notch CFO/accountant. Knowing exactly what your books and attrition look like is paramount in finding money. Due diligence is at its recent apex. I also heard that summer model contracts are not being valued very highly by some lenders, so don't think that's the way to go. But what about the commercial integrators? Well, the same rules apply, but everybody agreed that the less RMR you have, the harder it's going to be to find money. One lender told a story about a fire installation firm using its stored up RMR as an asset to sell to finance expansion in this down economy, making it possible to enter new rebuild markets instead of being dependent on new build. Smart move. But if you don't have RMR to sell off as an asset, you're not going to find it as easy to get money for that same expansion. Borrowing to create more revenue is possible, but what are you borrowing against if you're living job to job? You better own your building. Finally, what about this talk about manufacturers struggling and maybe facing extinction, like Steelbox? John Honovich posted a partial analysis recently talking about certain manufacturers being in trouble for 2009. I agreed with this slightly more before I did much of the reporting for this story. Basically, what I'm being told is that venture capital should still be available in roughly the same quantity as before. Yes, hedge funds and VC firms are going under or going away, but many of these venture firms have already raised money for funds and still need to put that money to work. They're not just going to sit on it. They're still going to be looking for good technology that needs a cash infusion and might be a good risk. They're willing to suffer nine bloodbaths if the 10th firm is the next Google. That's the game they play. So it might not be as hard as I thought for companies to raise their next funding round in 2009. What's going to be hard is for those companies that are a little more mature and would logically make the move from start-up capital to debt funding. Debt funding is going to be hard to come by for an unprofitable firm, and even more so for a manufacturer with no assets other than intellectual property. Patent protection is going to be even more paramount, as will be staying away from what are seen as dodgy markets: retail, municipal and state spending, new construction, anything to do with the auto industry, etc. So, if these are John's criteria for evaluating the risk of a manufacturer: Growth Rate of Segment the Company is in Profitability of Company Cash Position of Company Competitive Positioning of Company's products I might just add some nuance. It's all well and good to be in a high-growth segment like IP video, but if your IP video is targeted at the retail market, like, say, an Envysion, then that might not be the same as an IP video company like SightLogix, which is targeting the federal government and critical infrastructure. Profitability will be more important as a company ages. If you're new and unprofitable, that might be okay, as venture firms might be looking for a place to put their money on a good bet. If you're older and unprofitable, you won't be able to find a loan to keep you afloat. Cash is king. There's no doubt about that. Finally, competitive positioning. In an ideal world, how good your product is and how well it solves a problem would dictate how successful you are in making sales. But if you're not cash-positive enough to invest in marketing and getting your word out, you're going to get hammered by the bigger brands with better recognition, dealer channels, distribution relationships, and more cash in the bank. Further, I think a recession is as much psychological as it is economic. If people think things are bad, they are bad, and that makes them more conservative. A conservative mindset does not help a new technology make inroads; it helps an established technology keep its foothold. So, will we see a rash of IP camera and analytics makers go out of business in 2009? The lenders I spoke with thought there'd be some consolidation and culling of the herd, but didn't think it would be dramatic. More than one said the fears were overblown. We'll see.

S2 granted patent

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Saturday, December 6, 2008
Just a little update on S2, one of the first companies to really embrace the IP-technology movement into security. They've just scored a patent for the entire architecture of their product line, which is pretty interesting. Not sure if this closes anyone else out, or is just an indication of how unique their appliance-based access control and video management is, but S2 seems to be quietly gaining some decent market share. I just interviewed them about the expansion of their customer support center. That's always a good sign - if you need a bigger customer support center, you must have customers, right?

This just in: BHS upgrades to stages

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Friday, December 5, 2008
Secure Global Solutions (SGS) just announced the installation of new alarm call monitoring software at Brinks Home Security Holdings, Inc. The software platform is called stages and is designed to improve speed of access to customer data by operators monitoring alarm signals. Approximately 1.3 million alarm accounts have been transferred to stages. I spoke with SGS senior vice president Hank Goldberg who assured me that stages would revolutionize the industry with its ease of use and interoperability. “The fundamental issues are, number one, it’s an advanced application that’s browser based. Which means that there’s only one application to maintain,” Goldberg said. “Most of the applications that have grown up in the industry are actually pieced together little bits of application and are difficult to maintain. So we have a much lower cost, which we reflect in a much lower price.” Goldberg would not go into specifics of pricing, but said that stages is “extremely cost-effective, not only to purchase but to maintain.” Despite the lower cost of ownership and maintenance, Goldberg insists that stages is not just another piece of software, but is instead a powerful new tool, allowing all user types to interact with one easy to use, Windows-like application. “It is exceptionally high-performance," Goldberg said. Look for the full story of stages' take off in the January issue of Security Systems News

CSAA moving on up!

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Friday, December 5, 2008
The Central Station Alarm Association announced recently that it was moving to a new location for the New Year. The ever busy, but accommodating Celia T. Besore, director of marketing & communications at CSAA sent me a pic of the new space, which unfortunately, will not post here. The original release is included below. The Central Station Alarm Association (CSAA) will start the new year in a new, larger office near its current location. The new address will be 8150 Leesburg Pike, Suite 700, Vienna, VA 22182. Phone and fax information remain the same. "The workload of the Association and the increase in staff to continue to offer quality services necessitated the relocation to new offices," said Steve Doyle, Executive Vice President of CSAA. "In addition, we are excited that the move to the new building allowed us to get extra space to host the Central Station Industry Museum. Given the current real estate market, it was the right time to make the move." added Doyle. CSAA's headquarters have been at 440 Maple Avenue East in Vienna since 1997.

Will it be a bad year for the big shows?

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Thursday, December 4, 2008
Any major manufacturer knows how expensive it is to have a large presence at a big show like ISC West, ASIS, or IFSEC. Not only is there the outlay for the space, but there's the expense of the booth, the set up of the booth, and the travel for all the people to man the booth. It's huge money, and in a bum economy, where people are increasingly getting their information from the web and not attending shows in the first place, that might be an expense people are looking to cut back on. We've already reported, for example, that Honeywell's presence at ISC East was much smaller, in terms of booth, than it normally is, but that they, being local, sent a large number of people to do the meet and greet. Sounds like a smart move to me. It's the people that matter, anyway, in my opinion. Now comes some interesting developments on the IFSEC front. For those who don't know, IFSEC is a huge show (30,000+) held in the relatively crap (to use a British term) city of Birmingham, England. From what I've been told (I've only been twice), it's traditionally been a very international show, but has lately turned very British and has lost a little luster in comparison with ISC West, for example. That's anecdotal - but it's pretty consistently the story I'm told. Anyway, yesterday Pelco put out the following release: Clovis, CA (December 3, 2008) — Pelco management announced today that it will not be participating in the IFSEC 2009 Exhibition but will still be hosting its annual customer party, to be held at a venue near but not at IFSEC. The company feels it prudent – given the current worldwide economic atmosphere – to withdraw from participation at the show for the upcoming year. Yeah. Pelco's not going to have a booth at IFSEC. You won't see the dancing cameras. That's huge. And the fact that they won't have the party at the show isn't surprising - the facility is in the middle of nowhere, near the airport, and there's no decent place to throw a party anyway. “Pelco did not come to this difficult decision lightly, but we feel that we can better serve and support our customers worldwide by realigning certain expenditures elsewhere,” says Pelco President and CEO, Dean Meyer. “Although we are spending less in some places – at IFSEC, for example – we are putting that investment to work in other areas that make more sense for our customers.” For example, Pelco is reinvesting into many areas throughout the company, including providing resources to broaden its HD product offerings during 2009. “This move will allow us to help redirect resources to launch our broad HD end-to-end product offering over the course of 2009, ranging from megapixel cameras of all shapes and sizes to recording and viewing solutions encapsulating H.264 compression, and third-party interconnectivity to storage,” Meyer says. “As it remains important that we support our customers from around the world who travel to IFSEC,” says Kevin Smith, Regional Manager UK and Ireland, "the Pelco party will still provide a great opportunity to connect with customers, even without having a stand at IFSEC 2009.” Great press release, if you ask me. Not hiding behind the decision, but rather explaining it in a way that makes sense. Couple this announcement with the reports that are circulating about Norbain not attending IFSEC, and you've got to think IFSEC is reeling. Not surprisingly, today I got a press release from IFSEC (damage control - I'm shocked!): London, 4 December 2008.  Honeywell, Panasonic, Dedicated Micros, HID, Samsung Techwin, JVC, IBM, Cisco, Paxton Access, Siemens, Risco, NICE, Axis, Milestone, Sony and BAE Systems have all announced their commitment to IFSEC 2009. Already, over 500 security companies and the industry’s leading brands have confirmed their attendance at the world’s leading annual security event when it takes place from 11-14 May 2009 at the NEC in Birmingham, UK. First, if any of the above companies hadn't already bought a booth for IFSEC 09, that would be devastating. But the fact that Norbain and ADI-Gardiner aren't mentioned is pretty interesting. No distributor mentioned at all, actually. IFSEC is the focal point of the industry and as such it has the support of all the major associations and media including the Security Institute and the BSIA. Norbain and Pelco will be supporting IFSEC 2009 by hosting their established networking events during the week of the show. Oh, here are Norbain and Pelco. Nice spin. They'll be "supporting" IFSEC by not giving them any money for a booth and by having a party in the general vicinity. James Blue, director of fire & security at UBM Live, organisers of IFSEC explains:  “We pride ourselves on IFSEC being an event that facilitates business and delivers real results; bringing exhibitors together with a high quantity of quality leads and branding opportunities. IFSEC 2009 is set to be another successful event with an extensive educational programme, dedicated end user and installer campaigns and the most innovative marketing activities to date.” IFSEC 2009 takes place from 11-14 May 2009 at the NEC, Birmingham in the UK.  For further information on the event and its exhibitors please visit www.ifsec.co.uk.  Companies interested in exhibiting should contact Kristan Johnstone at kjohnstone@cmpi.biz. That's the security-industry version of "let's make a deal." So, what's this mean for the industry at large? I think people - integrators and manufacturers alike - are being conservative and watching their costs, and there's no way around the fact that IFSEC is god-awful expensive to attend. The British pound has treated the dollar rather poorly as of late, cab rides are $40, a decent dinner is $100 for two, and hotels are always over-booked and under-accommodating. IFSEC might be a good show, but it's in an expensive place and it doesn't deliver much that you can't get at Essen, if you're targeting the European market, and Essen is much cheaper and only every other year. Further, ASIS admits attendance and booths were down this past fall, for the first time in years, and I'd be shocked if ISC West didn't shrink a bit, though of all the shows, it seems like the most must-attend, so it may fare pretty well. Vegas ain't cheap either, but it's a hell of a lot more fun than Birmingham. I don't think this means the era of the big show is coming to an end, but it's definitely possible that the extravagance of the big shows is coming to an end, and that most manufacturers are becoming a lot more choosy about where and how they spend their show dollars. Is anybody actually impressed or care much about the giant booths, anyway? Don't you really just want to find a person to ask questions of and make a connection with?

The good news for the security industry in tough economic times? Courtesy is free.

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Wednesday, December 3, 2008
In my recent endeavors to introduce myself to all of you I haven't yet met, and to say hello to those of you I have, and perhaps to discover that coveted bit of new and exciting news that no one else has, I found myself cold calling my way through my Rolodex.
I have been touched by the kindness, willingness to talk and courtesy with which I have widely been met. Annie Roderick of Wayne Alarm, for example talked to me for a while about SSN's new ssnTVnews section of our site (by the way, if you've got a camera, start generating some clips, and send them over to our fearless leader Sam Pfeifle). Andy Stadler also chatted with me for a piece about the goings on at Security Partnerss. Andy provided me with this pic of Security Partners' new central located in a refurbished railroad warehouse.
I thoroughly enjoyed my talk last week with G4S's Jerry Cordasco, who though I inadvertently called him on his cell phone during lunch, was nonetheless friendly, informative and, yes, courteous.
I had a wonderful, friendly conversation today with Mel Mahler, Tom Szell and Lela Mullins from ADS Security. We talked for a while about all the awards they won at the First Alert Professional Convention held from November 13 through 16 at the JW Marriott Grande Lakes in Orlando, Fla.
Unfortunately, even though courtesy is a free, though priceless commodity, some people just fail to see the value of "please," "thank you," "you're welcome," or even "good bye" before hanging up on you. I've called San Antonio-based Dispatch Center, Inc. a couple times now, just to say hello and see what was going on. The first time, I got connected eventually to Stephen Harper, who was, at least, friendly. This time there was no Stephen available to let me down easy with a "nothing new going on." On both occasions, I have had the great misfortune to have to first deal with a guy named Ray. Today, after asking me, "What do you want?" he actually hung up on me as I was asking if Stephen had vociemail. And that was, unfortunately, before I could tell him to "have a nice day." So, have a nice day, Ray.
Now, I'm sure that we're all very busy and far too important to talk to the press, but are we really reduced to grunting out aggravated questions like imperatives? Is it really necessary to hang up on people, Ray?
My point is that courtesy is free, and earns you the admiration and respect of your peers, including the press who report upon you. Doesn't that make the worth of courtesy incalculable?
Just a thought. I welcome comments.

Is Nokia eyeing the security market?

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Wednesday, December 3, 2008
An interesting story from the Continent today, showing that Nokia may soon be a player in the security marketplace. It's starting out with a collaboration with an energy company to help people control their heating (it's a Finnish company - heat's a big deal there) through the Nokia Home Control Center, essentially a wireless router on steroids, but the article goes on to say that Nokia feels other third parties will integrate with its box, including security manufacturers: The smart box is based on an open Linux-based platform and includes a raft of wireless technologies which allow users to connect remotely via a PC or smartphone. It is envisaged that third parties will integrate their own services as Nokia vies for a slice of the "networked home" market. It packs 6GB (gigabytes) of storage, necessary if it is to act as a store for video from security cameras. First: Wow. "It is envisaged"? That may be the most passive sentence starter I've ever witnessed. Well done, anonymous BBC writer! Second: What the article discusses isn't all that different from what a Honeywell Total Connect, DSC+Life|Ware, or GE Home Technology can do, but it's interesting that a mobile device maker is trying to get hardware in the home. With competition heating up and mobile device makers struggling to keep their profits up, security might be an area where more of them try to make hay, whether it's the iPhone pushed as a video surveillance key, or smart-phones pushed as the center of your digital universe, including your security system. Regardless, it's more indication that mobile is king, and if you can't offer your customers access to their system via their mobile device, that's going to increasingly be a problem.

Shape up security

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Tuesday, December 2, 2008
If Somerville can shape up, the security industry has definitely got a shot. A few days ago I wrote about the woes of Santa Monica, Calif. where so many people are exercising and making so much noise that the neighbors complained and the cops had to get involved to limit the exercising. (I know, big problem!) Look what's happening here on the other coast: Somerville, Mass has become "Fit City" according to this story in today's Boston Globe. Somerville is a city next to Boston, borders Cambridge actually. I lived there for a while way back in the roaring 80s. At that time, Davis Square was a place for 20-somethings to find a cheap triple decker, not the hipster hangout it has turned into today (home of Axis Communications execs among others.) But who knew it would turn into Fit City? And guess what? the city of Somerville, in collaboration with charitable organizations and Tufts University is encouraging this "Shape Up Somerville" initiative. And it's becoming a model for other communities, from the story: "We want the default behavior, the behavior that requires no additional money or significant effort, to be the healthier behavior," said state public health commissioner John Auerbach. "How do we achieve that? By making sure schools have healthy lunches in the cafeteria. Working with employers to create healthier work sites. Make it easy for people to walk or bike to school or stores. To do that means mobilizing a community, and that's what Shape Up Somerville has done." Some one tell me that there's a Shape up Security initiative out there.

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