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TLAs and a history of the industry

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Tuesday, October 21, 2008
Hello to all. I'm the new associate editor here at SSN, taking over the monitoring beat from my predecessor, Leischen Stelter. While I've had lots of experience in journalism, in general, I am fairly new to the security systems industry and have been enjoying the opportunity employment here has given me to learn new things. Like acronyms. You guys have lots and lots of acronyms. I like a good TLA as much as the next guy, but you guys have the CSAA, the NBFAA, the SIA, the NAAA, and the MAMA as well as all kinds of AHJs who frequent the meetings of the IACP, the NACP, the IAFC, and the NASFM. Thank you Celia for your index of security industry acronyms. It has saved me more than a few times! Recently, while doing some research and making some calls to introduce myself and discover any newsy developments at various central stations, I came across this story about what can only be described as some half-hearted attempts at ecoterrorism in Dawson Creek (no, not Dawson's Creek), British Columbia. Don't get me wrong, when I say "half-hearted," I'm not suggesting that the terrorists in question should try better next time. I'm saying that if you've got a complaint with something going on in your community, go to the town meeting and leave the homemade bombs alone. In my mind, any act of violence that purports to champion a cause only creates from the resulting turmoil many more critics of said cause than there were in the first place. The story mentioned that Murphy Oil Company, Ltd., "is drilling wells and building a gas plant about 30 kilometers southwest of Dawson Creek." I called Murphy Oil Co.'s vice president of business development Cal Buchanan, who in the story said that Murphy may "hire a security company to monitor the remote areas." Buchanan told me that so far all Murphy Oil was doing was checking with locals to see if anyone could, in an unofficial capacity, be hired to drive by operation areas regularly. Well... wasn't it most likely a local who perpetrated the bombings in the first place? As I said in the first graph above, I'm no expert... Another interesting thing I came across during my cold calls and emails was this section of Wayne Alarm's site. I called up Wayne Alarm's central station manager Annie Roderick who was nice enough to talk to me a bit about the industry and about Wayne Alarm's Antique Corner, a veritable museum of all things security industry. Wayne Alarm is based in Lynn, Mass. Any city with the tag line "Lynn, Lynn, the city of sin... You never come out the way you went in" has earned the right to be a mecca for industry history buffs, I guess. Wayne Alarm will be hosting CSAA's Fall Operations Management Seminar, taking place in Peabody, Mass. at the Boston Marriot Peabody Nov. 9-11. Annie assured me that anyone in the area for the event wishing to stop by for a tour of the Antique Corner will be more than welcome. Please feel free to drop me a line any time with any comments or suggestions or exciting goings on in the world of security.

There's a new blogger in town

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Tuesday, October 21, 2008
Steve Weller, the CIO of SightMind, sent me over a link to his new blog. Thus far, it's only got the one post, which is just about as aggressive as you'd expect from a company that thinks it will soon have 60 percent or so of the IP video installation market share. Basically, it posits that the IP video market is in its infancy and therefore ripe for the plucking and dominating, with six reasons: 1. Nobody Is Doing It Need water? Call a plumber. Need power? Call an electrician. Need phones? Call a phone company. Need a network of cameras installed with networking, storage, server, internet connection, and sophisticated software that has to to work reliably 24/7 for five years in any weather? It sounds like an IT job, but they don't know about cameras or video surveillance software. The people who can pull the wires and climb the ladders would do a good job, but they don't understand networking. And the security companies are still trying to sell me analog CCTV as part of a packaged solution. This is the mantra that's been pushed on me ever since I entered the industry about three years ago, but no one seems to acknowledge that it's less and less true every day. Yes, there are still a number of traditional alarm companies who aren't interested in IP systems - because they never did CCTV in the first place. They're alarm guys. If you want a home alarm, you call an alarm guy. But, if you call Diebold (a pretty dang big company with a recognizable brand) or Stanley (same) or Convergint or Adesta or Navco or just about any PSA member or a host of other pretty large national integrators, I think you can get the system you're looking for, no sweat. Are there still issues with IP cameras outdoors and in low-light? Sure, some. But why is it verboten that you put a decent analog PTZ camera outside and put an encoder on the back end as part of your networked system? Just because it's an IP system doesn't mean every camera needs to be an IP camera. If you're telling yourself right now that all traditional security integrators suck at IP, I think you're going to be surprised when you don't get the market dominance you're looking for. 2. Everybody Is Doing It Search the internet and you'll find security and alarm, networking systems integrators, communication specialists, access control installers, electricians and structured wiring, analog CCTV product companies, even the spy gear stores and HVAC contractors. They're all selling IPVS solutions as extensions to their existing business because they have a truck and a ladder and customers are asking for it. Good luck with that. Yep. Because IP's so hard no one can do it. 3. Nobody Has Heard of Them With such a diverse selection of installers, none gets a consistent or wide enough reputation to carry much weight. Plumbers and electricians are pretty interchangeable because they all do most things, but that's not the case with IP video surveillance installation. Even if I do find the right installer (and they happen to be close enough) there's a good chance that my job will be too big, too expensive, too technical, or won't get finished. Where's the nation-wide brand with a fleet of installers and a five-year warranty? I guess there's some truth to this, but ADT might beg to differ. They're a pretty ubiquitous brand. I think they might have advertised at the Super Bowl. Still, the market hasn't developed to the point that there are two or three totally dominant players yet, I'd agree. But with Stanley, especially, making such a hard push, I'd guess they're doing national mainstream advertising for security pretty soon, and Brink's might not be far behind, now that they've spun off and are talking about their commercial focus. 4. No Industry Standards Will this work with that? When I need more cameras will they work with what I have? If I spend more, will I get a better picture? How long will that work reliably? How many of those lights do I need to get a picture like this? They said that it would record ten days of video, but if I do the footage is too grainy to see anything. Snow? Of course we get snow. Is that why it's fogged up? Wrong bracket? Again? No we don't stock those, they have to be special-ordered. Again, I'd say five years ago this was a major problem. Today, not nearly as much. 5. Way Too Many Products There are 6000 companies making IPVS products. Can anyone really be making a decent profit with that level of competition? With only so many surveillance situations that need to be addressed it should take several hundred market-leading, high volume, low cost products from just a few manufacturers to cover 80% of the market, but instead there's a dizzying array. I completely agree with this. A bunch of IP video companies are going to go out of business. That market isn't mature, but that doesn't mean it's in its infancy. 6. Form Still Follows Function At a certain stage in its evolution, all technology becomes fashion. IP video surveillance technology isn't anywhere close yet -- not even a choice of colors. It will take high manufacturing volumes and commoditization before manufacturers seek new ways to differentiate their products and we enter this phase. Eh. TVs are still pretty ugly, if you ask me. Stereo components are still all black and ugly. Only the iPhone is at all styley, and that's still pretty plain. You should see how ugly the phone on my desk is and landline phone technology has been around for quite a while. Smartvue and ioimage make some good-looking cameras. I don't think this argument holds any water at all. I guess this is all semantics anyway, and I'm not sure why I spent so much time on this, but you get my drift. I think there are a lot of negative nancies out there, many of them with IT backgrounds, who want to slag the security industry with a broad brush of dinosaurism (how's that for some mixing of metaphors). In my experience, there are plenty of forward-thinking and intelligent integrators who are doing just fine, thank you, in the new era of IP surveillance. Is it in its infancy? No. That implies an industry that simply can't do anything (I've had infants pretty recently - they're just about worthless except to look at). I think the IP video industry is solidly in kindergarten and maybe even in the second grade or so, and I think that's worth acknowledging, rather than engage in hyperbole. Still, good to have someone like Steve around now to stir things up a bit. That's always a positive, in my book. Plus, he pointed out some bugs in my blog that will make everyone's experience better. Thanks, Steve.

Another email exchange about the election

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Tuesday, October 21, 2008
Here's another good email exchange resulting from my (tepid) Obama endorsement. It's a good one, I think: On 10/21/08 9:57 AM, "Michael Boyle" wrote: Sir I read your editorial today endorsing Barrack Obama for president. What I fail to understand is your premise that because we are spending billions in Iraq, we should vote for someone who will get us out of there post haste for political reasons, not international relations or logical reasons. I have no quarrel with you that we shouldn’t have gone to Iraq, nor should we stay any longer then absolutely necessary, but to choose a candidate because he wasn’t the one who put us there is somewhat like jumping off a cliff because you don’t like the view. The Obama administration is under the mistaken impression that people like me (small business, 3M per year revenues) are rich fat cats that don’t pay their fair share. 45% for estate taxes? How about the fact that those estate monies represent monies for which taxes have already been paid? Mr. Obama will repeat the often past practices of every politician. He will chant all of the things that make everybody happy and then go on some alternative agenda. Mr. Bush did this to our detriment, why do you think Mr. Obama is so special he won’t do exactly the same? At least John McCain offers some straight talk in a political arena known for deceit. Michael William Boyle Investigative Consultants International Westfield, New Jersey 07090 www.icinj.com From: Sam Pfeifle [mailto:spfeifle@securitysystemsnews.com] Sent: Tuesday, October 21, 2008 10:48 AM To: mboyle@icinj.com Subject: Re: Obama for President? Hi Michael, Well, you and I agree on the tax issue, and I put that up front in the editorial, so I’ll just address your point about the war spending and political motivations. We didn’t get into the Iraq War by mistake, regardless of whether they really believed that Saddam Hussein had weapons of mass destruction. I believe that the Bush-Cheney-Rove American Exceptionalism doctrine – essentially, we have the right to interfere in foreign countries because we are the world’s superpower - is what got us into the Iraq war, and I am concerned it will get us into a war with Iran as well. As Obama fundamentally disagrees with that doctrine, and McCain agrees, I think they have a fundamentally different approach to foreign policy. I don’t think it’s just political posturing on Obama’s part that he will get our troops home faster, and will be less likely to engage our military overseas and therefore spend far less on foreign engagements. I understand your cynicism about politics, believe me. I find myself disbelieving just about everything that comes out of a candidate’s mouth. One emailer told me I was naïve to think I could even endorse on the basis of what the candidates laid out in their platforms and positions. I was better off voting on “character” and “experience,” he told me. Well, if we’re ever to return accountability to politics, I think we have to start taking candidates at their word and then holding them accountable to those words. Why is McCain offering straight talk, but you implicitly believe Obama is lying? McCain has vastly changed his opinions since the start of the campaign, whether it’s with taxing medical benefits or offshore drilling. Candidates try to get elected by telling different constituencies what they want to hear. I can’t say that McCain is any different than any other recent candidate in that regard. If Obama fails to deliver on his promises, we can vote him out in four years. How in the world we gave George Bush another four years after his performance is beyond me. Thanks for reading, and thanks for your feedback. Sam On 10/21/08 11:06 AM, "Michael Boyle" wrote:  Sam At no time did I mean to infer that Barrack Obama was lying. I think both candidates bend the facts and their stances as you suggest. I also agree that we lack what I refer to as “statesmen.” People who have a genuine policy outlook that is beneficial to the integrity and continuation of the American dream. Frankly, I think good people don’t run anymore, because they don’t want to get involved in the double dealing and duplicity that goes on every day in Washington (I apply this to both sides of the aisle.) I appreciate your note back. I think what is remarkable is not where we disagree, but where we agree that no present candidates address what this country really needs. Some fiscal responsibility mixed in with some global appreciation for the world we live in………….. Best regards. Michael William Boyle From: Sam Pfeifle [mailto:spfeifle@securitysystemsnews.com] Sent: Tuesday, October 21, 2008 11:14 AM To: mboyle@icinj.com Subject: Re: Obama for President? Michael, On that we can certainly agree. We don’t have a great choice before us. By the way, I’ve been posting some of these back and forths I’ve been having via email to my blog. Would you agree to have this back and forth posted? I think it’s a good one. Cheers, Sam On 10/21/08 11:06 AM, "Michael Boyle" wrote: Absolutely, post as you see fit. Michael William Boyle

Sad news from Prague

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Monday, October 20, 2008
The main Prague exhibition hall and convention space has burned to the ground. It was a beautiful space, in its own Eastern European/Gothic way. I attended Pragolarm 2007 there. It was about a 150-booth show with a lot of good attendees. Guess they weren't up on the latest sprinkler technology.

The final word on Essen

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Thursday, October 16, 2008
If there's one thing I can say about the Germans, it's that they're efficient. Not only does their public transportation work incredibly well, but they're somehow able to put out a five-page final report on their security shows (that's not a direct link - you have to go there and download it) not more than a week after the show ends. The numbers are impressive. 1,100 exhibitors, 40,850 "guests" (this includes exhibitors), visitors from 115 countries. And they break down the guests, too: roughly 10,300 were "constructors of security installations" (the Germans: so precise), 6,400 were "members of the industry" (I'm guessing those are the exhibitors), and about 4,000 were "resellers." You have to remember that Essen also allows in the general public, so there's a big number of "guests" that you or I might not care about at all, and, in general, there are a number of exhibitors that you wouldn't find at either an ISC West or an ASIS: the Russian ministry of defense trying to sell you armored personnel carriers, lots of protective glass companies, weapons manufacturers. Since it's kind of a blend of ISC and ASIS, you can see why it would be bigger and more diverse. IFSEC is comparable in scope, just a little smaller than Essen in terms of booths and attendees. Anecdotally, I've heard that IFSEC was for a long time thought of as more international, and Essen more German/Continental. However, this go round, a number of people mentioned Essen seemed more international, while IFSEC was very British, and people continue to express a growing and white-hot hatred of Birmingham, where IFSEC is held. Not only is Birmingham absurdly expensive (much worse than Essen, or Dusseldorf, where I stayed), but it's also just kind of an ugly industrial city with little to recommend it and there's not much close by. At least Dusseldorf is one of the financial and shopping capitals of Europe, with the "longest bar in the world," to boot. A number of people I spoke with were staying in Dusseldorf. Further, Essen just felt busier in its middle two days (it's a four-day show) than ASIS or ISC West did this past year. The booths were piled right up on top of one another, and the aisles felt very cramped and bustling. Other than maybe the middle day, I thought ASIS felt deserted at times, while ISC West was so-so. I book a lot of appointments one on top of another, and I always judge the traffic by how rude I have to be to get from one place to another in a short amount of time. At ISC and ASIS, I didn't have to be that rude at all. I just walked fast from one place to the next. At ESSEN, I was constantly apologizing for cutting people off and trying to slip through them, etc. This may be a result of tighter aisles and simple layout, but you can take that for what it's worth. But what about the content of the show itself?, you're asking. Well, it was a good reminder that North America is not the center of the security world. Big U.S. players in the IP video space, like Genetec or IQinVision, were relegated to the outskirts with fairly small booths, while any number of German and European IP video companies had huge booths and presences. Mobotix, Dallmeier, Basler, and Videotec all caught my eye as big companies that you don't hear from much here. All of them expressed an interest in selling into the U.S. in a much larger way in the near future. Even a company like HID, which normally dominates the show floor stateside, was kind of in a weird little corner at Essen. I was surprised. Also, this place was incredibly well organized for attendees. Check out this classification system, coded to the halls of the exhibition. It's like a Dewey Decimal system for the security industry. As for the integrators that were exhibiting, Niscayah and ADT seemed to be in competition for the biggest presence. Niscayah had a strange marketing device going on with an unshaven guy who looked a little like House pictured under the word "Wow," and then some language about "the whole system." And there were these poor schlubs walking around the show floor in suits with this guy and the word wow jutting up over their heads on a sign they had strapped to their backs. I'm sorry I didn't get a picture of it, but I was having some digital camera difficulties. Anyway, I wasn't getting it. I guess the Wow guy was supposed to be an end user who was psyched that Niscayah could deliver the whole system without any outside help, but if I was an end user, I wouldn't want to be thought of as quite that disheveled. But maybe disheveled is "in" in Europe right now. Who's to say? ADT was bringing its familiar North American brand to Germany and emphasizing, similarly, that it could do everything from your fire to your voice evac to your security. They had a good presence and a hard-to-miss booth, but nothing as adventurous as what Niscayah had going on. I've already detailed most of my booth visits previously, so I'll leave you with a couple of thoughts on people I checked out, but didn't actually interview: Nedap - they have what they're touting as a "universal controller," basically a panel you could use to control anything from alarms to access control to fire. It seemed pretty revolutionary. These guys said they'll be in the U.S. next year. Byometric - a new iris-recognition company. They appear to be powered by Oki's technology, but they're making a nice marketing push and had a slick booth. I'm not sure about their U.S. plans. Fujitsu - I'm a sucker for design, and their palm vein reader, basically a glowing orb that stands outside your door, looks awesome. If you're curious about anything I might have left out, post a question in the comments and I'll see what I can do.

One man's projections for 2009

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Wednesday, October 15, 2008
John Honovich posted a fairly controversial projection for the IP video market in 2009 yesterday. I'm at the very least jealous of his many comments. Before I get into any discussion of it, let me first say that I'm extremely skeptical of any of these kinds of projections. We run a "Stats" page in our paper issue where we recount one of these kinds of reports every month, and I always feel a little guilty about it. The numbers are always so round, the picture almost always so rosy. It's hard not to think that the researchers are just giving the potential buyers, usually larger manufacturers or potential investors in the market, what they want to read. It's not that I don't think IMS, especially, doesn't do its homework. It's just that I think it's very difficult to predict the future with any reliability, and I've thought that more so ever since I read the excellent Black Swan, a book that really changed the way I thought in a significant fashion. Basically, the book argues that it's always some completely unpredictable occurrence that actually molds the future, and rarely anything that anyone saw coming. Thus, predictions are just about always wrong. I highly recommend the book. So, with all of that said, what of John's predictions? Well, there are some round numbers, and some toying with statistics. Take the first sentence: IP Video market growth will slow by 66% next year due to the unfolding financial implosion. So, a casual read of that sentence gets you: "Whoah! Sales are going to slow by 66 percent! Crap!" (And, yes, people read like that. Trust me. There's no better confirmation of that than the anti-editorial emails I've been getting.) Of course, that's not what John is saying at all. He's say that GROWTH will slow by 66 percent. But, because IP video was growing so quickly, it can slow by 66 percent and still grow at a 15 percent rate. Got that? And 66 percent? You mean 2/3? What's that, the fourth roundest possible prediction, after 100 percent, 0 percent, and 50 percent? Why not 60 percent, or 70 percent? What I don't like about these kinds of numbers is that they imply precision, but in actuality are just as arbitrary as simply using an adverb like "significantly." If John's first sentence had read, "IP Video market growth will slow significantly next year due to the unfolding financial implosion," I'd have said, "Yeah, probably." But since he put in that 66 percent number, I'm all: "Pffft." But I obviously understand the way this whole "forecasting" thing works and I don't blame John for playing the game. That's how it works. People like numbers and dislike adverbs (assuming they can actually identify an adverb...). So, moving forward, there are a few points I would argue/add to: Easy Credit is Over The easy credit for consumers and businesses that characterized the last 5 years is certainly over. My projections assume that the current financial meltdown will be resolved and that basic liqudity will be restored to the marketplace. Nonetheless, even with this assumed, the regulatory and cultural pressures to restrain risky loans will leave credit far tighter relative to the past 5 years. This will have significant impact on both GDP growth and business investments. I agree that easy credit is basically over, but is easy venture capital over? I think there's still a bunch of private money out there that wants to go to work, and since the stock market isn't as great an investment anymore, more VC money may be eyeing the IP video market, where a 15 percent growth market isn't that bad. Getting big loans from banks? Hard. Getting $10 million from a VC fund? Maybe not so hard if you've got a decent business plan and a good management team. I think money is still out there for the taking and since many IP video companies are pretty small and don't need $100 million in capital fuel, the credit crunch might not affect the market that much. Capital Intensive Projects Will Largely Be Delayed With consumers spending less and credit being tighter, business will have to delay many capital intensive projects. Both the ability to justify such projects through market growth and the capacity to obtain financing will extremely difficult. IP Video is, by definition, a capital project. And since IP Video depends on new projects or replacement of analog CCTV systems deployed within the last few years, customers will need to obtain capital or draw down on cash reserves to purchase IP video systems. The financial pressure to resist will be intense. The ability to maintain existing CCTV system will be easy. This is definitely happening. At least four integrators in the past two weeks have told me that projects they were greenlighted (greenlit?) on were either pushed back or cancelled altogether after the developer couldn't get the funding it was banking on (ha! a bad money pun! sorry about that). Weak ROI of IP Video Will Be Exposed The ROI of IP video is generally weak. According to Axis' own numbers, the TCO reduction is only 5-10%. To a CFO, especially in a recession, these will not be attractive. The problems of IP video will be exposed. A rule of thumb often cited is that innovative technologies should reduce costs by 80%. One example is T1s versus cable modems. Cable modems provided 'good enough' high speed bandwidth at 70% less costs. This caused large migration from T1 to cable modem for Internet use. Unfortunately, IP Video offers such strength in eliminating analog fiber systems relevant to only a small fraction of security buyers. I think this argument misses the possibilities of leasing and video as a service. If end users can pay a monthly fee for IP video that they can both access themselves at any time, and have a video monitoring service access, they can reduce manpower fees a great deal, get a good deal of return on reduced shrink/less graffiti/property loss, and see HR benefits with real value. Also, the costs of the IP video system are dropping. Cameras are becoming more price competitive, encoders are making it cheaper to leverage an existing analog infrastructure, etc. I think integrators can be better at selling an IP systems' value than John assumes. There is a difference between actual ROI and perceived ROI, and some of that comes from good salespeople. And, finally: Where Do These Numbers Come From? These numbers are projections based on an analysis of macroeconomic conditions and competitive strength of IP video technologies. While I talk with numerous industry leaders, these numbers are not based on vendor projections. The uncertainy in any projection in these conditions is clearly high. Well, obviously. So why use numbers at all? The problem with numbers is that they're kind of designed to imply exactitude. When you tell someone you want $1,000 for your IP camera, you're not going to be happy if they give you $800 and say, "well, that's pretty close." We have the ability in the English language to talk about degrees. We can say the market is going to slow, growth is going to slow, there will be uncertainty, end users will take less risk, etc. We don't have to say, "end users will be 72.9 percent more squeamish." Maybe that's idealistic of me, and I understand predictions come with the obvious caveats attached, but I sometimes fail to see the point of the exercise. John's a smart guy and is the best new voice to come into the market lately, but he doesn't need to attach numbers to his thoughts for them to be valid and interesting.

Another back-and-forth about the editorial

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Wednesday, October 15, 2008
As people say "yes," I'm posting dialogues about the (tepid) Obama endorsement. Here's one: On 10/15/08 2:00 PM, "Shannon Fox" wrote: Mr. Pfeifle, I must say that I found your editorial very disturbing and it, unfortunately, reinforces the true problem with our country – people willing to sell out their morals and core beliefs for a few dollars (or the belief of a few dollars). Yes, I make my living in the security industry. However, if the security industry was not around, I can earn a living doing something else. I am not willing to sell out my moral convictions simply to keep my business afloat! Do you want to fix our economy? Do want to fix industry? Do you want to fix this or that? Well, this can only be accomplished by fixing society. If you try to fix the after effects instead of the true problem, you are only fooling yourself. All of our problems are the result of a broken society and nothing else. People are willing to “look the other way” in regards to core beliefs and morals in order for financial gains. Fix this and everything else falls into place. If you put someone in office that has compromised morals (ex: supports the murder of innocent children, believes in teaching “alternative” lifestyles to children, etc., etc.) then you can expect a compromised society. There is nothing more important than morality – not oil, not the environment, not the economy! Once we can find a president with a solid moral foundation (and have people in congress, the court system, etc. that reflect the same morality) and will not sell out, everything will fall into place. This includes the economy, energy issues, foreign issues, etc. Unfortunately, we do not have a current presidential choice that truly reflects our needs. However, Obama is definitely not the man for the job. Thanks, Shannon Fox MonitorClosely.com (Asheville, NC & Vicinity - Sevier County, TN and the Tri-Cities) From: Sam Pfeifle [mailto:spfeifle@securitysystemsnews.com] Sent: Wednesday, October 15, 2008 2:12 PM To: Shannon Fox Subject: Re: Editorial - Obama for president? Hi Shannon, I appreciate your feedback. As I said in the precursor to the editorial, I did not consider social issues in the editorial, as I felt they were outside the bounds of a business paper’s discussion. Unfortunately, we’ve already shipped our November paper, so I can’t run this as a letter to the editor before the election, but would you like this posted to my blog, so that your feedback can be heard ahead of the election? Cheers, Sam On 10/15/08 2:58 PM, "Shannon Fox" wrote: Sam, I understand that your main focus was from the business side and not the social side. However, I believe that is another major mistake within our country. You cannot separate social from business. Major problems arise when our core beliefs do not influence our business. You are welcome to post it to your blog. I appreciate all that you and Security Systems News does for our industry. Thanks and have a great day! Shannon

Smartvue on the little screen

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Tuesday, October 14, 2008
Well, I made it back safely from Essen, and I'll have some more thoughts on that later, but if you're looking for something to while away your morning after coming back from the long Columbus Day weekend, check out Martin Renkis pitching Smartvue: Not a bad video production, really. The office feels kind of homey, and I like Martin's take on formal (pocket handkerchief), but not too formal (no tie).

UTC gives up on Diebold

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Tuesday, October 14, 2008
Remember that UTC bid for Diebold? No, seriously, do you remember that? Well, turns out it ain't gonna happen, after all. After some previous bombast, UTC's note to Diebold announcing that it's giving up on the bid is pretty succinct: Mr. John N. Lauer Chairman Diebold, Inc. Dear Mr. Lauer: We have seen Diebold's financial restatements recently filed with the SEC and note that you have scheduled your annual meeting for November 12. In light of your extended refusals of UTC's requests for management discussions and due diligence, we are withdrawing our offer of February 29 to purchase any and all Diebold common shares at $40 per share. We had hoped we could negotiate a transaction that would have created substantial value for both your and our shareholders. It's unfortunate this won't happen. Sincerely yours, George David Chairman So, to sum up, Diebold did $1.5 billion in the first six months of 2008, with net income of $41 million, and UTC was offering about $2.6 billion for the whole kit and kaboodle. It's kind of easy to see why Diebold management wasn't eager to sell. However, Diebold stock sits at $27.77 at the moment of this writing, and it's hard to see how the stockholders are served by denying them a 30 percent premium on their shares . If I'm a Diebold shareholder (and I'm not), I'd be pretty psyched to get rid of my shares for $40 a whack, considering Diebold spent all summer valued right around $40, based on the UTC offer, and then plummeted to its current position what with the financial crisis (Diebold does a lot of business in banks) and general panic. Of course, the stock market makes no sense, since the positive numbers Diebold finally reported should have had a positive effect on the share price, but instead drove it down. If they're pulling in $3 billion, which is nearly $47 a share, they should be valued higher than $28 a share, if you ask me.

Devcon deregisters

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Saturday, October 11, 2008
In what appears to be a money-saving move, the Florida-based super-regional security company Devcon announced yesterday that it was deregistering itself from the SEC. This means that it won't have to file certain forms with the SEC. It is able to make this move because it has fewer than 300 people who hold its common stock. The deregistration is effective yesterday, Oct. 10. Devcon had been trading on the OTCBB since May when it was delisted from NASDAQ. Here's a story I wrote about that. At that time, Devcon's president Robert Farenhem told me the move had nothing to do with the underlying health of the business. From the story: Rather, he said, this move is necessitated by a breach of technical requirements to be listed on Nasdaq exchange, which he characterized as “harsh accounting requirements that security businesses suffer.” Devcon was notified in mid April that it was out of compliance with the Nasdaq requirement that it have a minimum of $10 million in shareholder equity. “Two and a half years ago we had $2.5 million in RMR,” Farenhem said, “and today we have $3.6 million in RMR … but over that period of time we have amortized about $40 million [for the purchase of Guardian International in 2007].” The Devcon statement yesterday said that Devcon "expects, but cannot guarantee, that its common stock will continue to be quoted on the Pink Sheets after it is deregistered." I'll be following up on this in the December issue.

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