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PSA-TEC 2016 roundup: M&A trends; The cyber opportunity; Robots

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Wednesday, May 11, 2016

There was not a free chair in the Lakehouse conference room here at PSA-TEC in Westminster, Colo. yesterday afternoon during two panel discussions that addressed topics such as: M&A, cybersecurity and managed services.

John Mack Imperial Capital said that there’s been “more significant M&A activity in the past year than in the previous 30 years.” He called that “generally good news” and predicted M&A activity will continue. He noted that new entrants into the security industry are not “taking share away” from others. Rather, new entrants are helping the security industry grow, and they’re bringing “new and interesting technology.”

NetOne’s Dave Carter said the flurry of M&A can be a concern to NetOne if a member company (there are 28) is acquired by an outsider (as happened when Safeguard Security was acquired by SAFE)  However, that is not normally the case. “For our companies, in the regions they operate, they are the acquirers," Carter said.

Brent Franklin of Unlimited Technologies looks at all of the M&A activity as an opportunity. “While the big guys are turning the battleship in the dock … [Unlimited can] pop up into that space and serve their customers,” he said.

Carey Boethel of Securadyne agreed: “When big companies are consolidating and merging they focus strategies internally. …They take their eye off the ball.”

Michael Meridith of SEi concurred,  “customers fall through the cracks,” he said. And, there's more good talent looking for jobs, he added.

Jeff Nunberg of ISS pointed out that many of the recent buyers are venture capitalist firms who “expect a return on investment in three- to five years.” As they build a business, he said, they also “suck the live out of it … which makes it hard to deliver service.” In terms of vendor M&A, Nunberg said: “We have zero control over that,” so he does not worry about it.

All of the panelist admitted concern about cybersecurity—keeping their own companies and customers as safe as possible from a breach. A couple speakers also noted that most security installation companies are not taking cybersecurity concerns seriously enough. Those companies likely will not take it seriously until there’s an incident.

Imperial Capital’s Mack and Michael Kaiser National Cyber Security Alliance talked about cybersecurity as a possible money maker for physical security integrators.

Mack said adding cybersecurity services is a “huge opportunity for people in this room.” Small and medium-sized businesses “have a lot to do to better protect their information, data, and networks.” He suggested that security integrators partner with cybersecurity experts. That would make them very valuable to customers.  “When you upgrade physical security systems [for a customer] at the same time talk to them about how to update their information security infrastructure.” Mack said if he were to get back into the operations side of security, this is where he’d focus.

Kaiser agreed that “one of the biggest gaps in cybersecurity right now is the SMB … they’re not making cybersecurity a priority,” he said. They need a provider to help them “secure their network and their security devices.”

How should you educate yourself on cybersecurity? Attend the RSA show in San Francisco, Mack said. Do your homework about companies attending RSA. Many of them really want to know about physical security. “I guarantee you there will be guys who will be incredibly interested in talking to you," Mack said.

PSA Security is also an excellent resource to educate yourself on cybersecurity he said, noting that Andrew Lanning would be presenting the initial PSA Cybersecurity playbook at PSA-TEC on May 12. Here’s information on that presentation.

“Be part of the solution,” Lanning said.

Managed services make your commercial companies more valuable, Mack said. In addition, he said that acquirers are losing their appetite for security companies that derive all of their RMR from residential accounts. Buyers don’t like the high creation costs on the resi side and the “commoditization of residential security."

“There is no question if you show up [to sell your company] with more RMR, you have a higher valuation,” Mack said. “Guys who show up with a mix of RMR with a commercial focused business will be higher valued than the gyu with the same about of RMR from a residential business,” he said.

There is technology out there now that makes managed services much easier, Mack said. And the financing model for managed services is easier to manage than the model on the resi side. “You don’t have to go upside down on the direct labor and materials,” he said. “But the selling proposition to the customer and how you define that customer and sell to them has to be different,” Mack said.

He said it is probably a good idea to create a new division, or even a new company, to do managed services. Other speakers agreed.  

Robots were another topic of discussion at PSA-TEC. Sharp announced its new SRBD. Here’s a link to this story. A key SRBD executive—Mike Kobelin—is well known to PSA Security members and PSA-TEC attendees, as he is a former PSA board president.

One of the first people in the security industry to talk to me about security robotics was Joe Lynch of Minuteman. Here’s a story I wrote a couple years ago where I spoke to 10 top integrators about tech trends.  Scroll to the end to read Lynch’s remarks. One year after I wrote that story, I asked Lynch about aerial drones and he said there were many questions about legislation and regulation, an obstacle that PSA Security CEO Bill Bozeman told me will hold back development of that technology for the short term. I ran into Lynch today and asked him about aerial drones. He said he’s been able to figure out the FAA regulations and is optimistic about the possibilities. Minuteman owns an aerial drone and is using it in beta projects currently.

Ray Dean of ASI  was at the Sharp robotics press conference and was eager to know when the company’s product would be available.

Numera releases new wearable line

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Wednesday, May 4, 2016

CARLSBAD, Calif.—Numera this week announced a new selection of wearables to complement its Libris mPERS device while users are at home.

The center of this announcement is the new Smart Cradle, which connects the Libris device with the new wearables while charging the mPERS, Anu Herranen, marketing manager for Nortek Security and Control, told SSN. 

The new wearables include a Fall Detection Pendant, a Convertible Help Button which can be worn as a pendant or on the wrist, and a Simple Help Button Pendant.

Herranen said that a noticable difference between the Fall Detection Pendant and the Libris device is their weight. The Libris is about 2.1 ounces, she said; the Fall Detection Pendent only weighs about half an ounce. The pendant is also 40 percent smaller by dimensions.

She said the two biggest benefits for end users are the ability to have a personal safety device while the Libris is charging and the option for a more comfortable device while around the house.

“[Users] can leave their Libris in its Smart Cradle, because all of the mobile PERS devices do have a battery that needs to be charged, … and they are still equally protected,” she said. The Libris has a battery life of 36 hours, she said, while the wearables’ batteries last for several years.

The new wearables also continue to track users in the EverThere program. “The Smart Cradle connected with any of the wearables provides exactly the same experience in EverThere that we do in the Libris device.” The Smart Cradle is also upgradable, via Over-The-Air software updates.

Herranen said that the ability to wear a help button on the wrist is new for the Libris offering. She said the wrist-worn help button was specifically designed for wear during sleep.

The Libris still has features that the new wearables don’t, such as voice capabilities and GPS location. 

Outsmarting the smart home

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Wednesday, May 4, 2016

Talked about heavily at ISC West in April, cybersecurity is the buzzword in the industry right now, as manufacturers and dealers on the residential side try to figure out how to navigate through the potential minefield of new smart home products and devices that may leave their security systems vulnerable to hacking.

In a study unveiled this week, Cybersecurity researchers at the University of Michigan were able to hack into a leading "smart home" platform and essentially get the PIN code to a home's front door.

Their "lock-pick malware app" was one of four attacks that the cybersecurity researchers leveled at an experimental set-up of Samsung's SmartThings platform, and is believed to be the first platform-wide study of a connected home system. The researchers weren’t picking on Samsung, as the overall goal of the research was to show how vulnerable these new connected home devices and systems are to hacking.

The researchers found “significant design vulnerabilities from a security perspective," noting that hackers’ attacks can “expose a household to significant harm—break-ins, theft, misinformation and vandalism. The attack vectors are not specific to a particular device and are broadly applicable."

The findings will be presented on May 24 at the IEEE Symposium on Security and Privacy in San Jose, in a paper titled "Security Analysis of Emerging Smart Home Applications."

At the very least, this study—as well as numerous stories of hackers finding their way into connected home devices, from smart TVs to baby monitors—raises important questions that manufacturers and dealers must ask themselves in this new world of advanced technology and interactivity.

As Samsung works out the kinks in its system, many other smart home companies can benefit from this study, as it sounds an alarm—no pun intended—of the importance of cybersecurity. While no system is completely immune from hacking, the research also underscores the fact that smart home companies and dealers need to make sure they are adhering to, at a minimum, the industry’s best practices and guidelines.

One resource is UL’s new Cybersecurity Assurance Program, a standard by which companies can have their products tested and verified by UL for guard against well-known cyber risks.

Having your products and systems third-party tested is a good first step in addressing any security flaws that may be present, as well as any potential fixes, and provides a measure of comfort for customers who are making their first forays into this bold new world of connected home technology.

 
 

The 'New ADT' is here

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Wednesday, May 4, 2016

The "New ADT" is here. As of May 2, the Protection 1/ADT deal is closed, and ADT is no longer trading on the New York Stock Exchange.

The deal, initially announced in February, was the third major security investment for Apollo Global, which announced it would buy ADT for $6.9 billion and merge it with Protection 1.

I tried to get a call scheduled with Tim Whall who is the CEO of the combined company or someone else at “The New ADT,” but have not heard back yet.

The official announcement had little new information, it mentioned that the headquarters of the combined company will be ADT’s headquarters in Boca Raton, Fla., and said that the company will “operate primarily under the ADT brand.”

Will the Protection 1 name go away completely? Who will run the resi business? What about ADT's nascnet commercial business? Is CMS staying or going? CMS has the opportunity to go after the cablecos/telecom business and DIY business that other wholesale monitoring companies are doing well with. Will it? As a non-public company, ADT can concentrate on slow smart growth--something observers say it has done well with, even under the constant scrutiny of the stock market. So many questions to ask.

Goldman, Sachs served as lead financial advisor to ADT and BofA Merrill Lynch also served as financial advisor to ADT.  Barclays, Deutsche Bank, Citigroup Global Markets Inc. and RBC Capital Markets, LLC served as financial advisors to Apollo and Protection 1 and provided debt financing.  PSP Investments Credit USA LLC also provided debt financing.

The deal also provided an entry for the Koch Brothers into physical security. An affiliate of Koch Equity Development LLC, the investment and acquisition subsidiary of Koch Industries, provided $750 million of preferred equity financing.

Simpson Thacher & Bartlett LLP served as legal advisor to ADT. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor to Protection 1 and Apollo.  Milbank, Tweed, Hadley & McCloy LLP served as legal advisor to Koch.

 

Affiliated’s Catalyst PERS conference sold out

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Friday, April 29, 2016

Affiliated Monitoring’s new PERS conference, Catalyst, sold out three-and-a-half weeks prior to the inaugural event on May 17.

Affiliated’s VP Daniel Oppenheim told SSN that Catalyst booked so quickly due to its “focus on sales and marketing, and Affiliated’s reputation as a PERS specialist.”

“We have 160 attendees, and including staff and vendors, we're going to be at about 200 total,” Oppenheim said. Oppenheim believes it will be the largest PERS conference ever held.

Oppenheim said that Affiliated will unveil three new services at the show, but declined to give more detail.

Former major league baseball player and manager Bobby Valentine will be giving the keynote address. “We were looking for someone who we felt has managed teams,” Oppenheim said. “He has very practical knowledge about bringing in people with different backgrounds, different skill sets. … He really can talk about the grind, day-in and day-out and trying to get teammates to perform.”

He said the company will look for a larger venue for next year. “We’ll probably do it again in Florida, just at a larger resort, around the same time.”

Finding security in smart home products

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Wednesday, April 27, 2016

With the “smart home” taking over talk on the residential side of security, it is no surprise that research and studies continue to pop up in an effort to quantify and qualify what is going on in this growing connected-home market.

Results of a study conducted in March by August Home and Xfinity Home give some further insight into the relationship between home security and connected home devices.

When asked why they would consider adopting smart home technology, the study found that 63 percent of consumers said security or “keeping their family safe” is their top motivation.

In addition, in a Parks Associates’ survey of homeowners with broadband connections, those with a security system were more likely to say they intend to buy a smart home device in the next 12 months.  

So at a time when dealers are trying to emphasize the importance of security first in this new smart home world, it looks like consumers are heeding their message.

In terms of how many plan to add smart home technology, the August Home and Xfinity Home survey found that 18 percent of respondents said they’d likely buy a new smart home product over the next 12 months, including 56 percent of those who have already installed at least one connected device in their home.

What smart home devices are they planning on buying? Video is at the top of the list with 4 in 10 consumers (40 percent) saying a connected camera would be the product they’d most likely add to their home, followed by a video doorbell (26 percent), connected light bulb (19 percent) and smart lock (13 percent).

When asked which device they’d most like as part of a smart home-powered security system, over 63 percent of respondents chose a connected video camera inside or outside the home, while 61 percent of those with a smart home said that a video camera was the device they’d most like to access and control from their smartphone.

This is all good news for the residential security industry, and for dealers who are taking the time to reconnect with their customers who continue to find security in this emerging world of connected products.

 

Security robotics and regulation

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Wednesday, April 27, 2016

A couple weeks ago I wrote about PSA-TEC, PSA Security’s annual training and education conference, which will take place in Westminster, Colo. May 9-13.

Kudos to PSA for being the first in the industry to take a close look at security robotics. PSA Security CEO Bill Bozeman is among those who believe security robotics will be “the next big thing” in security.

Courses at TEC will explore ground-based, aerial and marine robotics. You can check out the educational sessions here.

In many ways, this robotic technology is here. Drones are being used for surveillance by movie studios and on colleges campuses. And, systems integrator Northland Controls even has robots patrolling its parking lot in Fremont, Calif.  

However, security robotics is in its nascent stage though, and the security industry has to figure out how to harness the technology more broadly, and in a way that makes business sense for end users and integrators.

Also, it’s not clear at all how the government is going to regulate security robotics in general, and drones in particular. There’s a bill in the U.S. Senate right now that would make drone regulation a federal responsibility. One thing for sure is that security robotics will be regulated. And, that makes sense. While drones may be safely used for surveillance in some areas, drones and other robotics may pose a risk in certain locations, such as airports. Questions of privacy will need to be addressed as well. Like it or not, some degree of regulation is inevitable and advisable.

The Security Industry Association is keeping an eye on this issue, and you should too. Jake Parker of SIA told me the “FAA is in the process of finalizing regulations that [drone] operators must follow and chances are this will evolve in the future.” He also noted that there are “significantly different requirements for law enforcement use versus private/commercial security.” He added that this topic will be discussed at SIA’s June 17 Government Summit.

I’m looking forward to the security robotics educational sessions at PSA-TEC, and I’m also looking forward to seeing the robots and drones in Colorado. Bozeman says they’ll be there.

CSAA announces 2016 annual meeting keynote

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Wednesday, April 27, 2016

Earlier this week CSAA announced the keynote speaker for this year’s CSAA Annual Meeting, held in Marco Island, Fla., from Oct. 22-27: Tasha Eurich, organizational psychologist and author of New York Times bestseller Bankable Leadership.

“We are pleased to feature a next-generation speaker at the Annual Meeting,” CSAA president Pamela J. Petrow said in a prepared statement. “CSAA members are always looking toward the future, and Dr. Eurich is sure to provide them with new strategies to stay ahead of today’s leadership challenges.”

Eurich is principal of The Eurich Group, an executive development firm that helps companies improve the effectiveness of their leaders and teams. She has a Ph.D in Industrial-Organizational Psychology from Colorado State University and serves on the adjunct faculty of the Center for Creative Leadership.

“By pairing her scientific grounding in human behavior with a pragmatic approach to business challenges, she has helped thousands of leaders over the last 15 years,” CSAA said in its announcement.

When I’ve spoken to executive director Jay Hauhn in the past, he’s said that CSAA is retooling the structure and format of its annual meeting.

This certainly seemed to have an impact, as last year’s annual meeting was one of the best attended in the organization’s history. “2015 saw the largest attendance CSAA has had in recent years, and we are confident our reimaging of the meeting will top last year’s record when we convene this fall in Marco Island,” Petrow said in the announcement.

“CSAA is entering the second phase of the reimaging of its Annual Meeting,” Petrow said. “In 2015 a new emphasis was placed on educational programming, and the general sessions were a hit with attendees. CSAA intends to bolster that emphasis on fresh, meaningful education in 2016.”

Dahua cameras now easier to get in North America

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Wednesday, April 20, 2016

China-based camera manufacturer Dahua this week took a major step to expand its presence in North America: ADI Global Distribution will now carry Dahua products in its 103 store locations in the U.S. and Canada.

Dahua has plans to grow its presence in North America in a big way, Tim Shen, Dahua Technology marketing director, told me at ISC West.

The China-based camera manufacturer established its North American office in Irvine, Calif. in 2014. At ISC West this year, Dahua invested in one of the biggest booths at the show. It was 3,600 square feet, double the size of its 2015 ISC West booth.
 
I requested an interview with Shen or another Dahua executive to discuss the announcement. None were immediately available, but Raleigh Gerber, Dahua's newly hired communications manager, sent me some background information. She said that in addtiion to making the product more readily available to North American integrators, working with ADI "gives Dahua an opportunity to listen and learn more about the fast-moving video surveillance market, to gain insights about systems integrators’ needs and better help them."

She added that the partnership with ADI "supports Dahua’s open platform solutions, allowing us to provide seamless and flexible integration with our software and hardware partners, and system integrators."

 Dahua's products include its 1.3-4MP IP cameras, 8 and 16 channel POE NVRS, 1080p HDCVI cameras and tri-brid HCVRs.
 

Telguard frees dealers from 2G obstacles

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Wednesday, April 20, 2016

Telguard recently announced its new Freedom program: providing dealers with funding and equipment for 2G conversions for a $9.95 monthly fee per 2G account. Shawn Welsh, Telguard’s SVP of product line management and marketing, told me that the program helps the dealers who haven’t yet figured out how to deal with the sunset.

The sunset is an old topic, and Welsh said dealers have probably gotten a little fatigued hearing about it. He said that Telguard looked to why some dealers hadn’t started.

“What it came down to—what we heard a lot of times—was [that] some of the smaller independent dealers just simply didn’t have access to the cash that they were going to need to go and try to swap everything out,” he said.

Barriers specifically include the cost of the hardware, sending out a truck for installation, and the concern of whether the customer would disconnect their service after hearing about the needed upgrade. “When the security dealer installs the unit, we will actually … pay them [$50] for the installation of the unit,” he said. 

“We also include the ability to integrate our home automation platform, HomeControl Flex, as well as Arlo cameras from Netgear, all for that same price,” he said. “Now the dealer can go in and he can try to upsell the customer to new features.”

The program is open to all dealers, Welsh said. Telguard announced the program at ISC West.

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