I love it when my stories and blogs get comments... I recently did some writing about Verizon debuting their first home automation/security solution. I also wrote about them poking around at ESX last year, and that got a lot of commentary.
My recent writings about Verizon also prompted some reader comments. Actually, my most recent blog on Verizon was me publishing some remarks from ESX chairman George DeMarco. He had a lot to say, and one reader prepared a lengthy response.
First, however the commentary on the Verizon story.
Lee Jones of Support Services Group forecasted a similar result for Verizon as for other telcos and cable TV providers who've tried home security in the past.
"Current CATV and Telco management have a short memory. They forgot why they got out of the private security business during the early 80's. Overwhelming customer relations issues and more lawsuits than they ever experienced in their entire core business," Jones said. "They also forgot that local law enforcement is the critical third leg of the tripod, which is weaker now than when they made their exit. In my opinion the next generation of the alarm industry will be the benefactors, by the rewards for their massive investments and for cleaning up their huge mess."
Valid points. Others I've spoken with have also said that telcos regulary forget how complicated it is to be in the security business.
Commenting on my DeMarco blog post, Neil Licht from International Electronics, Inc., had a lot to say.
"This may not be a 'popular' answer but it seems to need a realistic answer re: Telcos in the security space.
I'll focus on 2 things. 1. Technology and the Telco's advantages, and 2. So what do we do in the face of this challenge? Technology, simple linked connectivity via web, IP - its was inevitable that the already tech connected and savvy Verizon would do this," Neil said. "Telco entry into the Security space is very different today than the past attempts from utilites like telcos because, as Verizon's fios bundles show, Telcos now have the easy and wide spread ownership over connectivity, necessary infrastructure, networking power, bandwidth management, wired, fios (fiber), international reach, wireless capability, understanding and managing types of services and signals like video, digital, analog and integrating them as 'if then.' For Verizon et al, its simply just another IP-network deployment to be added over their existing infrastructure."
This is an interesting point, and one that was made to me by NextAlarm's Tom Reed. Tom told me back in a November 2010 call that it would all come down to who controled the portal.
"I believe at the end of the day it’s either going to be big service providers or big retail who are going to be the portals for allt he IP services going into the home. We want to be the security guy in there," Tom said. "All we want to be is the guy with the alarm. And today, if we have to partner and help to make that happen, we’ll partner and share cloud capability ... NextAlarm’s never going to control the portal… it’s always going to be Comcast. It’s going to control phone, cable, internet, IP, smartgrid, security, home automation. Whoever is controlling the pipe into the homewill control the portal for all these services."
Neil goes on:
"We can relate to this as the task because of how we have shifted our systems deployment through the IT side of our customer's connectivity and networking so Verizon's comfort with knowing that's all they need to do should not surprise us," Neil said. "With offerings like bundled fios connection, verizon simply means adding just another channel. They already are expert in specifically identifying subscribers and managing them. In this case, unlike the past, it really may be a simple matter of adding the option and then harvesting it through their existing capabilities in managing data via IT-networking."
DeMarco also mentioned the simple process of Verizon leveraging their sizeable, built-in audience.
"I'm not sure that a fight against this trend can be mounted or succeed. Given the changes in connectivity, IP involvement, network structures, interoperability, enormity of managing so many varied bandwidth issues, CCTV, you name it that are now how security management systems get the job done, the Telcos now already own and have all that interconnected technology management in place. Video, ISP, web, wireless, land line, even wireless hot spots that replace the 'cable-fios' set top boxes, phones in place, lines in place plus the server and cloud capacity to make it all work," Neil said. "In fact, the wireless phone with the new G4 network has the infrastructure to easily join into the security management zone, carry and manage all of these signals accurately, tap into annunciate, notify, interface commands to systems, record, archive recall video or other activity on demand fast and allow for immediate annunciation/interactivity/integrated reaction."
Clearly, Verizon has a technology edge... And, like Tom said last November, they're already in a position where they're more in control of the new pipeline (broadband) into the home.
Point 2. So what do we do now? What Verizon et al do not own is the knowledge and specific licensing for low voltage home or commercial security. What they do not own is the sales analytical skills to design, tailor, create and then sell the need-solution services that physical security management is all about. They surely do not have the people side of a central station monitoring-response ability in place or infrastructure in place nor would they want to spend money to build it. Can you see them trying to understand codes, AHJ's and UL listed central stations or other requirements?" Neil asks. Good point, Neil. One thing I learned in undergoing CSAA's operator training is how important human/human interaction is in the security industry.
"We have and offer that expertise and infrastructure and can partner as the provider and even manager of that side of things so they don't have to expend a fortune trying to do so. That's a giant joint venture ROI-Profit-Time to Market partnering chip in this whole equation re Verizon going into the security business and its our chip. In one sense, we own the key to Verizon's ability to gear up and make a profit without having to hire a gazillion people. Let's go use it proactively via partnering and this chip being the reason for and how we make that partnership happen. If I were seeing this trend, I would be going to my telco and proactively partnering, offering my security expertise as their key to what they are missing (above). That lets them do the tech innovations and remain in their comfort-expertise zone and YOU-We still do the expert provider side of the success equation, our comfort-expertise zone. In fact, this may even be something that should be industry wide initiative that can assure continuing value and growth for us who are in the alarm, physical security industry instead of a giant head on clash."
Kind of reminds me of George DeMarco's warning: Eventually, they're going to get it right, unless the rest of the industry steps in and seizes the opportunities for partnerships.
Neil says as much in his concluding remarks:
"Rather than fight the 'giant' and their capabilities and cash availability, we instead pro actively go create this win-win partnership with the Telcos. Technology is the key and Telcos have all of it under 'one roof' working together, managed together, interoperable together and converged together. What they do not have is the true understanding of what security is all about, what consumers need and we do. In essence then, we have and hold what they need for success."
You heard the man: Get out there and sell your relevance. Seek out and exploit the partnership possibilities.