Security Systems News Top Stories

Sonitrol loses 8-year-old lawsuit

Thu, 2 Sep 2010 00:00:00 CDT

DENVER—Jurors here in the Colorado Court of Appeals have decided in favor of the co-plaintiffs in a nearly decade-long legal battle against Sonitrol Corp. The lawsuit stems from a 2001 fire in which a warehouse owned by co-plaintiff Core-Mark Midcontinent was broken into and burned. The original decision in the lawsuit said Sonitrol Corp., because of the exculpatory clauses in its contract, was only liable for $500 in damages. That decision was appealed, and the result of that appeal, announced on Aug. 18, is that the three co-plaintiffs—insurers Commonwealth Insurance and United States Fire Insurance, and the insured, food distributor Core-Mark Midcontinent—are now owed a total of $18.3 million. Pre-judgment interest of 8 percent per year in Colorado could add millions to that number, according to Cozen O'Connor, attorney for the insurance companies.
At the time of the incident, Tyco International owned Sonitrol Corp. Tyco sold the company to Spire, Carlyle and Wachovia for $125.5 million in 2004. Stanley Works then bought Sonitrol in June 2008.
However, Stanley’s not paying the bill. Lynda Murphy, a Stanley spokesperson, said, “that was all Tyco’s thing. There’s no implication for Stanley now … It’s got nothing to do with us.”
Ann Lindstrom, spokesperson for Tyco property ADT confirmed Tyco’s relationship with Sonitrol Corp. at the time of the loss. “We can confirm the claim arises from a discontinued business operation of Tyco International,” Lindstrom said. “Tyco is unable to comment further as the litigation is still ongoing.”
Who foots the financial bill aside, what ramifications does this decision hold for Sonitrol specifically and for the verified-alarms in general? Leo Wanstreet, president of the Sonitrol National Dealers Association, was quick to point out the loss and subsequent jury decision in the Colorado Court of Appeals do not detract from what Sonitrol offers. “A lot’s changed since 2002 and verification’s a lot bigger topic now,” Wanstreet said. “The important thing to take away from this is that the system worked. It wasn’t a system failure and verification should not get a bad rap. It was a management failure. They didn’t solve the problems in the manner they should have.”
Vocal verified alarm advocate Keith Jentoft, RSI Video Technologies president agreed. “I believe that what got Sonitrol in trouble was the fact that they essentially turned off the microphones that they claimed were operational,” Jentoft said. “In essence, they said they could hear, but they really couldn’t.”
Published reports claim a string of false alarms at the Core-Mark warehouse led to a tech being sent at least twice to the protected premises to numb down the threshold on the microphones, leading to what jurors decided was a situation in which the system did not work and Sonitrol was negligent. On Dec. 21, 2002, burglars broke into the Core-Mark Midcontinent warehouse in question and burned it to the ground. Police were not dispatched.
Calls to Shook Hardy & Bacon partner Paul A. Williams, attorney for Sonitrol in the Colorado case, were not returned by press time.
Calls to Watkins & Letofsky partner Brian Letofsky, attorney for Core-Mark, were not returned by press time.

Per Mar sees opportunity in South Bend

Thu, 2 Sep 2010 00:00:00 CDT

DAVENPORT, Iowa—Brad Tolliver, VP of Per Mar’s Electronic Security Division, finalized the acquisition of Indiana Security, and before the ink was dry on the contract was interviewing sales and technical people to add to the team.
“It’s a new territory for us and we believe there’s a lot of opportunity in this market,” Tolliver said. “We really want to grow our presence in the South Bend market.”
A super-regional with 21 branch offices throughout Wisconsin, Iowa, Illinois, Minnesota and Nebraska, this acquisition marks Per Mar’s first foray into Indiana.
William and Linda Humphries founded Mishawaka, Ind.-based Indiana Security in 1972 just outside of South Bend. The Humphries are retiring, but their son Brad Humphries will stay on as general manager. Ten current employees will also be staying on.
The company brings with it 2,300 accounts, 60 percent of which are commercial. “They do a variety of core business, [with particular expertise] in financial institutions,” Tolliver said.
“It’s very much a family business and it’ll be transitioned into another family business,” he said. “The companies and customers are very similar and that’s one of the things that made them attractive to us.”
Currently, Per Mar’s closest office to this market is Rockford, Ill. This new territory will extend from South Bend all the way to Southern Michigan.
Per Mar recently announced that it instituted a new company-wide initiative: False Alarm Control Teams in nine of its branch locations. Tolliver said that’s one of the many initiatives Per Mar will be rolling out in this new territory in the next several months. Asked about future acquisitions, Tolliver said Per Mar is “always in pursuit of acquisitions.”
Ron Davis, managing partner of Davis Marketing Group, represented Indiana Security in this transaction.

3M agrees to buy biometrics maker Cogent for $950m

Thu, 2 Sep 2010 00:00:00 CDT

ST. PAUL, Minn.—3M, the $23 billion global manufacturer based here, has entered into an agreement to buy all the shares of public biometrics manufacturer Cogent for roughly $950 million. Often known as Cogent Systems, the company provides finger, palm, face and iris biometric systems primarily to governments and law enforcement agencies. Its largest customer is the Department of Homeland Security.
Cogent will be added, should the deal go through, to 3M’s substantial Security Systems division, said company spokesperson Donna Fleming Runyon, in an interview with Security Systems News. 3M did roughly $1.5 billion in security and safety revenue in 2009, mostly dealing in passports and badge printing. 3M does have some biometric capabilities already, said Runyon, especially in its passports. However, “Adding Cogent Systems’ products to our business strengthens our product portfolio and services in high security credential issuance and authentication systems and positions 3M’s business in law enforcement applications,” said Mike Delkoski, vice president and general manager, 3M Security Systems, in a statement. “It also expands our reach into access control and other commercial ID and authentication applications.”
Cogent did roughly $130 million in revenue in 2009, but is trending toward less than $100 million in revenue in 2010. The company employs roughly 500 people in its Pasadena, Calif., headquarters, as well as offices in Ohio, Virginia, Austria, Canada, China, and the United Kingdom. Ming Hsieh, Cogent’s founder and CEO, will remain with 3M going forward.
Cogent’s primary product is its Automated Fingerprint/Palmprint Identification System, or AFIS, which enables customers to capture fingerprint and palm print images electronically, encode prints into searchable files, and accurately compare a set of fingerprints/palm prints to a database containing potentially millions of prints in seconds.
As of this writing, 3M still has to purchase the shares not owned by Hsieh, who has nearly 40 percent of the company. Reuters is reporting that one investor, St Nevan US Limited, has sued the 3M board, arguing that the bid of $10.50 a share is not high enough, though it is roughly 17 percent above the most recent trade at the time of the offer. It would appear that Wall Street agrees with St. Nevan, as Cogent stock pushed past $11 in trading on the days following the announcement of 3M’s intentions.
Further, writing for www.thedeal.com, Lou Whiteman quotes analysts and argues that there may be another bidder for Cogent that could swoop in and offer a higher price. He postulated that government services companies like Northrop Grumman, or commercial security manufacturers like Honeywell, might be interested in 3M’s products, but cited no sources that had expressed interest from any of those companies.
Runyon at 3M said it was too early to speculate about 3M’s intentions for Cogent in terms of branding or exploring the commercial marketplace with its products.

ADS acquires in Tennessee

Wed, 1 Sep 2010 00:00:00 CDT

NASHVILLE, Tenn.—ADS has a new platform for growth with the acquisition, announced Aug. 30, of Systems Unlimited of Jackson, Tenn.
“They’re a nice mix of 60/40 residential to commercial,” said John Cerasuolo, president of ADS. “And it’s a company with the single most recognized brand in the Jackson area.”
Cerasuolo declined to cite the terms of the deal or exact number of accounts that come along with the deal, but said it’s in the 1,000 to 5,000 account range.
The 20-year-old company was founded by former owner Keith Harvey, who will stay on as general manager and run the branch office, as will “every one of his team of 13 guys. There are six technicians, a couple of supervisors, sales and office staff,” Cerasuolo said. He said ADS likes to structure platform deals so that “the owner stays with us and runs the branch. We find they’ve got the right entrepreneurial spirit that drives our company.”
The branch will be co-branded with ADS for a year of so and then transition completely to the ADS brand. ADS has a presence that “goes right up to the doorstep of Memphis” and this new branch creates density in the area between Nashville and Memphis. ADS is continually looking for acquisition opportunities that will “fill in our Southeast region,” which currently includes 15 branches in the states of Tennessee, Georgia, Alabama, Florida and Kentucky, he said.
“We want to connect the dots,” Cerasuolo said. “We’re always active and we’re always looking for deals, but the most important thing is finding the right fit. We walk away from a lot more than we pursue.”

VRI partners with CareCentrix for evolved PERS

Wed, 1 Sep 2010 00:00:00 CDT

DAYTON, Ohio—Healthcare services company VRI on Aug. 26 announced a partnership with in-home nursing care company CareCentrix to expand its services and move PERS to the next level, according to VRI president Andy Schoonover. It’s not just about the device, the button, and the alert. It’s the service, the metrics, and the response.
“We’re in a slow transition from security to PERS and PERS is now mixing with healthcare. We’re seeing more and more folks on the PERS side transition from the unit being the primary business to healthcare being the primary business,” Schoonover said. “It’s taking PERS to the next level … It’s one thing to say ‘I know somebody has fallen.’ It’s another thing to figure who the right responders are to that alert.”
VRI will provide CareCentrix with telemonitoring, medication adherence, and medical alert systems to support their efforts in providing people with comprehensive medical care at home.
Schoonover says while VRI’s primary sell is to healthcare plans, there is real opportunity here for dealers. “We think that providing telemonitoring services to dealers makes a lot of sense. Whenever you have product where there is low awareness of the product and high willingness to buy there is opportunity for companies that know how to market and sell products to the end user,” Schoonover said. “Whenever I tell people about our telemonitoring services, I always get a ‘Wow, my mom could use that.’”
While more expensive than traditional PERS, Schoonover said the selling points for a more advanced telemonitoring solution were many. “Properly used, the devices are proven to keep those with chronic diseases out of the hospital. Telemonitoring gives family members an even higher level of comfort. Now caregivers know not only if their loved one has fallen due to the client using PERS but also that their vitals, blood sugars, and other biometric data are in line with their doctors’ expectations,” Schoonover said. “All of this information can be viewed on our online HIPAA-compliant portal that can be private-labeled for our dealers.”

Guardian Protection nabs third-largest Brink's/Broadview dealer

Mon, 30 Aug 2010 00:00:00 CDT

PITTSBURGH, Pa.—In an indication that Guardian Protection Services is moving beyond its super-regional roots and is serious about becoming a national player, the company announced Aug. 26 that Southern Alarm, the third-largest Brink’s/Broadview dealer, will become a Guardian dealer on Sept. 16.
Southern Alarm “has ranked as the top second or third Brink’s dealer for seven years now,” said owner Kelley Clements. Based in Richmond Hills Ga., the company has branch offices in Augusta, Ga. and Charleston, S.C., has 35 employees and averages “about 180 installs per month.”
With Southern Alarm as an authorized dealer, Guardian builds on a quiet expansion it has undertaken over the past year, said Hank Groff, national director of Guardian’s Authorized Dealer Program. This expansion has taken Guardian beyond its well-established super-regions in the Mid-Atlantic, Chicago area, Florida and Texas to elsewhere in the country.
“In the last 12 months we’ve moved into additional areas, [signing up new authorized dealers] in northern Florida, in Houston, Texas, and into the states of Utah and California, where we never were before. Now with Georgia and South Carolina, we’ve added two more states.”
And it’s not stopping there, Groff said. Guardian will “entertain a partnership with dealers in any area of the United States if it’s the right fit, if they meet our standards of quality,” he said.
Groff said Guardian’s authorized dealers are treated the same as its branch offices: “We make a lot of resources available to dealers. They’re not just a marketing arm for us, we treat them like a part of the family.”
Clements said he was wooed by five dealer programs at the ISC West show in March, and within the next 30 days narrowed his decision to two potential dealer programs. He settled on Guardian, he said, because “it has similar values to Brink’s where the emphasis was on quality of accounts rather than quantity.”
When Broadview Security was acquired by ADT this spring, all of its dealers and branches were acquired as well. Dealers have the option to leave ADT when their contracts expire. Clements believes he may be the first dealer to leave the ADT program.

Two insiders to bring 'undefeatable' door contact to alarm industry

Mon, 30 Aug 2010 00:00:00 CDT

WAUKESHA, Wis.—Two former alarm company owners, Michael Keegan and Chris Utter, have teamed up with a company called Magnasphere to bring a new kind of door contact to the alarm industry, one that they believe will become the industry standard within five years.
“The reed switches are going to go the way of the photoelectric beam,” Keegan predicted.
Most alarm dealers know about the vulnerability of your garden-variety reed-switch door contact, Keegan said. “If you present a magnet to the outside of a door where the contact is, you can open the door and never set off the alarm.”
The Magnasphere switch, on the other hand, is a “magnetic sphere or ball contact,” which Keegan says cannot be defeated with a magnet without setting off the alarm. It is also made of metal, which makes it “virtually indestructible,” he said.
Ken Risk, CEO of GRI—the largest domestic manufacturer of reed switches—acknowledged that magnets can be used to defeat reed switches, but noted that it’s easier said than done. “You have to know exactly where the contact is located,” he said. He also noted that doors being defeated is not a big problem in the alarm industry and added that while it’s much harder to defeat the Magnasphere contact, it is not impossible.
Risk said he’s a huge fan of the Magnasphere products, however, and his company is a reseller of that product. Further, he believes the Magnasphere contacts could potentially exceed the sale of reed switch controls, but believes the price needs to come way down. “If they could get the price down to $1.50 or $2.00, sales would take off like a rocket,” he said.
Keegan said that dealers he spoke to mistakenly thought, before checking, that they spent about $1.50 per contact. They actually spend closer to $5, he said, which is comparable to the Magnasphere high security door contacts, which sell for just under $5, he said.
Two alarm dealers contacted by Security Systems News said they spend between $1 and $3 on reed switches currently; one dealer verified this with a purchasing manager.
They both, however, thought the Magnasphere product sounded interesting.
Keegan believes that once the word gets out about Magnasphere, alarm dealers will be eager to provide a higher level of security to their customers and gain an edge over competitors who sell reed switches.
Keegan said he’s “having conversations with some of the largest dealers and integrators in the country.” The contacts are being distributed by Alarm Products Distributors in Minneapolis currently and he’s in talks with others. “We hope to announce another major distributor here very soon,” he said.
Magnasphere introduced its contacts, which were designed for high security applications such as embassies and other government buildings, at ISC West in 2002. That year the contacts won awards at the show for best contact.
But its success in the government market has not been matched in the resi or commercial markets. Why? “They didn’t know how to present it to the industry,” Keegan said. “They’ve always had the message, but they didn’t have the messengers.”
Utter, who formerly owned Sentra Security, joined Magnasphere in December of 2009, with the goal of creating Magnasphere high security contacts and mounts designed for residential and commercial applications. Keegan, who recently sold his alarm company, Watchguard Security, ran into Utter at the ESX show and joined the company several weeks later.
The market for door contacts is large for security applications where “30 million reed switches sold last year,” and outside security as well. “One billion reed switches were sold to other industries last year,” Keegan said.

Fastest growing firms in security?

Thu, 26 Aug 2010 00:00:00 CDT

NEW YORK—Well, despite the economy, we know at least a few physical security players have grown in the last few years. The Inc. 500/5000, a list of “the fastest-growing small companies” as defined by rate of growth over the period from 2006 through 2009, was released this week and includes the likes of VMS-maker Exacq, integrators Security By Design and Intelligent Access Systems, residential firms like Defender Direct and Pinnacle Security, and online distributor Brickhouse Security.
Exacq led the way for the physical security industry, ranking at #173, with sales of $9.7 million in 2009, representing a 1,642 percent growth rate. For installers, it was Detroit-based Security By Design in the lead, with $6.7 million in 2009 sales, for a growth rate of 956 percent.
Of course, as you go down the extended list to the bottom of the 5000, you don’t have to grow very fast to make the list. Sacramento-based All Phase Security, which does both installation and guarding services, came in at #4,506 with modest growth of 13 percent over three years, reaching $7.5 million in revenues for 2009. Logically, it is harder for older companies (All Phase was founded in 1994) and larger companies to grow at the percentage rate that makes the top of the list. It can be seen as plenty impressive for Monitronics, also founded in 1994 and with $234 million in 2009 revenues, to come in at #4,222 with 26 percent growth.
Nor is every security company that is growing fast represented on this list. A company must agree to submit its audited financials for all the world to see and some firms are not comfortable with that. Further, a company might be unaware of the list and application process entirely.
However, Jason Buckman, CEO and owner of Security By Design, said the process isn’t overly strenuous. “This was brought to us by our CPA,” Buckman said. “It’s just a one-page form that you put your revenue numbers on and your CPA signs. They don’t come out and do an audit ... It’s just our revenues, and at the end of the day, if anyone really wants to find that out, they’ll do it anyway. For us, it’s a good positive marketing piece to get our name out there.”
Buckman said it’s a nice thing to have on the resume, too, for larger end users who are concerned, especially in this economic climate, about a small integrator’s staying power and capabilities. “Part of the motivation,” he said, “was to show we’re not a small company. It’s in writing, and it’s a reputable source ... [End users] are concerned small companies won’t last. They’re doing a lot more due diligence on your capabilities financially. That’s made things more difficult over the last couple of years of trying to do business.”
Not so difficult, of course, that Security By Design couldn’t grow at a 956-percent clip.
For Exacq director of sales and marketing Tom Buckley, inclusion on the list has a positive impact he’s familiar with: In 2000, Integral Technologies, the last firm run by the majority of Exacq’s leadership team, ranked on the list with 1999 sales of $14.4 million. “We got a lot of play out of that,” Buckley said. “It got us local attention. We’re always looking for good employees, and local attention got us that.” The market paid attention, too, he said, and he felt it had more impact than would have winning the New Product Showcase at ISC West or some other industry-specific award. (For more on the similarities between Integral and Exacq, see here.)
And maybe the list is a predictor of future success. Lenel was #9 on the list in 2000, Buckley noted.
This time around, the local recognition hasn’t come for Exacq yet, but “we heard instantly from Anixter,” Buckley said, “and we heard from PSA. Our bigger distributors are certainly interested in that kind of information.” Nor is it a bad message to send out to the reseller community, he said. “They’ll feel good about being with a winner for right now,” Buckley predicted.
Buckman at Security By Design hopes potential end users have a similar positive connection with his business going forward: “That was a lot of the motivation,” he said, “to show that we’re not just a little privately held company. We’ve got the wherewithal to compete with the larger companies.”

PSIA chairman: Get involved!

Thu, 26 Aug 2010 00:00:00 CDT

SANTA CLARA, Calif.—As the Physical Security Interoperability Alliance continues to make progress toward its goal of a holistic body of technological standards in the security industry, new board chairman Dave Fowler, also senior VP of product development and marketing as PSIM software-maker VidSys, said integrators need to help drive the industry-wide effort.
“They’re the pull,” he said. “We’re the push side. We’re pushing the technology and products into the marketplace. They’re the pull side, saying, “I’ve got to have products that adhere to these standards.”
Thus, one of Fowler’s goals as chairman is to get more participation from integrators on the PSIA’s working groups, and “getting more information into their hands about how they can get involved.”
If it seems obvious that standards making more products work together more easily would make integrators’ jobs easier and systems less expensive to deploy, why then aren’t end users more involved already?
“Part of it is the historical issue in the industry,” Fowler theorized. “We’ve grown up fairly fractured, with no standards, so the standard mode of operation is that there’s no interoperability, so they think, “I’ll solve that problem my own way,” whether it’s by custom development or buying everything from one vendor ... Because the industry has never seen the value of standards, there hasn’t been as much excitement about moving toward them. But ask the IT industry about the excitement caused by standardizing around Ethernet or TCP. They’ll immediately say the industry grew a lot faster, but that message hasn’t resonated in security yet.”
Only a few companies have PSIA-compliant products on the market, though. When will PSIA specifications actually begin to have an impact? “It’s evolving over time,” Fowler said. “You get momentum around a specific area and then that momentum spreads. You might see it in video, and then quickly, if there’s a common way of handling video, then you start asking how you can link that into access control.”
No, but seriously, when? “In the next year there will be a lot of adoption at the vendor level,” Fowler predicted. However, he noted that the compliance tools that PSIA have released and are continuing to release are vital, as manufacturers are concerned that each vendor will interpret the specification differently, and “implementation is only as good as the interoperability that you can get from that implementation.”
This is also why PSIA is promoting its “connectathons” or “plugfests,” the next of which is at 4 p.m. on Oct. 13, at the ASIS show, in room A122.
Will standards create so much plugging and playing that an integrator’s value proposition will be significantly diminished?
No, said Fowler. “Systems integrators think that their value add is in the integration of these products together into one system. It’s not. The value proposition is what you do with the information, not the ability to get the devices to plug together.” Integrators in security should look again to the IT industry for a way forward. “That’s where they’ve moved already,” he said of IT integrators. “There were all these physical systems that you needed to collect information from—now, with all these network devices, they’ve collected all the information. That’s easy. And now they’ve moved into policies and compliance and provisioning and guidelines, and that’s where they’re making their money.”
But are today’s physical security integrators ready to make their money helping end users comply with regulations and create policies for the use of their systems? “People will continue to do contracting and installing,” Fowler allowed, “but they’ll become only a piece of the solution, and not the whole solution over time. We’re seeing that already. They’ve upgraded their organizations to get people more oriented around helping people get more out of their systems, rather than just installing the devices.”
Finally, what about the relationship with ONVIF? “PSIA is focused on areas that ONVIF is not focused on,” Fowler said. “And as we make progress on specs, you have to ask, ‘If there’s already one standard out there, why wouldn’t I get on board with that and concentrate on areas where there isn’t one?’ Over time it would be great to find us working together and to not overlap.”
So, if it would be great, has PSIA had conversations with ONVIF along those lines, and has Fowler reached out to ONVIF in his first 30 days at chairman of PSIA? “I can’t comment on what happened prior to stepping into this role,” he said, “but I have not had conversations with ONVIF. But I can’t see any reason why those conversations shouldn’t take place, and we’ll see how that evolves. There are lots of common vendors between the organizations, and it would only make sense to want to pool their efforts.”

Platinum VoIP partnership intended to help ease sales process

Thu, 19 Aug 2010 00:00:00 CDT

AMERICAN FORK, Utah—Platinum Protection executives say a new partnership, announced Aug. 17, with VoIP phone service provider Ooma will give its sales reps a valuable selling point: Savings from the phone service can potentially offset the cost of a new security system.
Platinum sales reps will begin offering Ooma’s VoIP phone service at a discounted price to home security customers immediately.
“For someone who’s paying $40, $50 or $60 for a landline, here’s a solution where they get better phone service, they can keep the same number and they can have a security system—all for the same price they’re currently paying for the landline,” said Chance Allred, partner in Platinum Protection.
Ooma offers an electronic device that hooks up to an existing high-speed internet connection and existing phone to provide free calling in the U.S., with add-on services such as Google Voice Extensions, PureVoice Technology, and Mobile Calling Application.
Platinum is offering Ooma’s Hub for home phone service for $200, a $49 savings off the online cost. The only additional cost are local taxes and fees, which run around $3.50 per month.
“Ooma fully supports the installation, warranty, and service of the system. And there’s a 30-day risk-free guarantee. If a customer doesn’t like Ooma, they can get a 100-percent refund,” Allred said.
The Platinum executive team and regional managers tested the Ooma systems in their homes for the past six months.
“Everyone who used it said it’s better than the standard landline,” Allred said.
Platinum executives just returned from a managers conference where regional managers were trained on the Ooma product. Those managers have since returned to local offices and are in the process of training sales reps.
While the summer season is winding down, Platinum’s extended season goes through the middle of October. Allred is optimistic the service will take off with Platinum customers “as more sales reps are trained on it and more customers use it and like it and the word gets out.”