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May 19, 2009
By Khali Henderson
As recession-proof industries go, security might be as close as you can get. Every business has a need for security and few are willing to compromise it to save a few bucks.
“People and organizations are still buying video security systems despite the recession,” said Stan Schatt, research vice president and practice director for ABI Research in an April 1 press statement. “In fact some large retailers have increased their deployments to counter recession-induced shoplifting. Meanwhile U.S. government spending, particularly on enhanced border, port and airport security will be a mainstay in the short to medium term.”
Whether or not a slowdown-induced crime spree ensues, there is a very real opportunity in government funding for security projects through stimulus funds awarded under the American Recovery and Reinvestment Act.
According to analyst Alastair Hayfield from IMS Research, the trickle-down from government stimulus packages will not be felt until late 2009.
Regardless, the security market is a sizable opportunity at $9.7 billion, according to a study released in January 2009 by the Security Industry Association (SIA), based on 2007 data. This includes access control, video surveillance, fire detection, intrusion detection and electronic article surveillance. There’s another $8.2 billion going to supporting industries like installers and integrators, SIA’s report said.
Those figures are likely to grow as companies upgrade their security systems to newer technologies. Like the telecom industry, the security industry is migrating from analog to IP-based surveillance and access control systems. Much like IP PBXs, IP surveillance systems, for instance, will grow faster than the analog market, overtaking CCTV by 2011, according to a forecast from iSuppli Corp..
The IP transformation means telecom partners not only can relate to the pains of transformation, but they might have a greater understanding of the underlying networking technology than even traditional security dealers. And, telephony vendors like Grandstream Networks are recognizing the synergies by offering products that do double duty. Grandstream announced April 1 its entrance into the IP video surveillance market. Its SIP-based H.264 video surveillance products with two-way audio capability turn each camera into a VoIP device that can interoperate with tens of millions of SIP phones that are already deployed.
“Security, like telephony, is a utility,” said Robert Aranda, President of the IP Integration and IP Managed Services Division of Interface Security Systems LLC. “It’s just another application on the network.”
With this understanding, Interface in 2007 purchased its own IP backbone with the acquisition of Aranda’s company, LPM, a managed network and IP integration company. Now, Interface’s growth strategy centers on five pillars — managed Internet access, intrusion detection, video surveillance, energy containment and IP telephony. “We understand security and equally telephony and networking,” Aranda said. “We have true convergence.”
After integrating its acquisition over the past 18 months, Interface is ready to bring on more business and is rolling out its first channel program, targeted directly at telecom partners. The program was pilot tested in March. The overwhelming initial response Interface received at the Spring 2009 Channel Partners Conference & Expo from agents representing hundreds of potential locations caused the company to reconsider its ability to scale the program, Aranda said. Now, he said Interface is in negotiations with an unnamed master agent to manage the new channel. He expected to announce the distribution partner by the end of second quarter.
Interface may select a second master, but Aranda said the company has no plans to do so. All sales and service training will be handled by the master agent, and Interface will be integrated into the master agent’s existing portal for quoting, order status and commission reporting.
Given its focus, it’s not surprising that Interface’s indirect sales compensation plan is modeled after typically agent program. Agents earn 10 to 20 percent commissions on the MRC paid by the customer. However, Interface is paying the full commission at contract signing and when the customer renews rather than as a residual, so there is no risk to the agent, Aranda said. And, he said, there’s little risk to Interface because its bundled offer lowers the possibility that customers will churn.
Read more about:Agents
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