How the Cloud & Big-Time Manufacturers Will Affect the Security Industry
In my 37 years working in the industry, I have seen the “race to the bottom” occur with every popular technology that has come into our business. Two examples come quickly to mind: PIR motion detectors and digital communicators. The first PIRs I sold at a distributor in Atlanta went for $275 in 1977 dollars. A few years later the cost for better performing PIRs had dropped below $50 each, and soon bottomed out at around $10 apiece. The same story happened with digital communicators. The first ones were $130 with no control panel functions. Dealers had to purchase a $150 control panel (ADEMCO 342Rs, anyone?) to complete the “head end” of a security system. Today’s combined control panel/digital communicators are typically priced to the dealer at around $50 for a six zone control. You can’t take your wife to dinner for $50, but dealers can buy an alarm panel/communicator for that price.
What has surprised me is the speed at which IP cameras have dropped in cost, while simultaneously increasing features and options. In a couple of short years (the older I get, the shorter the years) the price of feature-loaded IP cameras has dropped to or below the cost of low-end analog surveillance cameras that have no IP capability, on-camera recording, audio, or any advanced features.
While the established manufacturers try to plan their new offerings, the flood of IP cameras is coming from across the Pacific. Our friends in Asia seem to have decided that there is a large market in indoor IP cameras and are filling that perceived need. Security dealers need to be thinking right now about how these inexpensive IP cameras will impact our business.
We are already seeing how these low-cost IP cameras are changing the marketplace. Lured by the precious RMR, big-time companies such as Google, AT&T and the various cable providers are spending millions in advertising dollars to inform our existing and potential clients about the proven value of remote video viewing and recording. The concept of “peace of mind” has been one of the sales mantras in electronic security for decades. This idea has become even more concrete now that my smartphone allows me to check in on my family at home while I’m on the road anywhere in the U.S. or Canada.
Consider Google/Nest’s purchase of Dropcam for $555 million. That represents a half-billion dollar wager on the future sales of residential and small commercial IP cameras and cloud recording. That’s big money and the folks at Google don’t often fail in the marketplace.
What does this tidal market shift mean to electronic security dealers, and what can you do to compete?
Here are some ideas:
- IP is here to stay. IP cameras are now cheaper than comparable analog cameras, and end-users already have the LAN networks, Wi-Fi, and Internet connections that can be used to make cameras remotely viewable on smart devices and Internet PCs. One of the primary driving forces behind the growth of IP camera installations is the simple fact that most all clients have HD televisions in their home, and now they expect to see the better quality surveillance images that are available from HD and megapixel IP cameras.
- Major companies (AT&T, Comcast, Dropcam, etc.) are right this moment taking a concerted run at your accounts. While some dealers scoff at low-end commercial/residential video revenues, the big boys are creeping into our business. What do you think these major companies will do when their video RMR growth flatlines in two or three years? Aren’t they going to take a shot at your monitored security accounts? Security dealers need to offer low-cost IP video camera options to their existing and new customers to combat this invasion.
- Sales people and technicians need to be trained and certified in IP networking immediately. The most valuable things in any home or building outside of the people, pets and maybe an art collection is on the customers’ hard drives and PCs. If your technicians cannot install and program IP cameras with complete networking knowledge and confidence, at a minimum they will burn excessive installation time or even worse cause problems for the client’s network. While the techs need to know how to do it, the salespeople need to know how to sell it. If your salesperson glazes over when a commercial account’s IT manager wants to discuss the impact of a proposed IP camera installation, do you think your company will win the contract? The IT person is going to want to deal with a salesperson who is knowledgeable in IP. If you can’t talk the talk, you can’t walk the walk.
- Forget pulling new cables for low-end IP cameras. With other technologies available (IP over AC power lines, IP and PoE over existing coax, and Wi-Fi), dealers can quickly install IP cameras and devices without making holes, pulling new cables, and scaring the cat with the power drill sound.The major manufacturers of these “new” technologies such as D-Link, Trendnet, and NVT all provide simple and sure ways to test for the functionality of their devices. In most cases, you just plug in the transceivers and look at the indicator lights. For Wi-Fi strength testing there are a wide offering of Wi-Fi testing apps available for free for your smartphone. These testing methods take the unknown out of these new technologies and the tests can be perform by the salesperson who’s equipped with the testing devices or apps in just a couple of minutes. This way the functionality of using one of these “new” technologies for a specific installation has been tested before the client signs the agreement.
- The Cloud, particularly on smaller operations, poses a threat to the NVR and DVR. It’s a simple fact: you can get cloud recording from Honeywell Total Connect, Smartvue, or Securvizion (to name three examples) at a much lower cost than buying, programming, and installing video storage hardware. Using cloud recording will lower the cost of an installation to the end-user, which helps sell more systems for the security dealer who embraces these services. Cloud recording on the Internet is also a much more secure video storage method than a localized NVR. If a rogue employee unplugs the NVR in the telecom closet, the failure of video recording may not be discovered until someone needs to review an incident from yesterday and discovers they have no recorded video. The best cloud recording services available to security dealers not only record full time video and motion clips, but these services also supervise the IP video stream, and can email/text selected individuals (company manager, alarm company personnel) if the video stream(s) stops flowing to the cloud recording servers.
- Call it dual, backup, or whatever you like, redundant recording of IP cameras is an absolute must and it costs just about nothing. Major camera manufacturers such as Axis Communications and Vivotek include either SD or mini-SD storage card slots on many of their products which enable a camera to record itself. Hard drives will eventually fail, and we in the industry have a moral commitment to provide reliable recording using at least two separate methods. Mating SD-card equipped cameras with Internet cloud recording gives the customer and the dealer a much higher probability that critical video images are captured. Self-recording IP cameras can also sooth the savage IT manager who is obsessed with what the bandwidth impact will be on their enterprise LAN when you hook up 12 IP cameras to his/her network. SD/mini-SD cards can be very cheap; you can buy one for $10 or less. That’s an inexpensive insurance policy for your company’s cameras’ recorded output. If the Internet connection fails SD-card cameras will continue to record even if the cloud recording has been disrupted.
While some in our industry wring their hands in despair at the combined “Sharknado” effect of falling IP camera prices and the entrance of the Great White Sharks of the communications industry into our business, I believe that this is a golden opportunity ready to be exploited. We can do things for our customers we could never do before, and we can provide video systems that deliver real-time and recorded “peace of mind.”
In short, get your technicians and salespeople trained and certified in IP, learn to use Wi-Fi and Ethernet over AC powerline connections, setup your cloud recording service, and take the RMVR® (Recurring Monthly Video Revenue) rocket ride to profits.