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I had a series of posts in June asking the simple question, who’s bigger, Salesforce.com or GM? (I, II, III, IV)

The series concludes here, indicating that Salesforce.com’s market capitalization remained slightly behind that of General Motors.  At least this was true on June 4th.

Well, some things have changed.  Most who are interested in economic issues are well aware of the challenges now facing GM (and for that matter, Ford and Chrysler).  A multi-billion dollar bailout  may be next.  It has not been an easy run for the ”Big Three” automakers.  GM’s market capitalization has been battered (~$6.1 billion).

Salesforce.com has also faced some challenges.  While they set company records with their 2nd quarter profits, the results were short of investor expectations, and the stock plummeted 8% in one day.  The San Francisco based company is now valued at ~$6.6 billion.

Perhaps this is an unfair comparison, especially given the very difficult situation in the auto industry.  Still, who would you rather own?

There are more ways than ever to communicate using video.  Of course, there is video conferencing, either via a special phone device like a Polycom or software on your computer like Skype.

But whole new segments of video communication have emerged in the last 3-5 years that most of us probably never thought would happen.  YouTube is increasingly being used as a visual collaboration tool and it isn’t only for entertainment, but also increasingly for business.  There are ton’s of informational videos, how to and product demos out there.  Now, take this to the next level.

There is a concept called Visual Networking in which anyone can immediately talk, see and share content with a few people or thousands of colleagues or friends”.  An interesting startup company called Bada Networks (formerly Amity Systems) is building technology just for this purpose.

Here’s a good article in network world about Bada.

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IP Video Market Info released a search engine designed specifically for the video surveillance professional.

John Honovich, founder of IP Video Market Info and frequent commenter to this blog, describes the new optimized search engine in this press release.

Let’s hope that word spreads and the search engine is successful!

I posted a while back about getting to know the folks at Protiviti at a conference.  A very good customer of ours happens to be a very good customer of theirs so we started talking.  They are thought leaders in the world of loss prevention and provide consulting services to retailers to help them drive profitability in their businesses.

I was on a plane yesterday and was reading a report they put out recently that assessed capabilities and needs in loss prevention at a large number of retail and restaurant operators.  There were a number of interesting takeaways from the report, but the one that I found most interesting was what executives (not just LP executives, but VP and C level execs at the surveyed firms) thought needed the most improvement in their LP efforts.  #1 was Internal Theft.  Tied for #3 was Measuring/enhancing exception-based reporting ROI.

Both of these issues are squarely impacted by video, so this is a good sign for providers that are investing in video capabilities that can help reduce internal theft and be used to provide or augment exception-based reporting systems to help improve their ROI (by providing visual context of what really happened behind the numbers that are spit out of the exception reporting system).

Tomorrow I’ll post some thoughts on the exception reporting topic as we’ve had a number of prospects pose some interesting questions on this front.

This certainly comes as no surprise. Technomic’s revised economic forecast for full service restaurants in 2008 is a mere 1%, adjusted for inflation. This is down from nearly 3% just last year.

I own an SUV and wouldn’t dream of selling it in today’s market. What does one do until the market comes back? You make some small investments to improve it’s efficiency. You also make darn sure that you operate it in a manner that produces the most miles per gallon.

Same goes for restaurants. Take the time now to invest in operational efficiency and the technology that will get you there. At the end of this cycle, the top line will grow again and the bottom line will swell. Hold off for this future valuation. It will be well worth the wait.

Casual-dining deals faltering in tough economy

TAMPA, Fla. (Aug. 11, 2008)

Outback Steakhouse parent OSI Restaurant Partners’ move to sell its six-unit Lee Roy Selmon’s chain became the latest victim of the tightened credit markets, as the deal fell through because the buyers could not obtain financing.

According to a June filing with federal regulators, OSI revealed that the purchase agreement, announced last October and expected to close last December, had expired.

An investor group led by its NFL Hall of Famer namesake founder and Selmon’s president Peter Barli said last October that it was purchasing an 80-percent stake in Selmon’s with plans to grow the concept to 30 restaurants in five years.

The current status of the deal remains unclear, and OSI officials could not be reached for comment as of press time. The filing said the company also had shelved plans to sell the 37-unit Roy’s Restaurant chain because of poor market conditions. Still, OSI indicated in the filing that it would continue to evaluate exit strategies for its non-core chains, which include Selmon’s, Roy’s and the 38-unit Cheeseburger in Paradise chain.

The stalled deal joins others in the casual-dining sector that also have lost steam, including Brinker International Inc.’s unsuccessful efforts to sell Romano’s Macaroni Grill or Sizzler’s decision in June to hold off on a sale of its 300 domestic locations until market conditions improve. Last month, P.F. Chang’s China Bistro Inc. closed its lone Taneko Japanese Tavern about three months after disclosing that an attempt to sell a controlling interest in the intended chain prototype had fallen through.

Some transactions, however, have survived the tough economy, such as the $11.3 million deal that took Max & Erma’s private. Pittsburgh restaurateur Gary Reinert Sr.’s G&R Acquisition Inc. bought the 106-unit chain earlier this summer.

Pending deals include Planet Hollywood International Inc.’s offer to buy Buca Inc., parent of the 88-unit Buca di Beppo chain, for 45 cents a share, or $9.7 million.

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In a recent study by PriceWaterhouseCoopers and the National Venture Capital Association (NVCA), venture capitalists invested over $7.4 billion in the second quarter.  This is on par with the $7.5 billion invested during the first quarter, and continues a general and steady upward trend since 2002. 

You may have read some earlier posts about how we are making some changes to be more customer and market driven.  Part of our near term plan was to relaunch the Envysion Video service based on some new capabilities, some large customer wins, and our PCI compliance.

As part of our efforts I’ve spent the last two weeks talking to a variety of media people, analysts and bloggers.  I’ll share some of the things I’ve learned from that experience later, but I did want to call out a good assessment that John Honovich did over on his IP Video Market Info site.

Here’s the article.

I definitely enjoyed speaking with John as he really gets this space and was able to provide me some insight as well.  You should definitely add him to the list of blogs you follow.

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The Austrian economist Joseph Schumpeter used the phrase “creative destruction,” to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways. In his view, this was part of a cycle of economies going through growth and recession.

We’re not technically in a recession until there have been two consecutive quarters of negative growth of real GDP or economic growth. But 70% of the US economy is consumer spending and consumer spending is growing extremely slowly. Discretionary spending seems to be what’s really taking the toll right now as noted by this article in Business Week. Yet some of the less exciting staples of the economy are actually humming along such as food and fuel.

What about security? IMS reports a slowdown in growth of network video to 30% for 2008, down from 42% last year. 30% growth doesn’t sound all that bad to me. Now that’s just for network video growth, which they note is less than 20% of the overall video surveillance market. Hybrid video systems (that is, video systems that support IP network video and analog video) would seem to be positioned well either way the market moves over the next year or so.

There are a few takes on how the reduced growth in the economy will affect the broader video and security market from some video/security bloggers. John Honovich claims that there are too many IP Video Surveillance Software suppliers that are either not supplying value or are not differentiated. There sure are a lot of them and it does seem like that there will be consolidation or a reduction in the number of IP Video Software suppliers.

Steve Hunt blogged an insightful article recently on the same topic but with a different twist. His main point is that if you supply value, you’ll survive. To supply value however, you have to stay close to your customers.

I’d say the software (and service) suppliers that provide real value to their customers will survive if they can control their costs and connect with their customers. Perhaps some creative destruction will occur along the way video as innovative entrepreneurs create new ways to deliver increased value to customers. Those who aren’t producing value to the end customer however might want to read, “Change or Die”, available now at Amazon.com!

A couple of weeks back I posted about a brief meeting that I had with another CEO in the video space, Patrick Sobalvarro of Intellivid. I mentioned that Patrick, who has been in the video world longer than I have, was gracious enough to share some of his insights and it was a very good initial conversation. I should have mentioned that he seemed like a pretty happy guy.

Now I know why.

Tyco International Announces Acquisition of IntelliVid® to Bolster its American Dynamics® Video Portfolio

Congratulations Patrick and I look forward to catching up after you settle into your new firm.

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A couple days ago Matt Steinfort posted on the significant investment dollars that are funding both start-up and well established companies in the broader video market.

Is this another case of irrational exuberance?  Not by a long shot.

Capital infusions of this significance are not executed on a whim.  The investors conduct extensive research on the company seeking investment and the greater landscape of the marketplace.  They must be convinced that the target company is in a segment poised for growth, and that the team assembled is capable and well-positioned to capture a portion of this growth.

Investing in the absence of either is simply hoping that the “greater fools theory” prevails. 

Contributing to the attractiveness of the video market are projections referenced in stories like this one.  In a recent report, ABI Research projected that the video surveillance market (which includes surveillance cameras, computers and storage, professional services and hardware infranstructure) is poised to grow to $46.0 billion by 2013 from $13.5 billion in 2006. 

This is an annual compounded growth rate of nearly 20% per year! 

This type of projected growth tends to draw a crowd, and suggests that MVaaS providers and partners are in the right place at the right time.  Carpe diem!