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.
Congratulations Patrick and I look forward to catching up after you settle into your new firm.
Image via WikipediaA 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!
In any business, knowing your entire ecosystem is critical, regardless of industry segment. Coming in cold to the MVaaS world, I didn’t know what I didn’t know. As a managed video as a service provider, I knew we sold cameras, provided EnVRs, installed systems, required broadband or satellite and integrated with Point of Sale (POS) providers. Using these categories as a starting point, my team quickly prioritized which companies/providers we wanted to know in those arenas and others, such as security providers, broadband providers, IT integrators and more.
My team set meetings with the leads from those companies we did business with and magically I had the answers to the test in terms of who I didn’t know, but needed to. In addition, we gained introductions to the “right” people where there was a mutual value proposition. Not only did we get intros but information about how the companies operated and what resonated with them.
Austin Powerssaid the three most important things in life are “shag, shag and location” but in our business I would amend his Groviness’ proclimation to the three most important things in life are ”shag, shag and relationship.” Know your ecosystem, build relationships and move faster…
Image by doublelibra via FlickrI read a good post by Brad Feld dealing with a recent accounting pronouncement (Feld Thoughts – FAS 157 – Another Annoying Accounting Provision). He promises more on the subject, and I’m looking forward to the posts to come.
Now that I’ve mentioned accounting, I’ll pause briefly, allowing you to complete your yawn. . . but I do urge you to read Brad’s post. It is very funny and decidedly anti-accountant, a popular sentiment after six years of SOX compliance and 146 years of benevolence from the IRS. I think you’ll enjoy his take on the topic.
That being said, and in the spirit of full disclosure, I’m a certified public accountant. However, I have a somewhat different background than many of my brethren in that I majored in psychology as an undergraduate. How did I find my way to accounting from psychology? Probably not important. What did occur to me, however, was a possible new business opportunity. Think about it. I could offer the technical reasoning for the necessity of an accounting pronouncement, and then provide counseling services post-op to subjects that remain light-headed. Talk about a two-fer. The green visor crowd would be envious…
The venture capital market is clearly still bullish on the broad video market as the dollars keep flowing into both start-up and well established companies. It is interesting to watch where the dollars are going – there has been a lot of investment in video analytics companies, IP camera manufacturers, video management software providers (primarily IP camera based) and other leading edge providers that are changing the landscape of the video surveillance world.
I saw two recent examples today.
The first was VideoIQ, which raised $10M in a Series B (second round of funding for those that don’t speak VC) round from Atlas Ventures, Matrix Partners, and Lehman Brothers Venture Capital – all very successful and well-known VCs. VideoIQ is a technology company that spun out of GE Security last year that does IP cameras with on-board storage and analytics. From their website, “VideoIQ is taking a leadership role in making video analytics a standard part of every video surveillance system with affordable, plug-and-play analytics systems that perform in every environment.” They say, not surprisingly, that the new money is to fuel market expansion and product development (has a start-up ever said anything else when it comes to how they plan to use their money?)
The second was Milestone Systems, which raised a whopping $27M, from Index Ventures, a European VC firm that I don’t know much about. It is interesting to see Milestone, who makes software to manage IP camera networks, raise money as they have been in business for 10 years and have a rather large business with offices in 9 different countries. Despite not being a startup, guess what Milestone is going to do with its new capital? From their press release “Milestone will also use the funding to continue development of its technology platform and spearhead new business initiatives”
It is great to see such strong investment activity continuing in our space – it is a great sign that the market continues to have tremendous promise for those that can innovate and create value for their customers.
I just read a popular article on where to deploy video analytics at Security Info Watch, Axis: Video Analytics at the Edge.
The article written by Fredrik Nilsson of Axis Communications does a great job of describing different deployment options for deploying video analytics. While I agree with the bandwidth advantages and improved analytic performance for video analytics in the camera, I believe the cost of implementing this scenario is not always clearly an advantage.
1. Operational cost: maintaining the more complex configurations and software which are required for analytics at the edge may result in increased operational costs compared to a more centralized configuration scheme. Video management software must be more sophisticated to manage custom configurations in 10,000 camera devices versus 1,000 NVR’s with video analytics. Either can be done, but guess which one costs less?
2. Cost to change: Video analytics is rapidly changing. The ability to cost effectively upgrade the analytic components is extremely important. A solution which performs analytics in software on high powered servers should have much more flexibility for upgrades. In addition, upgrading the processing capacity of commodity based servers performing analytics should prove to be lower cost than upgrading all of one’s cameras at the edge.
3. Cost Optimization: Not all cameras need video analytics. With a separate device performing analytics, it is possible to change which cameras have analytics being performed. When hardware in the camera is required, one has to replace cameras to turn on video analytics. If analytics are needed in a different area, more cameras have to be purchased or the cameras have to be physically moved.
Having the option to add analytics in the recording device (NVR or DVR) or other server one or more “layers” above the cameras helps address the above cost issues. Products such as Amietis Symphony supply such a capability through their NVR software which performs analytics on PC based servers.
To fully realize the advantages of analytics outside of the camera, one needs to be able to integrate Video management with NVR’s and Cameras all in one. Amietis does not appear to currently publish a simple web or XML based API for integration with their analytics. Rather, one must use Amietis’ video management software in combination with their analytics to deliver a working solution. Not exactly something a web based MVaaS provider is able to do since Amietis Symphony is not web based itself.
Cernium on the other hand appears to have a product line which has both analytics only software and hardware based solutions with open, XML based API’s. They appear to have a business model for integrating with Video Management software providers as they recently announced integration with Milestone systems.
Axis’ open approach of exposing simple, web based and XML based API’s to interface with their IP camera products is likely to help them gain a lot of traction for their analytics working in a variety of video management platforms since this makes it so much easier to integrate into many video management platforms, ultimately delivering the ability to mix and match the best products to solve problems.
Image via WikipediaYou may remember the hilarious SNL character Theodoric of York, Medieval Barber. If not, here is a link to the hulu site.
It’s certainly easy to laugh at the ignorance of our ancestors. Then again, I wonder if we’ll be proud of all the things we “know” 100 years from now…
What is the moral?
No, Nah and Nope.
Rather, I would suggest that it is the following:
Know what you know. Learn what you don’t. Challenge both.
This holds true for many areas of life, and it is specifically applicable to business. Leaders who fail in this regard risk being obsoleted.
Do you think that video providers are experts in all aspects of their own business? What about their suppliers? Competitors? Are they experts in their customers businesses? If they aren’t, how can they possible meet the needs and requirements of their customers?
The MVaaS providers that will succeed will be those that:
In my last post I gave some highlights of customers conversations at this past week’s NRF LP show. I also talked to a number of current and potential channel partners for MVaaS services. While there are a number of potential channels that weren’t represented at the show, there were a couple channel segments that were represented.
Traditional security providers
I’d like to see the marketing budgets at the companies as they are at every loss prevention and security show I have ever seen, and when they go, they bring at least a dozen people with them. It either speaks to the amount of business that they do in this space or to an industry-wide lack of concern over expenses. I’m guessing the former. These companies sell video, access control, alarms, etc to the retail and restaurant providers. They have all been around for a long long time and have deep personal relationships with the industry practioners. They are all very familiar with video. My general experience with this category of partner, which was consistent with the conversations at the show, is that these guys understand the market, see the value of MVaaS (particularly the recurring revenue piece) but are a little uncertain how to proceed. Their biggest challenge is the installed base of traditional DVRs that they have in place. They want an MVaaS solution that can work for their customers on their existing DVRs. This speaks to the need for standards on how to communicate across vendor platforms, something the MVaaS industry really needs to tackle to take full advantage of the opportunity.
Remote Monitoring Companies
I talked to several service providers that put eyes on video for their customers. They provide remote guard services, operational audits and just about anything that a customer would want them to watch. Some are evolving out of the central monitoring station model and are looking to expand the breadth of their services and see MVaaS and the integration with POS and other systems as way to add more value for their customers. Others are entering the space using offshore monitoring resources. These guys definitely get it. Their challenge is incorporating an MVaaS solution into the central monitoring software and systems they are already using to monitor video and alarms so that they don’t have to use their legacy systems and a separate MVaaS service. Again, this speaks to the need to have some communication standards in the industry so that MVaaS services can be easily integrated into some of the common central station tools, such as MAS.
There were a number of other potential partner segments at the show, but I’ll cover these in a subsequent post as they aren’t traditional channel partners.
As promised, here are some random thoughts from the National Retail Federation Loss Prevention Show in Orlando earlier this week…
Video was everywhere – 3 out of 4 exhibitors at the show had some form of video in their booth, many of them demonstrating some form of video analytics (tracking people in and out of their booth, showing examples of check out lines, peering at the bottom of carts looking for people sneaking things through checkout)
MVaaS providers still in the minority – Most of the video providers were still of the traditional DVR in the store, run thick client on your laptop, works great in a single store variety.
ADT is the mothership - I must have met 10 different people that are at various security/integrators that were either very recently at ADT and left or had worked there for an extended period of time at some point in their career.
The recession isn’t stopping retailers from investing in video – judging by the case studies presented and the reactions we got from retailers, the challenging market conditions aren’t causing a shut down in video investments. Articles like this one suggest that perhaps the opposite might be appropriate.
Never hold a customer event at a Howl at the Moon Saloon – One of the larger security integrators hosted a party there. I won’t get into specifics, but it’s a good thing this wasn’t a conference for HR professionals. Never thought of getting customers to do an R-rated version of the hokey pokey as a customer retention tool.
ROI is king – the LP director at a large Fast Casual restaurant put it bluntly. If you can’t demonstrate a very positive and very quick ROI, the C-level team will never go for any LP investments.
I’ll cover the high points of some of my specific conversations with partners and customers tomorrow…
Do you remember Kirk Gibson’s walk off home run in game one of the 1988 World Series? The late Jack Buck’s famous radio call of the exciting moment was “I don’t believe what I just saw!”
Well, try finding the footage on YouTube. Apparently YouTube does not have the “expressed written consent” from MLB. If you want to view this moment, share it with your kids, pass on to them your love of America’s past-time, you’ll need to pay the toll to MLB.com.
Interesting marketing approach.
This reminds me of Rob Hagen’s excellent post on standards setting for IP based video. While not directly parallel, what the situations do have in common are big organizations, using size and influence, trying to derive new revenue streams.
Don’t get me wrong, more power to them if they can pull it off. And they have had some success in attracting subscribers to their subscription service. However, my guess is that most people willing to pay are hardcore baseball geeks (not meant as a pejorative) interested in fresh content. As for the casual fan interested in re-living 20 year-old highlights, I’d venture that revenue is low and irritation is high. These are my memories. Why don’t they share?
