Yesterday I linked to two recent earnings releases, and asked the question – Who’s bigger?

If you answered “it depends”, you were correct.  It is not possible to answer this question without knowing the basis of comparison.

Should the size of an enterprise be based on reveneues?  How about profits?  Total assets?  Number of employees?  

In the first quarter of 2008, GM recorded $42.7 billion (with a “b”) in revenues.  Salesforce.com recognized only $248 million in their first quarter.  GM has 266,000 employees worldwide.  Salesforce.com is still under 3,000.  GM has nearly $149 billion in total assets.  Salesforce, on the other hand, has only $1.1 billion.*

GM is clearly the larger company, right?

But what about profitability?  GM has been posting recent losses, including a $3.3 billion first quarter loss.  Salesforce.com posted $18.4 million in income in their first quarter.*

So, Salesforce.com is the winner, right?

But haven’t I missed another important measure?

* Data sourced from either the earnings releases or annual SEC filings.

It is interesting to see how we culturally and socially react and adapt to technological changes, especially those that affect our everyday lives, even if in indirect ways.

Here’s an interesting use of video surveillance… I found this interesting tidbit on slashdot about an unusual method a band used to make a music video.

On May 21, 2008, Saleforce.com released its fiscal first quarter results.  A link to the news release is attached.

http://www.salesforce.com/company/news-press/press-releases/2008/05/080521.jsp

About three weeks prior, General Motors released its first quarter results.

http://www.gm.com/corporate/investor_information/earnings/index.jsp

Stating the obvious, these are two very different companies.  Salesforce.com develops and markets on demand application services, which includes Software-as-a-Service and Platform-as-a-Service solutions.  General Motors, on the other hand, develops, produces and markets cars, trucks and parts worldwide. 

About the only thing they have in common is that they were founded or came to prominance at the turn of ”a” century. 

Ever thought about which company is bigger?

In a previous post, I made the statement that there are three paths a customer can take when trying to deploy video throughout their company: Build, Buy or Subscribe.  The question is, what would drive a customer to choose one of these paths over the others.

In this post, I’ll give you my take on why a company would choose to build their own video solution, buying their own cameras, intalling their own service and maybe even building their own DVRs.

From my experience in the marketplace over the past few years, there are a couple of different cases where customes have decided to build it themselves.  If you fit one of these cases, maybe you should consider building a video system yourself.

You aren’t going to use it. You may think I’m being snide, but I’m not.  If you don’t plan on actually using your video system and you are really only looking to put up cameras as an insurance policy in case something terrible happens, then you can probably get by with a homegrown, quick and dirty system.  Go buy a couple cameras from Best Buy or another electronics store, use your existing PC and find some IP camera software somewhere, hang the cameras, pull the cable and you are good to go.  You get the added benefit of potentially detering bad activiity by having the cameras up there at all.  Since you are never really using the system you don’t care about remote access, about ease of use, about features or return on investment (because you know you won’t get one)  It is only an insurance policy and you are good with that.  Just make sure it is on all the time (See Michael Wilson’s post on checking the children)

You REALLY love technology.  This is a case that fortunately I’ve only encountered twice in my tenure in the industry.  I say fortunately b/c in my opinion this type of customer is not motivated by economics or logic as much as they have an emotional or philosophical bias to own that a service provider will struggle to change.  The clearest example of this was a well-known trendy hamburger franchise that put out an RFP for a video system for a couple hundred sites.  We were pretty excited about the opportunity until it became clear what they were doing.  They had scoped out the highest end system I had seen.  They wanted to buy everything themselves (high end Dell servers for the DVRs, top of the line Axis IP cameras, crazy amounts of storage, the whole 9 yards)  Normally I would say that all of this is a good thing for a MVaaS provider, as the value we provide is in the software and the network, not the equipment.  Unfortunately, in this case they had spent so much on this expensive gear that they had only a few hundred dollars per site left in their budget for the software.  They couldn’t find a software provider willing to provide them service with those economics so I believe they built something on their own.  (Side note: I’m not an audiophile, but this seems to me like buying the highest end speakers available and then plugging them into a do-it-yourself ham radio).  You don’t see a lot of these folks around b/c you have to have a lot of extra cash and the IT group has to have an incredible amount of discretion and control (not to mention resources) to be able to pull this off.

You have a need the market can’t address.  This sounds reasonable in theory, if the market can’t provide the functionality you think you need – just figure it out yourself and develop a solution that fits your exact needs.  Having said that, I would argue that only a few companies have the capability to actually do this.  You have to have a lot of resources and expertise to build new capabilities.  The only companies I’ve seen fit this even a little bit were really working with a service provider to get them to customize the providers solution to fit unique requirements, not really building it themselves from scratch.

If you can think of other reasons why a company should want to build their own solution, let me know.

Have you given yesterday’s post some thought?  What possible connection am I making between this film and managed video?

Should parents have cameras installed in their children’s bedrooms, made viewable from their favorite restaurant?  Should a public view monitor be made available to all babysitters so they can monitor the well-being of children in real-time?

This is not what I had in mind…although perhaps there is a niche here to fill for some video provider…

The connection I was suggesting has to do with the essence of the babysitter’s situation.  The caller exploited the babysitter’s vulnerability – namely the fear of the unknown.  This is not an indictment of the babysitter, but rather a reality of the situation.  She did not know how the children were at that moment because she hadn’t recently checked.  The children were sleeping upstairs.  She assumed that they were safe.  Only when the caller called did she realize that she and the children were not safe. 

An interesting question arises – Had the caller not phoned to taunt her, how long would she have gone before realizing the danger?

Customers of traditional DVR and VHS video systems must deal with a similar reality.  As long as nothing happens, why worry about whether all of their video systems are operational?  Assume everything is fine, right?  It is only when something happens that they find themselves hoping that their systems were operational. 

Traditional CCTV customers have reported that as many as 50% of their traditional video systems were not fully functional when they did an audit – rendering their investment useless.

A key element of Managed Video as a Service is the ability to monitor the status of all cameras and recorders in real-time, with proactive system notifications alerting the customers of any issues.  When the proverbial caller calls, customers of MVaaS know in advance that their systems are working.  This is something that Jill Johnson could have used.

In the 1979 version of When a Stranger Calls, babysitter Jill Johnson (played to perfection by Carol Kane) is repeatedly called by a person whom she does not know. The caller, in a calm and deliberate manner, continues to ask her “Have you checked the children?” Obviously concerned by the harassment, Jill Johnson calls the police for help. Who wouldn’t?

For those of you who have not seen the film, you may view the climax of the scene below. Great seventies film-making!

What you may not know is where this post is heading. What does this have to do with Managed Video? Any guesses?

When a Stranger Calls

I’m going to start a recurring weekly post to give people a sense for the nature and scope of activity that MVaaS providers are seeing.  I will keep it simple and high level, but will also try to give you explicit examples of the conversations that are happening.

MVaaS customer conversations

We hit several very positive customer milestones this past week.  The customers were primarily in the restaurant and retail spaces – these are two segments that have clearly embraced the advantages of MVaaS.  The customers ranged from QSR to casual dining on the restaurant side (I’ll do a separate post on the difference in the value proposition between these two restaurant sub-segments).  The most significant milestone on the retail side was through a channel partner and was with a retail operator that has 5,000+ locations, all of which are corporate owned (the difference between corporate and franchise owned is another topic of a future post)

The milestones themselves were all related to trials we are in or about to start with our prospects.  As MVaaS becomes a more enterprise level solution, customers are electing to put their prospective vendors and their internal organizations through pilot projects to ensure that they have tested the solution and are confident that they will receive an appropriate ROI.  Upon successful pilot, they can then roll the solution out into their locations.  Here is a sample of our progress:  We successfully completed our pilot with a large multi-brand franchisee with 100+ locations and will be installing all of the remaining locations this quarter.  We got the go ahead to begin the pilot for a national QSR brand with 600+ corporate owned locations and installed our first store in a pilot with another national brand with 500+ locations.  We also got to contract with a smaller, but well known casual dining restaurant.

MVaaS Partner Conversations

As active as we were with customers this past week, we were even more active in potential channel partner conversations.  Rather than spend a lot of time talking about all of the individual conversations, I’ll provide some context on our overall strategy and the type of partners we are speaking to.

One of the key principles of MVaaS is that it is an excellent managed services opportunity.  We believe strongly that there are several potential channel segments that are both interested and capable of selling MVaaS to their existing customer bases.  This past week was an excellent example of the breadth of the potential partners we are speaking to.  On Monday we spoke to a large telecom provider that you will definitely recognize, but that you may not have ever thought of with respect to MVaaS.  We had a joint customer call with one of our more promising near-term partners, a provider of remote guard services that is looking to expand their value proposition.  We had another conversation, discussing joint customer opportunities with the sales team of a leading managed services provider.  Our technical team met with two potential partners, one is a household name in the networking equipment space (we are looking to integrate with their products to form a combined service offering) and the other is a hosted access control company that is evaluating adding video to its service.

All in all a pretty busy week!

A key component of managed video is that it must work like it’s just “built-in” to your network.

Step by step, access to video, video acquisition, storage and management will become components of “the network”.

The form factors that these components will take will vary.  They may be separate hardware devices, or expansion cards for an existing devices or software added to some device.  But the end result is that these components will become increasingly integrated as part of “the network infrastructure”, just as email, websites, fileservers, routers and switches are all part of the network infrastructure.
Why?  To maximize the effectiveness of video and minimize the overhead.

Effectiveness is massively improved when the video can be linked to data.  This data resides on other systems in the network, but unless they are linked together, value is lost.  Effectiveness is also significantly improved when access to the video when many people can view the video.  Outside of internal security, there is external security, such as first responders.  Then there’s operations, marketing, maintenance, management, Human resources and the list goes on.  All of these people are on the network now and could take advantage of the appropriate, authorized access to video.

Even at a medium sized business thousands of components may be involved in a video system.  Installation and operation of these must be as plug and play as possible.  Users with basic computer skills need to be able to jump in and find what they are looking for quickly.  Component failures must be rare, easily detected and remedied.

By integrating components into the network infrastructure one can apply established methods for remotely operating, monitoring, repairing and controlling access to massive, distributed video systems.

Cisco Systems is making big strides in the security space. Of the many moves they have made, one of the more interesting (and quieter) is building two blades for their immensely popular Integrated Services Router (ISR) router family. There are over 3 million ISR’s deployed today. The modular design of the ISR makes it a great platform for rolling out new capabilities. Here is an interesting pair:

• a video encoding blade that can encode analog video
• a management blade, that can store video (on a hard disk) and make it available for viewing & management

Together, these add DVR functionality to the ISR router. Look out, all you DVR vendors, the 800 pound gorilla just built the perfect DVR platform!
Expect many more interesting moves from Cisco in this area in the future.

This blog has previously mentioned digital signage as an example of a Managed Video application. For a succinct summary of issues to be considered (and resolved) when deploying a large-scale in-store digital signage project, check out this recent article in RIS News by Allyn Crowe of Stratacache. I’d be interested to hear anyone’s comments: Are there other issues that need to be considered? How does the Managed Video as a Service model address the issues?