Understanding Cisco's Kid

What Cisco's acquisition of SyPixx heralds for our industry (hint: the VARs are coming)

Over the last two weeks, I have spent some time with some of my colleagues debating the significance of Cisco's recent acquisition of SyPixx. My view is that Cisco's move is a major confirmation of an inevitable migration of the physical security market to the new paradigm of a network-centric architecture.

The new network paradigm could finally mean an industry open protocol and industry standards. Many in our industry have been encouraging this change for years, and some have even argued that the only way for the physical security industry to grow is to move to this plug-and-play technology. These discussions most often center on the new buzzword of "convergence". And while this word takes on different meanings for different groups, in our industry it's become almost synonymous with the move from analog technology to IP technology. Some players in the physical security industry are convinced that the entirety of physical security will move to this new paradigm and that network manufacturers will become the providers of physical security equipment.

The most obvious segment of the physical security industry to initiate the move to IP technology is in the area of video surveillance. There are major advantages in moving video to an IP infrastructure, whether it's cost of installation, or the ability for the CSO to access the cameras from a remote office, or the ability to apply "analytics" to the video data. Thus to me, Cisco's recent acquisitions of SyPixx and Scientific Atlanta are early indicators of this change.

There are some that would argue that a Cisco or another network manufacturer could not be successful in penetrating the physical security industry. They argue that the physical security industry already has established channels in its ''security integrators and dealers" which address this market. For those that argue that the physical security reseller channel would block new resellers, I like to remind them that the network industry has its own channels of distribution. The computer/networking industry calls its dealers VARs (value-added-resellers), and the VARs channel dwarfs the physical security channels we know so well in our industry.

Some asked why a Cisco or any other networking systems manufacturer would be motivated by the physical security market. I pointed out there are five major reasons for this move:

  1. The IP video market is estimated to be a minimum of $2B this coming year with an upward growth of at least 25 percent.
  2. The network industry will be able to attract a significant part of this revenue in addition to increased revenue from other network components needed for this technology. Cisco and their competitors are in the business of selling bandwidth, and as we know, streaming video uses large amounts of bandwidth and storage media.
  3. The network industry is already heavily involved in logical security. Physical security is just another step in the overall need for security at today's corporations.
  4. The network industry has proven that it can take dissimilar products and functions and effectively integrate these into a plug-and-play technology. They have proven they can take technology similar to physical security components and reduced their costs by orders of magnitude. Want proof? Just look at the costs of network appliances today.
  5. The network industry recognizes that the migration of physical security to a network-centric solution will offer major technology improvements in the area of integration and cost savings to the end user.

In short, Cisco is highly motivated to move into the physical security space.

There is, however, still major resistance which opposes the move to network-centric security. The arguments from the field are numerous but hinge mostly on the unknown and unproven. The concerns with quality and reliability still abound. Some customers are convinced the move to IP security will result in significant down time. Some argue, "My company can't even keep email up. How are they going to handle security?" Others are convinced IP video is far more expensive than analog video.

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