Thermal Cameras, CBRNE Sensors, Consumer Electronics: FLIR Systems Puts It All Together

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"Consumerizing" military/defense security technologies focuses FLIR's vision

Defense optics specialist. "Green" company. Consumer electronics manufacturer. General business media have used all those terms describe FLIR Systems. In the commercial security industry, FLIR, which is forecasting FY2010 revenues of about $1.4 billion, is probably best known as a thermal camera manufacturer. As Bill Klink, vice president, security and surveillance for FLIR's commercial systems division told us, "That all speaks to the diversification FLIR has now. We touch all those markets."

We talked with Klink (pictured below) to understand why FLIR is in these different markets and what strategy ties all these disparate parts together. In particular, we were curious about the company's two acquisitions this year. First, in May, FLIR bought Raymarine, a major international supplier of maritime radar and display systems with a huge consumer business.  This month, FLIR is acquiring sensor specialist ICx Technologies, Inc.  Among ICx's offerings is a line of chemical, biological, radiological, nuclear and explosive (CBRNE) sensors.

Klink spoke with us about how FLIR expects to grow though its acquisitions, its long-term strategy of continually driving down the costs of thermal imaging and the technology it will be showcasing at ASIS 2010.

What follows is a transcript of our conversation, edited for clarity and length.


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Sharon J. Watson: What's the best way to describe what FLIR is today and what the strategy is that links its parts into a coherent whole?

Bill Klink, vice president security and surveillance, FLIR:
  Our business model has always been to take defense technology and commercialize it. Our legacy has been as a defense optics specialist. The whole thermal line is an outgrowth of military needs for night vision...We now have thermal technology in passenger cars, security cameras, cameras measuring building heat loss, military helicopters, fishing boats. It's really diverse.
KlinkWeb.jpg


We have two divisions, the Government Systems Division and the Commercial Systems Division. Those divisions point to how FLIR intends to grow.  Our security business sits in the Commercial Systems Division.

SJW
: Let's look at security, then. On most security company websites, words like interoperability, openness, connectivity are pretty prominent. FLIR's website talks a little bit about connectivity and about your "Nexus connectivity technology" but doesn't seem to emphasize it. How open is FLIR and what's involved in integrating your devices into an existing IP security or surveillance network?
Klink: Interoperability and connectivity are as important with thermal cameras as they are with CCD cameras. We're slightly muted about the interoperability of our technology because most people deploying thermal cameras have a specialized need to see at night. We put our energy behind creating awareness of the thermal solution rather than emphasizing, hey, put a thermal camera into your network. Other companies differentiate themselves with their list of technology partners. What separates us is the uniqueness of our technology.

That said, Nexus is our software platform--it provides that interoperability. Often a deployment will use Nexus in parallel with a video management system (VMS).  Nexus is not intended to be a global VMS. It provides unique benefits for thermal cameras.  We support ONVIF. We've got some tighter integrations with some VMS platforms we have a track record with, such as Genetec and Milestone.

SJW: Let's talk about FLIR Sensors Manager and Nexus...how do these relate to each other and to video management systems? Are they complementary or competitive to VMSs? How does Thermal Fence fit in?

Klink: Nexus is underlying software. It's in an SDK we offer to people to create underlying connectivity. FLIR Sensors Manager sits on top of Nexus and sits parallel to a VMS from a company like OnSSI, Genetec, etc. Sensors Manager has unique capabilities in it that are not typically part of a VMS.  

For example, it has geo-location and geo-reference mapping capabilities for locating cameras and sensors. So when you're working through Sensors Manager, you can see on the map which direction cameras are pointing and with geo-reference you know where in space they are. A typical video management system doesn't do that. We do that because most of our applications are outside rather than inside a building. Most of the applications for thermal cameras have detection ranges longer than what most people would use a video camera for. A video camera might be looking down the hallway 50 or 100 feet or so, or it might be a parking lot going 200 feet. With a thermal camera, we're oftentimes looking at 300, 400 or 500 feet and want to be able to detect a person at night, so referencing those cameras in their views on the map tends to be more important. That's something we do in FLIR Sensors Manager that isn't normally done in a typical video management system.

Analytics is another one. We embed video analytics in our FLIR Sensors Manager product. Some of the VMS's have that, some don't.  But again they and FLIR Sensors Manager work in parallel. It's different than the VMS, but typically not competitive. Rather, it's a complementary product.

The Thermal Fence is an end solution version of FLIR Sensors Manager where we use our video analytics. We use our ability to move a pan-tilt camera to the location of an alarm that might come from something other than a camera. It may be a sensor alarm or a shaker fence. Those can be integrated into FLIR Sensors Manager because it manages sensors, not just video. Our thermal camera products are then used to assess that alarm in darkness.

SJW:
Is that the kind of data that Sensors Manager would then push to a command and control system or a physical security information management system like those offered by VidSys, Proximex or Mer?

Klink:
Yes, those command and control products would be candidates for integrating Nexus at the software development kit level, for example. They could use the FLIR Sensors Manager application and it could exist that way but most often they would create hooks and an underlying level through Nexus and the SDK--a base-level integration. They would then have the geo-reference mapping elements and the analytics embedded into their own software product. We would fit underneath the command and control software product.

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"Consumerizing" military/defense security technologies focuses FLIR's vision

Defense optics specialist. "Green" company. Consumer electronics manufacturer. General business media have used all those terms describe FLIR Systems. In the commercial security industry, FLIR, which is forecasting FY2010 revenues of about $1.4 billion, is probably best known as a thermal camera manufacturer. As Bill Klink, vice president, security and surveillance for FLIR's commercial systems division told us, "That all speaks to the diversification FLIR has now. We touch all those markets."

We talked with Klink (pictured below) to understand why FLIR is in these different markets and what strategy ties all these disparate parts together. In particular, we were curious about the company's two acquisitions this year. First, in May, FLIR bought Raymarine, a major international supplier of maritime radar and display systems with a huge consumer business.  This month, FLIR is acquiring sensor specialist ICx Technologies, Inc.  Among ICx's offerings is a line of chemical, biological, radiological, nuclear and explosive (CBRNE) sensors.

Klink spoke with us about how FLIR expects to grow though its acquisitions, its long-term strategy of continually driving down the costs of thermal imaging and the technology it will be showcasing at ASIS 2010.

What follows is a transcript of our conversation, edited for clarity and length.


*****

Sharon J. Watson: What's the best way to describe what FLIR is today and what the strategy is that links its parts into a coherent whole?

Bill Klink, vice president security and surveillance, FLIR:
  Our business model has always been to take defense technology and commercialize it. Our legacy has been as a defense optics specialist. The whole thermal line is an outgrowth of military needs for night vision...We now have thermal technology in passenger cars, security cameras, cameras measuring building heat loss, military helicopters, fishing boats. It's really diverse.
KlinkWeb.jpg


We have two divisions, the Government Systems Division and the Commercial Systems Division. Those divisions point to how FLIR intends to grow.  Our security business sits in the Commercial Systems Division.

SJW
: Let's look at security, then. On most security company websites, words like interoperability, openness, connectivity are pretty prominent. FLIR's website talks a little bit about connectivity and about your "Nexus connectivity technology" but doesn't seem to emphasize it. How open is FLIR and what's involved in integrating your devices into an existing IP security or surveillance network?
Klink: Interoperability and connectivity are as important with thermal cameras as they are with CCD cameras. We're slightly muted about the interoperability of our technology because most people deploying thermal cameras have a specialized need to see at night. We put our energy behind creating awareness of the thermal solution rather than emphasizing, hey, put a thermal camera into your network. Other companies differentiate themselves with their list of technology partners. What separates us is the uniqueness of our technology.

That said, Nexus is our software platform--it provides that interoperability. Often a deployment will use Nexus in parallel with a video management system (VMS).  Nexus is not intended to be a global VMS. It provides unique benefits for thermal cameras.  We support ONVIF. We've got some tighter integrations with some VMS platforms we have a track record with, such as Genetec and Milestone.

SJW: Let's talk about FLIR Sensors Manager and Nexus...how do these relate to each other and to video management systems? Are they complementary or competitive to VMSs? How does Thermal Fence fit in?

Klink: Nexus is underlying software. It's in an SDK we offer to people to create underlying connectivity. FLIR Sensors Manager sits on top of Nexus and sits parallel to a VMS from a company like OnSSI, Genetec, etc. Sensors Manager has unique capabilities in it that are not typically part of a VMS.  

For example, it has geo-location and geo-reference mapping capabilities for locating cameras and sensors. So when you're working through Sensors Manager, you can see on the map which direction cameras are pointing and with geo-reference you know where in space they are. A typical video management system doesn't do that. We do that because most of our applications are outside rather than inside a building. Most of the applications for thermal cameras have detection ranges longer than what most people would use a video camera for. A video camera might be looking down the hallway 50 or 100 feet or so, or it might be a parking lot going 200 feet. With a thermal camera, we're oftentimes looking at 300, 400 or 500 feet and want to be able to detect a person at night, so referencing those cameras in their views on the map tends to be more important. That's something we do in FLIR Sensors Manager that isn't normally done in a typical video management system.

Analytics is another one. We embed video analytics in our FLIR Sensors Manager product. Some of the VMS's have that, some don't.  But again they and FLIR Sensors Manager work in parallel. It's different than the VMS, but typically not competitive. Rather, it's a complementary product.

The Thermal Fence is an end solution version of FLIR Sensors Manager where we use our video analytics. We use our ability to move a pan-tilt camera to the location of an alarm that might come from something other than a camera. It may be a sensor alarm or a shaker fence. Those can be integrated into FLIR Sensors Manager because it manages sensors, not just video. Our thermal camera products are then used to assess that alarm in darkness.

SJW:
Is that the kind of data that Sensors Manager would then push to a command and control system or a physical security information management system like those offered by VidSys, Proximex or Mer?

Klink:
Yes, those command and control products would be candidates for integrating Nexus at the software development kit level, for example. They could use the FLIR Sensors Manager application and it could exist that way but most often they would create hooks and an underlying level through Nexus and the SDK--a base-level integration. They would then have the geo-reference mapping elements and the analytics embedded into their own software product. We would fit underneath the command and control software product.

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SJW: This seems like a good time to talk about the ICx acquisition. It has a lot of interesting sensors--chemical, biological, radiation, etc. Are you thinking of integrating those into Sensors Manager or would you offer some kind of an integration platform for that data? Or will those remain stand-alone sensors? How will that acquisition be brought into your security picture?

Klink:
The ICx acquisition and really all of the acquisitions FLIR has made -- and we're a company that has grown to some extent through strategic acquisitions -- we always perform heavy integration of those companies. When we make an acquisition like that we really don't operate them as a stand-alone entity. In all cases, we integrate them. It varies a little bit, if it's a technology acquisition versus a product acquisition. ICx fits into both categories. It's a really diverse company, it has a lot of what you might call stand-alone business units. But the intent is to leverage the capabilities of those stand-alone business units with FLIR and create packaged opportunities. I'll give you an example.

ICx has a good business in their portable towers that hold sensors, they have a radar capability, we have thermal imaging--they're all very complementary. That improves our integrated systems business, which prior to the acquisition, we were really more of the sensor supplier to integrators. At the government level, we can take a step up the value chain.

I should step back and tell you also we view the ICx acquisition as an acquisition within our government systems unit, not our commercial systems unit. We perceive most of the overt value being for government systems integration, not commercial security integration.

SJW
: So would a critical infrastructure project--a power plant, port, petrochemical--then fit under your government business?

Klink
: No, those types of applications are handled by our commercial business but most of ICx's business is government related. It's really not commercially related.

SJW: So, you are not thinking of pushing it into the commercial sector? Because the critical infrastructure sector is so hot right now.

Klink: We will integrate those technologies for the benefit of the commercial market as well. But when I talk about [the ICx acquisition] adding an integration capability to FLIR, I'm not talking about that in the sense of doing integration for commercial companies. I am talking about doing the higher-level integrations for government programs. I don't want to state something that sounded like all of a sudden we're in the integration business because we're not. For commercial security that's not what we're doing.

On the government side of our business, where we're dealing direct with the federal government, taking a step up the chain of integration capabilities is very valuable there. That's really for military programs, not for base protection or applications like that.
 
The other thing the ICx acquisition gives us--you had mentioned it--is further diversification in our product portfolio with chem-bio type sensors not only in portable instrumentation but in building structures themselves. That is one of one of the areas where we see a lot of the synergy in our commercial business in that we're centrally addressing building automation needs now with our temperature measurement cameras and our security cameras, and the chem-bio sensors fit right into that as well. That is an area of opportunity that we see on the commercial side.

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SJW: Taking a step back toward what you were talking about earlier, Bill, where you mentioned that many users that deploy your thermal imaging cameras have very specific needs about being able to see at night. Does that mean you are not necessarily going after being the video network on a corporate campus or a new hospital implementation? You are always going to have other megapixel cameras in that network, so FLIR's technology would be complementary to or augmenting existing cameras?
 
Klink: Yes, that's right, Sharon. We are a piece, a part of the comprehensive video security network. But thermal cameras are different than daylight cameras. You can use them during the day but, for example, you don't get facial recognition with the thermal camera, you don't get color discrimination. Thermal cameras don't replace daylight cameras except for low-light applications. Then they are a replacement and an improvement over the video cameras.

Thermal cameras are never going to go into a corporate campus and be the only video appliance in the network. The technology is not capable of doing that, first of all. That would be nice, we'd like that, but you have to know yourself as well. What we do is not just to see in the dark but to solve difficult video imaging problems and darkness as only one of them.

Backlighting is another one. For example, you have a sunrise-sunset situation. It can often be a very difficult imaging application for any video camera, even for wide dynamic range cameras. Thermal cameras are not bothered by that backlight situation, they get very good foreground contrast in that difficult imaging situation. Smoke, haze, other atmospheric obscurities are another area where thermal cameras perform better than video or visual light cameras. We see right through smoke. We can see into some amount of foliage--not dense, completely covered foliage but we can discern objects by their heat signature through a layer of foliage. That's also something that's difficult to do with a video camera. So it's not darkness. There are several video imaging challenges we can address.

SJW: That brings us to the Raymarine acquisition. In looking at the company's website, it does mention quietly they have a government business but most of the products seem very focused on the consumer market again. Will this acquisition take FLIR more to consumers or again, are there other technologies and approaches there that will play more into your commercial security market?

Klink:
Raymarine is principally an acquisition that leverages our existing presence in the consumer and commercial maritime market. FLIR has a product line and a business unit that addresses government but primarily consumer and commercial maritime markets: putting thermal cameras on boat so people can see at night, which is a problem for boaters. So Raymarine has a huge footprint in the consumer and commercial maritime industry with complementary products: radar, multifunction displays, a full suite of the electronics that going into boats. A thermal camera is one of those appliances.
 
Raymarine has a very deep penetration in the market with their multifunction displays. You need a display to look at a thermal camera. Having those devices integrated really gives us a powerful product offering to the consumer and commercial marketplace. It was very complimentary and added a tremendous amount of distribution for us as well as a technology base in marine radar we didn't have before.

So there was the technology aspect, the distribution aspect and then the product integration aspect. It's really a very highly leveraged acquisition. It doesn't touch our security business very much. It probably will from the marine radar side for waterside, maritime, coastal surveillance applications. But that's a secondary outgrowth of that acquisition.

SJW:
I'm sorry this is such an obvious question but I did poke around in your website and didn't quite find the answer. When I was at ASIS last year, I met a lot of different FLIR salespeople, so I wondered do you cultivate integrator and distribution channels or are most of your sales direct?
 
Klink: No, none of them are direct sales. We do all of our business in the security market through system integrators or through distributors who then will fill through system integrators. We don't sell directly to end customers or end users. That's because our products are typically one element of a total security solution. The integrators are a very important part of that.

When we go to ISC West and ASIS and our other tradeshows, we are marketing to end-users because that's part of our own awareness campaign. We tell people about the benefits of thermal imaging but when it comes to fulfilling their need for that technology, it always goes through a system integrator or a distributor to the integrator.

We don't really say that on our website, now that you mention it. That's not something we really talk about except we do have a web portal for our partners. We have a partner program

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SJW: If I'm a systems integrator and am looking at all of the things FLIR offers today and these acquisitions it's digesting--maybe more ICx over Raymarine--what are some of the opportunities you would be educating your integrators and channels about in terms of the kinds of solutions they can offer, the kinds of packages they can put together given all that you have under one roof now?
 
Klink: It goes in several different ways. It may depend on the nature of the integrators' business. FLIR can represent a movement for the integrator into markets they may not have been in before. They may not have dealt with customers who place a high value in seeing at night or seeing a long distance. Maybe their business has been more K-12 or convenience stores. Those are not the guys that are buying thermal cameras: it's the heavy commercial sector, people securing campuses, ports, large critical infrastructure, those sorts of things.

Our technology could represent a broadening of the market opportunity for an integrator because thermal camera is oftentimes what's driving the need. A given customer, a port, for example, has thousands of cameras already but they've got a specific need for a thermal camera. Or a nuclear power plant has a need to use thermal cameras [to meet] a government security mandate. Those can represent an opportunity for an integrator to broaden its market.

The other part of that is because of the thermal camera being a unique technology, it can be the lead component of an opportunity for an integrator but it always includes within it a bunch of other components that may be more traditional business for integrators, whether those are storage platforms, DVRs, video cameras, VMS. We tend to create business for those other devices, those ancillary devices that support the use of the thermal cameras.

The final thing I'd say is a thermal camera is a high value device. It's not a $500 camera, it's a few thousand dollar camera or more. It's a high value device. Almost by definition, any integrator working on a project with thermal cameras means their dealing with a high value project, which is a good thing. For an integrator, their ability to develop an expertise in thermal cameras gives them a way to differentiate themselves from their competitors.

That's why we train our integrators and make them partners, FLIR authorized partners.

SJW
: Do you see yourself also training them in sensor deployment down the road?

Klink: We'll train in sensors either that we manufacture and sell or integrate with but we're not going to train deep in technology we aren't intimately involved in ourselves. We wouldn't take on that responsibility or that role.
 
SJW:
In the case of ICx with its line of sensors...

Klink
: We would include that. That would be a device FLIR supplies. We wouldn't train somebody on a shaker fence even though our software can integrate with a shaker fence. We can move the camera to a shaker fence alarm. So we'll talk about the integration of the shaker fence but we're not going to train people on how to spec a job for a shaker fence.

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SJW: Last year, at ASIS, I heard your CEO, Earl Lewis, talk about FLIR driving down the cost of thermal imaging technologies so those devices can be ubiquitous all the way down to the consumer level. Are you foreseeing that the integrators will be able to push things down to consumers or is that going to come through different distribution channels? I noticed FLIR attended the Consumer Electronics Show and demonstrated its handheld Scout thermal camera.

Klink: The distribution channels have a huge role in that they're our path to market in all cases, including the consumer level. The top-level job, though, of consumerizing this technology rests with FLIR and our ability to cost-reduce the products.

Let's face it: if all we had was a $20,000 thermal camera, you're not getting too many consumers buying those. Our ability to reduce the cost of the technology is purely related to volume. We often use the GPS analogy. The technology used to be specialized, a little bit expensive and then everyone had them in their cars and now everyone has them in their cell phones. Thermal imaging isn't there yet but it's on that sort of consumerization trend. As volumes grow, prices come down. That opens new markets. You've got a new group of consumers that are available to use that technology just because it's less expensive.

In terms of delivering product, in reaching those consumers, that's where the channel is a vital part of the process. We have to enable them with lower-cost products. That's why we go to the Consumer Electronics Show. BMW has got us in a few models and a few other car companies have us as a standard accessory in their automobile lines.
First-Mate_medium.png
That little hand-held camera--now boaters are buying it. Scout is one model; our First Mate product (photo right) is another.

We've got a growing business in residential security. It's not big yet like home security but that day will come when more and more people are using thermal cameras around their homes as well.

SJW:
The last question I had for you: What you can say about what you'll be emphasizing at this year's ASIS show?

Klink
: The first one is very important and we have a release out on this. We've moved the standard resolution of our camera product line from a pixel matrix of 320 x 240 to 640 x 480. That's four times the increase in resolution. That's an outgrowth of our ability to produce those devices in a cost-effective manner. There aren't too many other people doing thermal cameras. There are a few; most of them are really only doing the 320 x 240, and some are only doing 160 x 120. Those get a much coarser image. You don't get the clarity you will get with 640 x 480.

That's what we've announced for ASIS. If you come to our booth, you can see examples of all resolutions. We'll continue to offer the lower resolution 320 x 240 products for people who are interested in that level of price performance. But what you're going to find is most people are going to want picture clarity. It's just like when you go buy a TV. Typically people want the one that looks the best. That's a big deal, to effectively increase the picture clarity for people who use thermal cameras.

SJW:
Does that raise attendant issues of storage problems and bandwidth management because of more data with the higher resolution?

Klink:
The file size of a 640x480 thermal image doesn't compare to the file size of a video camera image, so in comparison to video, it doesn't at all. But in comparison to the [320 x 240], you've got more data there. I wouldn't call it a problem because by comparison to the other devices being recorded and transmitted over the network, it's still a smaller file size.

But those details have to be considered. People that have a 320 x 240 camera and have a storage infrastructure set up for that file size, they need to be aware that the 640x480 camera data is going to take up more space.

SJW
: Anything else to share about ASIS?

Klink
: This is really exciting as well. The other technology we're showcasing at ASIS is our new color night vision camera. Without getting too deep into the science behind it, it is standard CCD technology that uses what's called EMCCD-- electron multiplied charge coupled device.

We purchased a company about two years ago called Salvador Imaging in Colorado Springs--they were leaders in that area. Again it's a technology that's very interesting to the military for very low light video. We are commercializing it and taking it to the commercial security industry.

I'll give you an example. Take a good brand of CCD camera with a day-night capability and use that camera outside.  Our color night vision camera will show color pictures in the same scene with the same lens when the other commercial camera monitor would be black. We've got some clips posted on our website.

SJW
: What kind of customers would be particularly interested in that?

Klink
: Other than government agencies who really want to do nighttime sort of surveillance, it's the same sorts of industry sectors. They want to extend the usability of their standard daylight cameras beyond dawn and dusk where the other cameras typically stop and you bring thermal in. Remember, we can't read a license plate with thermal, we can't identify faces with thermal, and we can't look through windows with thermal. You can do all those things with a color night vision camera. It won't take you all the way through to total blackness of night like a thermal camera, but it will extend your ability to read license plates, look through windows--all those things I just mentioned--in color, well beyond today's conventional CCD.

The people who are using it will tend to be the same people who buy thermal. That would be large corporate campuses, critical infrastructure, bridges, dams, nuclear power, petrochemical, people concerned with the Chemical Facility Anti-Terrorism Standards, perimeter security. We will have it on display at ASIS too.

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