OnPolicing Blog

In the early days of police body cameras, the few companies that served the market relied on an emergency procurement model: Pioneering police departments would buy the cameras in response to crises to show the public they were engaging in the reforms necessary to keep their trust.

This typically followed an ugly use-of-force incident or a corruption scandal. Other forward-thinking chiefs paid high prices for body cameras to keep ahead of these crises, knowing they were purchasing a technology in its earliest stages of its development, when it was likely to be the most expensive.

Police body cameras have evolved since then. They are quickly becoming a standard piece of police equipment, but in doing so they are also becoming a standard piece of consumer electronics.

Body cameras are not especially complicated devices – they comprise a camera, battery, a microphone, a button or two and a processor in a rugged case. They are like a smartphone without a screen.

It follows that, as with these phones, the profits won’t come from the devices themselves, which will be basically given away for free. Body camera makers know this, and are adjusting their plans accordingly. The present profit model for body cams is taught in business school as the “razor and blades,” or “printer and ink” model.

We all know the drill: you buy the handle for a razor at a very low price, or you get one for free, and then you spend the rest of your life buying blades for it. Similarly, you buy a great printer cheap and then run up your expenses keeping it fed with ink. It’s no surprise that both the razors and the ink come in “cartridges.” Once you buy something that you need to use every day and that requires a constant supply of a unique cartridge, you are locked into buying that cartridge at whatever price the maker feels he can sell it for. These models have a very high profit margin built into the cartridges.

Data storage is the police body camera equivalent of the razor or the ink, and vendors obscure their markup on this storage by bundling it with other costs, including hardware, software, replacement costs and even technical support. The best example is the single price per month per camera, all-inclusive.

Another tactic is to give cameras away for free for an initial period, knowing that downstream, profits will come from the storage required for their footage as agencies continue to use them and enter into contracts.

The striking thing to consider is that no police body camera company owns or operates its own data center where video footage is stored. All of them—every single one—buys cloud storage from businesses like Amazon Web Services or Microsoft Azure, both of which offer CJIS-compliant cloud solutions, and then resell the storage to police departments at an extraordinarily profitable markup. Glenn Mattson, an equity analyst for Ladenburg Thalmann, said that the leading body police camera maker’s gross profit margins on video storage were more than three times its gross margins for hardware.

Imagine if razor companies didn’t make razor blades, but instead bought them from a handful of wholesale manufacturers, put a special receptacle on them that only worked with their brand of handles, and then sold those blades at a markup of a few hundred percent. The docking stations and software interface are that special handle for body cams, and that is the profit margin the industry makes on Amazon’s storage.

American police departments have a tool at their disposal that, if used as our standard, will ensure fair competition and save taxpayers millions of dollars. The industry’s intended model only works if bidders are allowed, by the terms of a Request for Proposals (“RFP”), to bundle their charges and services in a way that doesn’t require that they specifically compete with one another over storage charges. At present, vendors prefer RFPs that allow them to bury storage markups and all of their other profit margins in a bundle of services that hide them from review and comparison. Regardless, our body camera vendors are paying companies such as Amazon for the actual number of gigabytes they are storing, at about 3 cents per gigabyte, so police departments ought to pay according to the same model. That we pay a flat rate bundled into the overall monthly price for a phone turns over the savings on any unused storage to our vendors.

This gap between fully-competitive pricing and the prevailing pricing model has only happened because we have allowed it to.

We lay out the terms of our RFPs; it is our prerogative to write them however we want as leaders engaged in government procurement and as representatives of our taxpayers. No body camera company can set those terms for us. If one of them balks at submitting an RFP because it interferes with their profit model, the body camera industry is mature enough to ensure that competitors will submit bids in compliance with the terms of the RFP and offer prices that are competitive and easy to evaluate and compare.

This is my advice: When police departments procure body cameras, we should always solicit multiple bids via RFP. More important, we need to specify in the terms of the RFP that the costs be broken down to indicate the individual prices for:

• Each camera, given its capabilities and specifications
• Docking stations and other accessories
• Each end user software license
• Insurance or replacement
• Technical support
• Storage, per gigabyte, for the agency, across all cameras
• Any analytics software, i.e. computer-assisted redaction

By disambiguating storage costs and other items out of a bundled price, police departments will ensure a level of competition across bidders that will favor them and their taxpayers.

This is nothing more than free-market capitalism, where an industry reaches its peak level of efficiency through widespread transparency in pricing. It will make it impossible to disguise the markup on storage, for example, because the price offered in the RFP will be easy to compare to the ever-decreasing market rate for bulk electronic storage, which is a price that is well-known and completely transparent in the tech industry.

The final evolution of the body camera industry will come when there is no markup on storage costs and the devices are always given to the police for free.

I predict this is the inevitable course of things, and we will be there in about a decade.

The devices are just cameras and storage is literally just electrons in an array. The industry’s profit will be based on what it costs to move footage from a camera to a cloud and then review it when needed, and, more important, on how good its overall platform is.

It will be a matter of cops finding it easy to use, reliable, and able to deliver the value they need in capturing, cataloging, retrieving, reviewing, processing and redacting bodycam footage.

It will also be a matter of how well the software has smart features that detect a deterioration in officer behavior and possible acts of corruption or misconduct, as well as cases where officers engaged in exemplary conduct, consistently show courtesy, or have a talent for deescalating situations. This is where companies will demonstrate their value, and so in a mature bodycam market the only line in the RFP that should be a competitive one between vendors is the line for the end user software license.

Hundreds of millions of dollars are at stake before this happens. We need to protect our taxpayers and our budgets by writing RFPs that, collectively, protect the interests of the taxpayers who fund our police departments. The first place to start is with the low hanging fruit of the extraordinary markup most of us are paying for storage that our vendors don’t own or operate. They have seized on it because it is makes for easy profits and we haven’t been paying close attention.

 

Brandon del Pozo is the Chief of Police of Burlington, Vt. Prior to this post, he served for 19 years in the NYPD. He is a National Policing Institute executive fellow.