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Who Owns the Code? CE Industry’s Dirty Little Secret

When an integration company goes out of business, and customers don't have the programming code for their system, they can be left at the mercy of the bankruptcy courts.


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NOTE: In my original story, as many have pointed out, I was completely unfair to Baumeister, a Chicago integration company that was forced to close its doors after many years of contributions to this industry. I have not heard Baumeister's side of the story. I'm usually much better at giving the benefit of the doubt but in my haste to post this story in advance of the auction (ending today), I took too many liberties. I regret the insensitivity and am currently revising the story to talk about the important issues discussed here, rather than focusing on one of many integrators that has, sadly, gone out of business.

When you install a home control system, who owns the source code when the client is all paid up?

That's a contentious issue in the industry, and no one seems to be talking about it.

The long-brewing issue, however, has become more urgent with the souring economy.

Some once-reputable integrators are going out of business and they're taking their clients' programming with them.

Consumers may be left with a lot of worthless equipment because no one else can take over a job without the source code.

This is a dirty little secret and it's giving our industry a black eye.

What Happens When You Don't have the Code?


Let's say an integrator abruptly goes out of business and takes with it the Crestron code that was customized for each invidivual client.

Without the source code, no other integrator -- not even Crestron itself -- can access a client's system. That means that even the most basic changes to a system -- say, swapping out a DVD player, adding another light switch, or changing a channel icon -- cannot be made without starting from scratch.

Starting from scratch does not mean just programming the system from scratch. It means re-interviewing the clients, determining their preferences, learning how they live, and doing all those invasive things that the homeowner dreads.

Like they really want to go through it a second time?

It also means charting the subsystems, mapping out the wiring, troubleshooting, and so on and so on.

And then comes the programming. Potentially tens of thousands of dollars spent on the original programming could all be for naught.

Dave Haddad, president of Chicago-based Vidacom Corp., is a long-time critic of the "code-as-hostage" practice. He has taken over several jobs from Baumeister AV, an established, high-profile integration company that recently was forced to shut its doors.

Haddad estimates that he would have to charge one of the affected clients $50,000 "just to sort it all out," he says.

And he is not rejoicing at that new-found business.

"Frankly, I'm embarrassed," he says. "I wish I could buy all of that locked-up code and hand it out to the customers who put their faith in this industry."


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Article Topics

News · Business Resources · Home Automation and Control · Home Automation · All topics

About the Author

Julie Jacobson, Editor-at-large, CE Pro
Julie Jacobson is co-founder of EH Publishing and currently spends most of her time writing for CE Pro, mostly in the areas of home automation, networked A/V and the business of home systems integration. She majored in Economics at the University of Michigan, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. Julie is a washed-up Ultimate Frisbee player with the scars to prove it. Follow her on Twitter @juliejacobson.

225 Comments (displayed in order by date/time)

Posted by mike  on  04/16  at  10:43 AM

Bigger issue than who owns the code is why would an industry that is supposed to be delivering high tech to the affluent be using such an ancient technology as custom code.  Any integrator who thinks crestron is high tech is defrauding their customer.  The real issue is that software should be enterprise based and that every house should have the same code base, like an ipod.  Then you add your content and apps and make it custom to the user like Apple.  I recently retired my crestron system due to that fact that the lowsy programmer had to come by every week and the programming cost more than the value.  Crestron and its dealers are the MADOFF of the electronics world. And I know all of you will have 110 excuses as to why crestron is relevant, but the reality is simnple, 90% of your customers are unhappy and to emberassed to tell the world they were let down, versus bragging about having a crestron system that does nothing but irritate them.  (AMX is the same boat, not personal to crestron)

Posted by Joe Calise  on  04/16  at  10:49 AM

Mike:

Sounds like you did not have a very good programmer.  An iPod CANNOT do everything, and is in a totally different world.

I don’t know where you get your stats from, and just because you did not have a good experience, that is no reason to try and classify us with a convicted criminal.

Posted by Here We Don't Go Again  on  04/16  at  11:05 AM

I am responding to the comments from “Here we go again”.  It is quite reasonable to assume that there is a good possibility that the company purchasing the “assets” will indeed be receiving files that will allow them to connect to a system remotely, among other things.

I’m quite sure you have heard of an XPanel, Crestron Toolbox and perhaps even a thing called spreadsheets, all of which could store information such as IP addresses and passwords.  And I think it is safe to say that they are receiving the master password for any server they are purchasing that contains the information, or perhaps you think they are paying 55K for a pile of bricks?

It seems therefore that you may wish to investigate that job at the National Enquirer yourself.

Posted by David Haddad  on  04/16  at  11:21 AM

Joe Calise said:

Although in the end I think you side with the homeowner / end user…

Joe,

Those of us who believe the code should be provided to the end user, or that at a minimum the end user should be protected with escrow etc., don’t see it as “siding with” anyone.  We do it because we believe it is the professional thing to do and is in BOTH of our best interests and is a win/win for everyone.  It’s NOT “us versus them” and in my opinion people who look at it that way may need to reevaluate their business model.

Posted by Julie Jacobson  on  04/16  at  11:25 AM

HEre we go ... I’m pretty sure my trusted Crestron integrator has all the files necessary to tap into my system, as I have always allowed him to do as he sees fits.

Posted by Joe Calise  on  04/16  at  11:29 AM

David,

I agree with you, I was just pointing out there are two sides here, and it seemed as if Julie was “siding” with the end user, and we were hiding a “dirtly little secret” - as the article is named.  I was defending the fact it is not a secret, nor are we trying to hide anything from anyone (at least in my company).  I agree it is not an “us versus them” evaluation, but more of a “legitimate dealer vs the guy trying to steal what we worked so hard to create”  I think we are in agreement in principal here, but you might have taken my words out of context.  No worries.

Posted by mike  on  04/16  at  11:47 AM

Why would anyone wealthy enough to afford a crestron systems give two hoots about your crestron code that is worthless from a value standpoint other than making their house work?  And you talk about homeowners like they are evil, these are the people that fund your companies.  Julie deserves a nobel prize for doing the right thing.

Posted by Julie Jacobson  on  04/16  at  11:54 AM

Joe—am I the “you” you are referring to here?

If you are not fully aware of companies like Crestron, and how it all works, it is very easy to form an opinion in the light of the consumer.

Yes, indeed I champion the consumer because ultimately they’re the ones that fuel this industry.

But I have the highest regard for GOOD integrators and the effort that goes into a well-programmed CRestron, AMX or other high-end system.

Perhaps I didn’t make that clear enough.

Sounds like Mike had a bad experience, and that’s unfortunate. He certainly isn’t the first.

It’s difficult to convey to consumers why some of these leading home-control manufacturers do things “the old fashioned way” and why they continue to be the most successful companies in the business.

The paradigm is shifting (as it has been doing for the past 6 years or so) but not as quickly as in the commercial world.

I’ve known plenty of die-hard IT-standards folks that have tried to do it their own way and then went to Crestron or AMX. Microsoft itself uses crestron throughout the facility to operate board rooms, manage facilities, etc.

The stuff just works ... that is, if you have a skilled integrator.

Posted by Joe Calise  on  04/16  at  12:01 PM

Julie:

No, it was a general statement.  I understand your position, and I enjoy your work. 

I thought my opinion would be interesting since I used to feel similiar to “mike” until I truly understood.  I too think he had a bad experience, and he also does not understand - we know the client can give a hoot about our program code.  They could not even open it.  It is the unexperienced (and sometimes experienced) who we are trying to protect our work from. 

It is a simple definition of CUSTOM, and this debate will always be neverending.

Posted by kevinmikelonis  on  04/16  at  12:02 PM

Quoting Mike:
“the reality is simnple, 90% of your customers are unhappy and too embarassed to tell the world they were let down, versus bragging about having a crestron system that does nothing but irritate them”

Keywords in Mike’s response = Embarrassed

Posted by kevinmikelonis  on  04/16  at  12:08 PM

Quoting Mike:

“the reality is simnple, 90% of your customers are unhappy and too embarassed to tell the world they were let down, versus bragging about having a crestron system that does nothing but irritate them”

Keywords in Mike’s response = unhappy

Posted by kevinmikelonis  on  04/16  at  12:09 PM

Quoting Mike:

“the reality is simnple, 90% of your customers are unhappy and too embarassed to tell the world they were let down, versus bragging about having a crestron system that does nothing but irritate them”

Keywords in Mike’s response = Let down

Posted by kevinmikelonis  on  04/16  at  12:11 PM

Result = Mike tells his freinds

No amount of justification or education will overcome the shared market perspectives of Mike and his freinds.

Posted by dj  on  04/16  at  12:12 PM

I’d like to say that I’ve taken over several Crestron jobs where the customer had the code, and never, not once was there anything useful in it, other than simple clerical information that could have been gleaned in other ways. I always had to completely re-write from scratch. I hereby promise that if we’re ever going out of business, I’ll mail you a jump drive with all of our code on it. If I’m out of business, it doesn’t do me any good anyway…

Posted by Richard_ADA  on  04/16  at  12:55 PM

First off, amid some of the rock throwing, remember that in many cases involving insolvency, things sometimes escalate quickly and all too often there will be unintentional victims who suffer.  Good people, fellow colleagues and friends, as well as the less upstanding sometimes fall on hard times and can no longer control what happens to their past and current customers.

The real issue here is that customers of dissolved firms can be left out in the cold.  It happens repeatedly and not exclusively to just our industry.  Julie’s example happens to be a high-profile case but there are others out there to be certain.  And when it happens, many customers are affected and not just the ones whom have finished systems.

And while similarities exist between integrators that cease operations, I suggest each condition is different and worthy of its own unique solution.  In this case, based on the way the contracts were written, the court has determined that these items are the property of the firm – right or wrong. I wonder just how many customers’ records this includes.  Would that be 10, 20, or 30 sets of blueprints and code – most likely way more?  Couldn’t Moglia have reached out to these customers offering them their documents/source-code for a nominal fee?  Certainly, as a customer with a working system who never felt at risk thinking that “my integrator will always be there for me”, couldn’t they be offered their material for say $2000.  While still distasteful, it would sure beat having to start from scratch. 

I like to say that during these times, it is important to “find a way”.  I recognize that most here feel that if the customer has paid in full, the code and documents belong to them.  That’s great but do you include that statement in your contracts?  I would guess that John felt the same but just never imagined this happening.

Julie, you did a great job on this and not just researching and writing a comprehensive piece, but for having the courage to call this one out.  Maybe some of your readers will take this information and do something positive with it.  Today’s economy is all about differentiating yourself from your competitors.  Here I see a great lesson.

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