Axon body cameras are a key business for TASER International, and the loss of a contract with the NYPD brought up big fears for investors. Image source: TASER International.
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TASER International (NASDAQ: TASR) isn't taking its loss of a body camera contract with the NYPD to competitor Vievu, a subsidiary of Safariland Group, lightly. The company is challenging the NYPD's agreement with Vievu and offering 1,000 body cameras for field testing with the department. The battle over the country's largest police force could tell where both companies are headed in the future.
Image source: TASER International.
The NYPD's free body cameras
After Vievu won the contract to supply 1,000 body cameras and five years of cloud storage to the NYPD, TASER International went into panic mode. Shares dropped the next day, and management started trying to challenge the Vievu product as lacking field tests by the department.
To show off its product, TASER is offering 1,000 body cameras for field testing -- an offer that Vievu has matched -- allowing the NYPD to compare the products side by side. It's a strategy that will either prove that TASER International has a superior offering, or that Vievu's price of one-third of what TASER bid is a much better value.
What TASER International is hoping the NYPD sees
According to The New York Times, Cincinnati tested both TASER International and Vievu body cameras earlier this year, deciding on TASER International after finding the audio, video, and field of vision on Vievu cameras to be lower quality. And it's quality the company hopes the NYPD appreciates.
TASER International's Axon 2 camera easily beats Vievu's LE4 in field of view, with 142 degrees compared to 95 degrees. And Vievu's software systems were found by Cincinnati to be lower quality, a concern after Oakland's Vievu system lost about a quarter of its data in a software upgrade.
It's easy to see that TASER's Axon line may be better than Vievu, but at what cost? Reports were that TASER's bid was three times Vievu's, and it's likely some law enforcement agencies will see the lower cost as a big advantage.
TASER International could compete by touting its superior performance, which it is hoping to do with the NYPD, but it may have to lower prices if this trend continues.
Competitors are coming for TASER International's most important business
It's clear that Vievu has struck a cord with TASER International, and the battle between the two will be worth watching. The upstart may forceTASER to lower prices, leading to lower margins and profits in the future. Or the Taser and body camera giant may be content with losing some market share in cities that value cost over quality.
HowTASER International reacts and whether or not the NYPD changes its decision on Vievu's contract could tell us where TASER'sstock will go from here. If Vievu is a competitor that will take a significant share of the market, investors should be very concerned. But ifTASER International proves to have a better product and can maintain high prices, it'll validate a bullish stance on the stock. The next few months could tell us where this battle over body cameras is headed.
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Travis Hoium owns shares of Taser International. The Motley Fool recommends Taser International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.