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Axon Enterprise Idea Proposal (AAXN, TASR)

Axon Enterprise Idea Proposal (AAXN, TASR)
 

Will Axon’s free camera initiative shut down the competition and drive continued growth?

Report Available:June 21, 2017

 

Blueshift’s initial research found newly-named Axon Enterprise giving a free body camera and one year’s worth of cloud storage to U.S. police officers in an effort to quell surging competitors and make its body cameras ubiquitous for law enforcement. The name change is symbolic of the company’s emphasis on the camera segment of its business as it moves away from being known simply for its stun guns. Still, competition is surging and the free giveaway does not guarantee success for AAXN as it creates potential conflicts for police departments in their procurement process and requires significant fees for cloud storage services after the first year.

 

Observations

  1. In April, AAXN stunned the law enforcement community with an offer of free body cameras for all U.S. police officers and one year of complimentary hardware, software, data storage, training, and support. AAXN said the offer generated interest from hundreds of police agencies across the U.S. In response, AAXN hosted a webinar to share more information on how these police departments could sign up.
  2. AAXN’s offer has its critics. City procurement departments, competitors, and legal experts have raised concerns about the free offer. The Safariland Group, parent company of competitor Vievu, called the offer a “publicity stunt that is at best unethical and at worst illegal.”  An NYPD official said, “It would be inappropriate according to rules governing the procurement process to accept such an offer.”Police departments in Phoenix and Madison, WI also rejected the free offer based on procedural concerns.  A law professor at the University of California, Davis, said she has concerns about the offer as there are issues regarding the design and use of the camera and the recorded data that needs to be addressed in an open community environment. There are also concerns about the offer being a marketing ploy to get police departments hooked on the cameras and then paying a hefty bill for the cloud storage and other services after the first year.
  3. AAXN reported a strong Q1, beating Wall Street’s expectations for earnings and revenue. At the close of Q1, 36 of the 68 major U.S. police departments had purchased AAXN body cameras and/or use its digital evidence management solution. The company sold 16,800 seat licenses in the quarter for its Evidence.com cloud storage platform and now has 148,400 licenses with a TAM of 2 million patrol officers and vehicles worldwide. Axon service revenue grew 142% year to year with a gross margin of 70%.
  4. Blueshift’s Oct. 26, 2016, report found TASR facing intense competitive headwinds that would disrupt its dominant position in the body-worn camera and evidence storage markets. Eight police and sheriff department sources acknowledged that competition is intense, but said Taser would continue to perform well.

 

Will AAXN’s free camera offer keep the competition at bay? Will AAXN’s growth continue as a result of its free camera offer? Will police departments take advantage of the free offer or will procedural issues derail the initiative? How likely are police departments to begin paying for storage and services after the first free year? How will AAXN competitors combat this offer? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Police and law enforcement departments, Competitors, City procurement professionals, and Industry Specialists.

 

Companies: Amazon (AMZN), Axon Enterprise (AAXN), Digital Ally (DGLY), GoPro (GPRO), IBM Corp. (IBM), Microsoft (MSFT), Motorola Solutions (MSI), NetApp Inc. (NTAP), Panasonic Corp. (TYO:6752), Sony Corp. (TYO:6758)

 

Research Begins: June 5, 2017