TASER Technologies (NASDAQ:AXON) is locked in a war with tiny rival Digital Ally -- a battle to control the market for police body cameras. And in war, if you want to distract an enemy from your main attack, it never hurts to open a second front -- which is just what Digital Ally has done.
Earlier this month, we told you all about TASER's attack on the validity of a Digital Ally patent on "auto-activation" of remote recording devices linked to body cameras. Digital Ally quickly dismissed TASER's challenge as "simply more of the same" arguments it has already made in the past, insisting its patents will hold up to scrutiny.
Now, Digital Ally is following up that riposte with a new attack of its own, announcing its entry into "the non-lethal weapon market" that TASER pioneered.
TASER's stunguns, as you know, fire projectiles, and then electrify them by running current from the stun gun to the projectile along thin wires -- stunning the target. In contrast, Digital Ally says it has invented a "wireless long-range electroshock weapon" that will "fire a wireless direct contact projectile from a launcher." The projectile incorporates a charge-delivery device, eliminating the need to run current along a wire from stun gun to projectile.
Essentially, it's a gunpowder-thrown cattle prod.
Digital Ally touts its new product as an "innovation" in the market -- not just because it works without wires, but also because it fires projectiles at a low muzzle velocity less likely to injure the target on impact. Also, once the projectile strikes its target, the user can dial the intensity of the charge up or down through a radio controller.
Why that's significant
Digital Ally's innovations are significant -- because they specifically target aspects of TASER's own weapons. By cutting the cord, so to speak, Digital Ally aims to create a weapon more versatile than TASER's ubiquitous stun guns. By reducing the velocity of the projectile, Digital Ally addresses criticisms of TASER's own attempt at creating a wireless stun gun.
That's right. About a decade ago, TASER itself invented a wireless stun gun called the XREP, which fired a self-electrifying charge from a 12-gauge shotgun. Upon impact, XREP would pierce its target's skin and then hang there, electrocuting its target for 20 seconds before running out of juice. Amnesty International, however, criticized the device, calling XREP "horrible," "horrific," and "a seriously dangerous weapon." TASER no longer actively markets XREP -- and hasn't tried to sell anything similar since pulling the old product -- but now Digital Ally will.
What it means to investors
Digital Ally estimates the value of the global market for "non-lethal weapons" at $8.5 billion and casts its new stun-gun concept as its opening volley toward capturing a piece of this market. It could succeed. After all, while Digital Ally is still working up the technology to develop its "product prototype," TASER itself -- with about $160 million in annual stun-gun sales -- still controls less than 2% of this market after nearly a quarter-century in business. The market remains fragmented and offers plenty of room for a new entrant.
That said, unless Digital Ally can both perfect its new weapon and simultaneously address the criticisms that doomed TASER's own effort in this direction, its new weapon may meet the same fate a TASER's XREP. Until it does this, TASER's tech remains the one to beat.