Earlier this week, shares of TASER International, Inc. (NASDAQ:AAXN) plunged on fear that Motorola Solutions Inc's (NYSE:MSI) new body camera solution may be a threat to its business. It didn't take long for TASER to react, introducing the next-generation Axon body camera.  

The hope is that the new product will solve some of the problems police forces had with the previous line of products. 

Image source: TASER International.

What's in Axon Body 2?
The new Axon Body 2 camera is a similar form factor as the previous model, but has significantly beefed-up features. It offers HD video and costs just $399 with a $79 per month unlimited HD video storage option for law enforcement. It's built with an Ambarella HD camera System-on-a-Chip, some of the leading technology in HD cameras today.

Axon Body 2 comes with a full shift battery life of over 12 hours and now allows officers to tag, stream, and replay videos from a mobile app. The improved ease of use along with unlimited storage in HD takes TASER's products to the next level at a time when increasing competition from the likes of Motorola Solutions are challenging the company's business.

Momentum in earnings
The goal for TASER's management is to keep the company's revenue and earnings momentum going. Over the last five years, the company's revenue has nearly doubled, and it's been reporting a solid profit the last few years.

TASR Revenue (TTM) Chart

TASR Revenue (TTM) data by YCharts.

Growing the installed base is what investors should be watching when TASER reports earnings on November 3. Weapons were still 81% of the company's revenue in the second quarter, and Axon was just starting to make up a significant portion of revenue. The Axon segment nearly doubled last quarter to $8.9 million in revenue, highlighted by a 226% increase in service revenue for licenses on Evidence.com. Bookings for Axon products also jumped 170% to $19.3 million.  

Long term, the more cameras TASER can get in the field, the more law enforcement agencies will be paying the $79 per month video storage fee, which is where the company will really make money. It's like the razor/razor blade model. Even if TASER doesn't make money on the $399 camera, that monthly video storage fee translates to $948 annually for users to store video. But Axon's hardware gross margin was actually 37.3% last quarter, and its service margin was an impressive 66.3%. That leaves a lot of potential upside if a camera like this gains wide adoption.

Another step in the right direction
The Axon Body 2 product launch brings TASER one step closer to being an indispensible part of police forces across the country, and it could bring great financial success as well. As an investor, I like the product progress, but it won't mean much unless we start to see more progress in signing up law enforcement agencies.

Keep an eye on units sold and growth rates for Axon hardware and software in the second half of this year. If both take off, this stock could be a big winner for many years to come.