By Stephen Nellis
SAN FRANCISCO (Reuters) - Taser International Inc , maker of the eponymous device used by police to stun and incapacitate a person temporarily, is changing its name to Axon as it pushes further into the software business.
The Axon name comes from Taser's unit that sells police body cameras, patrol car cameras and the software for managing the hours of digital footage they generate.
In a gamble that police departments will sign up for paid software subscriptions, the company is offering free body cameras to police officers in addition to a year of free access to Evidence.com, its online software for managing video and other evidence.
Shares of the company closed down 0.5 percent at $21.90, after rising more than 6 percent in anticipation of a company announcement.
Taser still gets the bulk of its revenue from its weapons, which use electrical current to immobilize targets. Last year, $202.6 million of its $268.2 million in revenue came from its weapons segment, mostly in the form of replacement cartridges.
But Chief Executive Officer Rick Smith said the Taser brand name can be "polarizing" because of its association with the company's weapons. The weapons are popular among police but have been criticized by groups such as the American Civil Liberties Union, mainly because of deaths caused by Tasers.
Taser will continue to use the Taser brand for its weapons products. The Axon brand will let the company market its cameras and records management software to police departments without the controversy the Taser brand can generate, Smith said.
"The thing we saw with Axon is that it's a less polarizing brand," Smith told Reuters. "We're never going to run from Taser. It's something we're proud of, and we think the facts are on our side. But we don't want to be having the Taser debate every time we talk about something else."
Nearly a quarter of Taser's revenue now comes from the Axon segment. Software revenue for Evidence.com nearly doubled to $11.7 million.
"The hardware creates an issue for police departments in a sense that you're creating hours and hours of raw data," said Steve Dyer, senior research analyst for Craig-Hallum Capital Group. "You have the question not only of how to store the data in an industry that is not traditionally that tech savvy, but also how to handle digital evidence with the same safeguards as physical evidence."
Evidence.com software is sold on a subscription basis, typically five-year contracts. That means Taser has to spend money to sign up customers, while revenue follows over the length of the contract.
Software companies including Salesforce.com Inc or Workday Inc have persuaded investors to accept this revenue model. But it can cut into profits in the short term: Taser's profits dipped from $19.9 million to $17.2 million last year despite strong revenue growth.
(Reporting by Stephen Nellis, additional reporting by Noel Randewich; Editing by Jonathan Weber, Andrew Hay and Lisa Shumaker)