Smith Micro Software Inc. landed a deal that makes Japanese conglomerate Panasonic Corp. a customer and reseller for the Aliso Viejo-based software maker.
Smith Micro will provide Panasonic secure wireless connectivity, data traffic, and device management programs for its vast line of products, which range from mobile computers and digital signage to security and surveillance systems.
Financial terms of the deal were not disclosed.
“We’ve been working with Panasonic to establish this relationship for several months,” said Chief Marketing Officer Carla Fitzgerald. “It’s a little bit different than some of the other partnerships we’ve had because of the breadth of opportunity.”
Osaka, Japan-based Panasonic is one of the largest electronics suppliers in the world, with nearly $74 billion in annual sales. Its products range from DVD players and sound systems to in-flight entertainment systems made by Lake Forest-based Panasonic Avionics Corp.
Smith Micro’s recent deal also adds Panasonic as a premier reseller for its software with deep ties throughout Asia.
“It will increase our ability to sell our solutions in deals they’re already doing,” Fitzgerald said.
The deal with Panasonic could be a significant help in diversifying its sales base. Smith Micro had $43.3 million in revenue in 2012 and is due to report fourth-quarter and year-end results for 2013 on March 6.
Its two largest customers, Sprint and Verizon Wireless, account for about 60% of the company’s revenue.
Strategy Shift
The latest development comes as Panasonic aims to shift its sales strategy from legacy electronics, such as TVs and stereo equipment, to higher-margin products for the mobile healthcare, utilities, public safety, and connected home and work sectors.
“These are all things Panasonic is building their wireless business around,” Fitzgerald said.
Smith Micro’s software is billed to diagnose connectivity problems, block unwanted apps and unauthorized access points, and automatically select lower-cost data networks.
The deal will extend Panasonic and Smith Micro’s reach into government, large corporations, and the explosive machine-to-machine market.
Global sales in the machine-to-machine segment are expected to grow 23% annually over the next seven years to nearly $950 billion, according to Washington, D.C.-based segment tracker Carbon War Room.
“We’re looking at opportunities in anything that can be connected to the Internet,” Fitzgerald said.
It’s a natural progression for Smith Micro, with its legacy technology powering connectivity in laptops to newer mobile devices such as tablets and smartphones.
Smith Micro shares have been flat in the last year, trading around $1.50 for much of 2014, with a market value of about $56.6 million. It was in jeopardy of a delisting after its stock price dipped below $1 for 30 straight trading sessions, but regained compliance late last year on the Nasdaq Capital Market.
Smith Micro has closed offices and cut about 86 employees, or 26% of its global workforce, in a restructuring amid lackluster sales.
Some analysts and company insiders believe 2014 could be a turnaround year for Smith Micro if it becomes a significant player in the “Internet of Things,” a catch-all phrase that describes the ability of consumers and businesses to control products from light bulbs to heating systems through a Web browser, tablet or smartphone.
“This is one element in several steps we’re taking to turn around our business,” Fitzgerald said.
The company is also in negotiations with chipmakers to embed its connectivity software on silicon, potentially opening new growth drivers.
“This is absolutely a new avenue,” Fitzgerald said.
