A Newport Beach-based startup has struck a distribution deal with a Mexican telecom owned by Carlos Slim Helu, the world’s richest person.
AirTouch Communications Inc. will supply Telefonos de Mexico, commonly known as Telmex, with its SmartLinX U250. The new product allows consumers to use smart phones to make and receive calls from a landline via Wi-Fi.
The company hasn’t announced product pricing yet, but the Telmex contract is valued at about $1.8 million, according to sources.
That’s a sales boon for 4-year-old Air-Touch, a relatively unknown communications-equipment mak-er that saw sales of $326,000 for all of last year.
It also represents a potentially powerful link to a telecom that’s established throughout Latin America and owned by one of the most influential executives in the world.
“It’s a game-changer for our company and part of the roadmap to roll out products in emerging markets,” AirTouch Chief Financial Officer Jerome Kaiser said.
Telmex is the largest landline carrier in Latin America, with operations in 19 countries. It ended the first quarter with 14.5 million landline connections, primarily in Mexico, where it dominates market share.
The company sees more than $7 billion in annual revenue. Telmex is part of Mexico City-based America Movil, also owned by Slim, whose net worth has been estimated at $69 billion.
The first 2,000 units of the SmartLinX were shipped last week to Telmex retail stores in Mexico.
Telmex personnel will be trained to operate the device. The company expects to sell up to 18,000 units throughout Latin America via 400 Telmex stores, as well as through resellers and online marketing.
Subscribers
The product launch comes as Telmex and other major landline carriers are losing subscribers with the widespread adoption of mobile phones.
Telmex reported a loss of 225,000 customer lines in the recently ended quarter in a 6% downtick from a year earlier. It hopes to stem the losses with the SmartLinX U250.
The small disk-like device pairs smart phones with landlines via Wi-Fi technology available through a mobile app.
Benefits
The benefits that will be marketed to potential customers include stronger signals, more secure connections, a savings of mobile minutes, and the ability to access contacts from a smart phone when using a landline.
“Allowing mobile phones to work using these land lines will help Telmex find new opportunities for services and revenue,” said Andres Vázquez del Mercado, Telmex’s executive vice president for corporate development.
AirTouch has a patent pending on SmartLinX U250, which was in development for more than a year and designed specifically for Telmex, said Tom Quan, who was hired in November to lead global sales, marketing and merchandising for AirTouch.
Telmex had been in discussions for more than a year with multiple telecom equipment makers to produce a device that allowed users to wirelessly control every smart device in a home, from television and security systems to thermostats and phones.
One company was even contracted to carry out the work, but wasn’t able to develop a product that handled all those functions, according to sources with knowledge of those discussions.
Background
Senior-level executives at Telmex then contacted AirTouch and asked the company to find a solution for a “home gateway” product.
The SmartLinX grew out of that effort, with a narrower focus on linking smart phones and landlines.
The product debuted at the International Consumer Electronics Show in Las Vegas earlier this year and was well received by telecoms, according to Quan.
AirTouch hopes the initial deal “will be the first of many large orders in the future,” Chief Executive Hide Kanakubo said.
Telmex is positioning the SmartLinX to eventually replace its cordless phones; it sells hundreds of thousands of units annually.
“We are confident that the easy to use U250 may eventually lead to replacing cordless phones among a large portion of our broadband and Wi-Fi network customers,” del Mercado said.
This is the second device AirTouch has developed.
First Product
In November its wireless desktop phone and docking station—dubbed the X1500—was one of the first products approved by Verizon Wireless for the consumer market. They are geared for the home or office.
The X1500 can tap into landlines and receive text messages and voicemail alerts. It also can connect wirelessly to the Internet.
The product comes equipped with up to six cordless handsets with signals significantly more powerful than a mobile phone, according to the company.
It’s priced below $200 and began shipping in the first quarter.
$12M Raised
AirTouch has raised $12 million to date from private investors and has used the proceeds for research and development, marketing and working capital.
The company changed its name from Waxess Holdings Inc. to AirTouch last year.
