Long-time readers should note some significant changes in how I communicate in the public domain. The primary purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.
Accordingly, this document should not be construed as an endorsement or recommendation of the companies or securities discussed herein. I am not an investment advisor and this is not an investment thesis. It is merely one part of the story, which I present for debate in hopes of determining all risks and upside potential. The disclosure at the end of this piece is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.
This article should be interest to investors and parents alike. Parents will be relieved to see technology making their job easier (for once). Meanwhile, investors looking to buy, sell, or short shares of Smith Micro (SMSI) will gain valuable insight that belies much of what you’ve read about Safe & Found’s earlier versions.
Whether you’re a parent or an investor (or both), I highly recommend at least testing Safe & Found (they are currently offering 15-day free trials).
Smith Micro recently released version 1.0.7 of Sprint’s Safe & Found product offering. The version number denote that the product is still in its infancy. Version 2.0 is reportedly due to be released before quarter-end and promises to represent a big step up from the newest version.
Based on what I experienced this weekend, it won’t have to be.
Many investors have been judging Safe & Found based on app store reviews. However, there’s a simple reason why that makes no sense — the vast majority of Safe & Found’s reviews are still for its older / original versions.
Feedback regarding its latest release is up significantly versus the prior versions.
Most investors don’t realize that early versions of a technically-complex offering are meant to test the product with consumers, albeit on a controlled scale.
This is why Sprint didn’t transition its customers from their legacy product to Safe & Found on day one. The early releases have been meant to work out any major bugs.
Based on first hand experience and second-hand testimony, I can say that they have succeeded.
It appears that Sprint would say so too. Based on my due diligence, they are just weeks away from making a complete switchover, moving an estimated 300,000 customers to the SMSI-developed Safe & Found.
For those of you who have been swayed by the product’s reviews, here is some additional color (to go along with what I’ve already said):
Unless you drill down and really analyze the ratings data — which I have done in prior posts — you can’t even begin to get an accurate read on the public’s perception (and that still doesn’t give you first-hand experience with the app).
Looking at the review data, there are only 662 Android reviews versus an estimated 165,000+ downloads (and closer to 300,000 in total). So, less than 1% of people downloading the product are leaving reviews.
What can we glean from that? Simple — the app is being reviewed by very few people. Not surprisingly, most people who are motivated to leave a review either LOVE it or HATE it — 79% of reviews are either 5-stars (love) or 1-star (hate).
It’s the vocal minority.
A sample of <1% of total downloads.
Beyond that, I also realized that the latest version is getting much better reviews than prior versions. Because of this, I set out to judge the new product for myself.
Several weeks ago, I tested a prior version of the Safe & Found product with a family of four. Ultimately, we were impressed with the product. I would have given it 3.5 to 4 stars. This weekend, I tested the latest iteration with a new family.
I intentionally sought a family that has used the Location Labs product and currently uses iPhones.
This is because location tracking apps have a reputation for not working well on iOS vs. Android. In fact, T-Mobile’s FamilyWhere app (developed by Location Labs, the same company Sprint is now replacing with SMSI) isn’t even available on iOS!
It’s only available via Google Play !
“The FamilyWhere app is available for Android only”
Additional information includes the following:
• FamilyWhere is optimized for SmartPhones and may not be compatible with all tablets
• Users who are locatable will be notified via text message
• FamilyWhere can only locate devices that are powered on and connected to T-Mobile’s network
* This additional information is quoted directly from T-Mobile’s website.
Why is it only on Android? Well, according to Sprint, they chose to replace Location Labs because it basically doesn’t work on iOS.
Needless to say, they need to solve this problem to fully-unlock their revenue potential… and that potential is set to go through the roof. On a combined basis, Sprint and T-Mobile possess 127 million customers.
Most incredibly, the Location Labs product still draws $10 per month from an estimated 500,000 T-Mobile customers. That works out to $60 million of pure profit annually.
Imagine how much larger that number will be if T-Mobile switches to a product that offers iOS support and something more than commoditized location capabilities. Merely doubling that number could add a billion dollars to the company’s market cap. That’s not game changing for TMUS, but it would move the needle.
And the implications aren’t just superficial. The battle among carriers is becoming increasingly focused on customer loyalty. Customer churn remains at elevated levels and market share gains are becoming harder to come by. For carriers, is substantially raising the strategic value of offering sticky applications.
Not only does SMSI’s newest version not have the Location Labs drawbacks, it also offers a lot more functionality. This is important because most anyone can now find location applications for free.
Of course, SMSI’s product offers location. However, it also provides a broad (and fast-expanding) set of differentiating features. These include Geo-fencing, Phone Call Controls, Application Control, Security, and will soon offer Wearables too.
I’ll get into all the details shortly. For now, understand that Sprint offers all of this at a significant discount to what T-Mobile charges for its inferior solution:
15 day FREE trial of full functionality is available for all new customers.
- $6.99/mo.: Provides full functionality (location, parental controls); monthly recurring charge per account for up to 5 devices.
- $5.99/mo.: Provides location only (only available for legacy Sprint Family Locator users who opt in during the free trial)
- $4.99/mo.: Provides parental controls only (only available for legacy Sprint Family Locator users who opt in during the free trial)
By now, it should be clear that this is very good news for SMSI.
With T-Mobile and Sprint merging, it doesn’t matter that T-Mobile / Deutsche Telekom will be the controlling entity. I consulted with several Wall Street professionals and the 100% consensus was that they will examine each company’s offering / synergies on a case-by-case / app-by-app basis.
Of course, politics will be involved… and of course, T-Mobile’s team will have the final say. However, as we can see, T-Mobile’s app is limited (in usability and functionality), outdated, and subject to competitive displacement (which is one reason why Sprint replaced the same product with SMSI’s product suite).
Further, Sprint has already gone through the process of moving their customer base from the Location Labs product over to the SMSI product. The experience from that transition will accrue to T-Mobile, making the experience faster and easier than any other option.
Best of all, if T-Mobile’s superior marketing engine is attracting $10 per month for its legacy offering, imagine how much it will be able to charge for Safe & Found. At the very least, they can charge the same price to foster customer satisfaction and loyalty (the latter of which has been a focal point for carriers lately).
Thus, I believe that the most likely scenario is for T-Mobile to adopt SMSI’s SafePath product… assuming that it’s good.
So, is it?
Based on this weekend’s assessment, the answer is an emphatic “yes”. I would give the newest version 4.0 to 4.5 stars.
My test family concurred. While their Location Labs experience led them to stop using the product, due to issues with functionality and usability, the Safe & Found experience left them keeping the app the end of our test. The mom was particularly relieved that the download and registration process was far easier than she feared. She breezed through it without any assistance.
Overall, a few reparable blemishes (details in a minute) inhibited a grand slam 5-star rating. However, this was clearly a home run, especially considering what was being offered just a few weeks ago.
As I’ve already stated, the prior version was impressive enough. It proved to me that its negative reviews are merely a relatively small (1 per 500 downloads) number of isolated issues. For the record, my sources attribute much of this to frustration over having to download and learn a new product.
However, the new version represents a significant improvementover the last one.
Here’s what it offers:
- Location tracking
- Geo-fencing (Create safety zones, where children are allowed to be)
- Notifications (notifies parent if the child moves outside of a designated area)
- Parental Controls (see the video below for more on this)
- Call Security (limit who can call and be called from your child’s phone)
- Security (Find, Lock, and/or Erase a phone if it gets lost or stolen)
- Wearables. 5G is the big talk around Sprint/T-Mobile… and 5G is going to be a big enabler for wearables. This will enable you to track your dog, possessions, or anything else!
Ironically, T-Mobile’s version doesn’t support iOS downloads (Android only) or non T-Mobile devices. In contrast, Sprint’s version supports (and works well on) both operating systems and supports non-Sprint devices (Ironically, I tested it using a T-Mobile phone!).
I generated a 12-minute YouTube video to demonstrate some of the Safe & Found functionality, most notably the Parental Controls, which stole the show for me and our test family (it also drew bullish comments when I told the family who tested the older version).
Here’s the video.
I’d give a recap of the video’s content’s, but much of my weekend was consumed by researching, interviewing, and writing up the ramifications of the Sprint / T-Mobile merger. If you’re interested in this stock (or an app for your family’s protection), you’ll have to carve out 12 minutes to watch the video…
…or better yet, test it for yourself! It’s easy to install/use (our test mom was afraid it would be hard, but pleasantly surprised by how easy it actually was) and free for 15-days!
Easy sign up email.
Simple download / register process. Mom was concerned that it would be hard to install and use. Nope. Was easy!
Only one parent needs to be on the Sprint network!
Location Labs basically didn’t work on iOS. $S switched because $SMSI does.
This is a BIG improvement over the last version I tested!
Knows every app loaded on each phone!
Can control & schedule which apps can used, and when, with an easy interface.
- All features work as described. Very functionally rich now!
- Battery usage = nice surprise; only 1% during 24 hours of relatively heavy usage.
Accuracy is fine. Won’t always find exactly where I am, but that’s not its purpose.
Alerts could be more timely; I noted a 3-4 minute delay between an activity and an alert. Again, not trying to splice atoms with this, but app might benefit by incorporating Twilio (TWLO).
- Sprint FINALLY Ramping Up SMSI’s Product!
- Videocast: AEHR 10-Q, MoviePass Update
- AEHR Grows 175% — Beats On The Top & Bottom Line (Buying More)
- GAIA vs. MoviePass: CAC Shows Which One Is A True Mini-NFLX
- Major Update on SMSI
- SMSI’s Safe & Found App: 100,000 Downloads & Counting
- MoviePass Projected To Burn $600M In 2018
- SMSI: Riding A New Trend & Making Its Latest Comeback
- Mark Gomes Research
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Disclosures / Disclaimers: I am long SMSI. However, this is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.
I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.
I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter. Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.
I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.