Competitive Intelligence

Taser vs. Stinger: Troubled Stun-Gun Maker Defends Against Competitor Amid Insider Selling Rumors

Days before Christmas, Taser International filed a lawsuit against fellow stun gun maker Stinger Systems, alleging that the company engaged in false advertising and unlawful patent marketing. Taser, whose 50,000-volt stun guns are used by more than 6,000 police departments and prisons worldwide, also disputed Stinger claims that its product is more effective than the Taser gun, saying that the Stinger product has not even reached prototype stage and called it a "fictitious" device in a press release. I have to say, the Stinger is certainly cooler-looking and, since they just had a demonstration of the product, calls into question, Taser’s competitive intelligence.

Then again, Taser has had a rough time of things recently. Amnesty International estimated in a November 30 report that Tasers contributed to the deaths of more than 70 people. Some medical experts say Taser shocks might trigger heart failure in cases where people are agitated, under the influence of drugs or have health problems. Taser says its guns are not lethal.

Taser said Stinger makes claims about being certified by the Bureau of Alcohol, Tobacco and Firearms, as well as claims that its device was the first ATF-certified weapon. Taser said the ATF does not certify less-lethal weapons, it regulates them, and also said it now owns a product that has been regulated by the ATF since the 1970's. Stinger's Robert Gruder, said his company believes Taser's claims serve to give Stinger more legitimacy in the marketplace. "We think these allegations are not only fictitious, but ridiculous," Gruder said. Taser also alleges that Stinger made false claims about being listed on a Nasdaq market, about its patent, its corporate history, as well as other aspects of its products' performance.

My favorite barb was, Gruder’s line "If he thinks we have a fictitious gun, I'd be happy to challenge him to a duel with our fictitious gun at 30 feet," referring to the superior range of his product versus the Taser product. "This just proves that Taser's management considers Stinger Systems a competitive threat. I would be happy to publicly demonstrate our weapon against the Taser at any time. We stand by our claims. Taser is just trying to impede competition." Here’s more from Stinger’s hometown media:

Stun-gun producer Stinger Systems Inc. is countering legal claims by Taser International Inc., which has accused the Charlotte company of making misleading statements about Stinger products.

"We intend to aggressively and vigorously defend our weapon and our company in the media, the trade press and in the courts from Taser's allegations, which are clearly aimed at silencing and stifling a competitive marketplace," says Robert Gruder, Stinger chief executive.

Toward that end, video footage of the company's flagship product, the Stinger, was broadcast Tuesday night in a news report by WSOC-TV, the ABC affiliate in Charlotte.

That report "unequivocally proves both the existence and operation of our weapon, contrary to allegations issued by Taser's management," Gruder says.

Taser recently filed a lawsuit against Stinger in U.S. District Court, contending the local company is using false advertising and unlawful patent marking in violation of federal statutes.

Among its allegations, Scottsdale, Ariz.-based Taser says Stinger is falsely claiming its products are certified by the Bureau of Alcohol, Tobacco and Firearms and its facilities are ISO 9001 certified.

Both companies make stun guns and other nonlethal weapon systems for use by law-enforcement agencies and other customers.

Stinger's ads use false information to claim its products are better - and less expensive - than Taser's, the complaint contends.

In a press release, Gruder maintains Stinger's products are viable and says Taser's claims are off target.

"We look forward to providing the law-enforcement community a choice in projectile stun technology and believe, in the end, the better product will win," he says. "I believe that product will be the Stinger."

And, Stinger has certainly been going full-frontal in their assault on the market leader. Their Taser Trade-In program and other differentia make a compelling competitor into a real threat to Taser’s long-term business prospects. Stinger's single cartridge weapon is almost half the price of Taser's X26 and yet it shoots farther and is supposedly more accurate – according to the trade-in program, any organization using either the M or X series from Taser, will get a discount on the Stinger single cartridge gun of $100 and two cartridge model $150 if they make the switch to Stinger.

That is, if Taser survives that long - a story out on Friday mentions the SEC will begin looking into insider trading at the company, as the stock tumbled toward the end of an otherwise bubble-like year in 2004. My theory is, the execs bailed out, when Stinger competition looked like it'd hurt the stock and sold shares on privileged information to try and lock in some of their gains before the company tanked.

Shocking... I'm stunned. (Sorry, I just couldn't resist.)

- Arik

Posted by Arik Johnson at January 7, 2005 10:47 PM | TrackBack