Big money is being spent currently to promote voice-activated smart devices.
Apple Inc with its HomePod, Google Home and market leader Amazon Alexa/Echo are all pushing their respective products hard.
People can already control smart devices from mobile phones but it is the advent of voice technology that will see the market really take off, he told Proactive.
Voice is the interface of the future and people will able to control many different devices made by many different vendors just by speaking.
LightwaveRF designs and supplies smart sockets and switches for the home to control elements such as lighting, heating and power.
Home devices get serious
By replacing existing light sockets and switches, you can remotely switch the lights on/off or turn the radiators down in certain rooms and so on.
LightwaveRF’s tie-up with Apple underlines just how serious the big three are taking the market, he adds.
Getting approval for any ancillary product from the iPhone maker is notoriously hard and it took two years of hard graft to get the nod.
But that was almost fast-tracking, says Pearson as Apple needed a range of smart switches and sockets to support the launch of its HomePod in the UK.
The effort was clearly worth it as already there have been significant benefits from the tie-up.
Previously, its modest size meant a struggle to make headway with the UK’s major retailers, but as soon as Apple’s approval came through, all that changed.
John Lewis now on board
For example, LightwaveRF’s product are now available through John Lewis while a new Apple HomeKit demonstration site has just opened at the retailer’s outlet at Westfield, White City.
The relationship with the iPhone group is set to expand further in the coming months with plans afoot to launch the HomeKit range internationally in 20 countries.
This will represent a change of scale for LightwaveRF, which hitherto has been focused on the UK.
Pearson, who became CEO in March 2017, has also taken steps to adapt the company to the ‘modern retail’ world with a major change in the distribution strategy.
Foregoing a big chunk of revenue even if only in the short-term is a bold move, but Pearson said LightwaveRF had to move beyond “filling up someone else’s warehouse twice a year.”
Short-term pain for long-term gain
There will be a cost. Switching strategy will mean losses in the half year to March just ended will be ‘markedly higher’ than the £330,000 posted a year ago.
Pearson argues it was a necessary move as the business starts to scale up.
“Modern retailers take what they need and measure sell-through week-by-week and re-order.
“We had to go through the transition.”
In future, we will have real sales, he adds.
LightwaveRF raised £5.25mln through a share issue in December before announcing the change, so financially it could cope with the disruption distribution and the expansion overseas.
Even so, the share price took a knock when the new arrangements were announced in March.
Revenues last year to September were £3mln and the trading update indicated interim sales were unchanged at £1.2mln.
At 13.75p, LightwaveRF is now valued at just under £10mln.
Undervalued compared to private equity
Rivals are generally valued much higher even though most, like LightwaveRF, are loss-making and still in the formative stages of development.
“Venture capital-backed firms are valued on sales multiples much higher than us,” says Pearson.
But if he is right about the market, there is plenty of time for that to change.
Currently, LightwaveRF has 40,000 customers of which half use voice-controlled devices in their homes, but there are 18mln households in the UK alone not including any potential uplift from the push abroad.
A new head of sales, Adam Williams, ex-Dixons, Sony and Samsung, has just been appointed to focus the sales effort and Pearson is confident LightwaveRF is in the right place at the right time.
“Voice control has changed the market.
“It used to be enthusiasts, geeky market but now it is becoming a real market for all vendors.”