Smith Micro Software, Inc. (SMSI)
Interview with:
William W. Smith, Jr., Chairman, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
wireless communication and utility software products and services enable wireless communications, eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, and network fax, along with traditional computer telephony.

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Smith Micro’s QuickLink Mobile wireless connectivity solutions are available for multiple OS platforms, including Windows 98 and above, Pocket PC and Palm OS and Macintosh 9.x

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Technology
Software and Programming
(SMSI-NASD)

Smith Micro Software, Inc.

51 Columbia, Ste. 200
Aliso Viejo, CA 92656
Phone: 949-362-5800


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William W. Smith, Jr.
Chairman, President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
May 2004

BIO:
Mr. Smith co-founded the Company and has served as Chairman of the Board, President and Chief Executive Officer since its inception in 1982. Mr. Smith was employed by Rockwell International Corporation in a variety of technical and management positions from 1975 to 1984. Mr. Smith served with Xerox Data Systems from 1972 to 1975 and RCA Computer Systems Division from 1969 to 1972 in mainframe sales and pre-sale technical roles. Mr. Smith received a B.A. in Business Administration from Grove City College.

Company Profile:
Smith Micro Software, Inc., (SMSI-Nasdaq) headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communication and utility software products. The company designs integrated cross platform, easy-to-use software for personal computing and business solutions around the world. With a focus on the Internet, Wireless, and Broadband technologies, the company's products and services enable wireless communications, eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, and network fax, along with traditional computer telephony. The Company’s software products and services are available for multiple OS platforms, including Windows 98 and above, Pocket PC and Palm OS and Macintosh 9.x and above.

Smith Micro has been building Wireless solutions since 1994 and offers a wide range of software applications that enable the Wireless Internet. Their product list includes QuickLink® Mobile for Windows, QuickLink® Mobile for Mac OSX, QuickLink® Mobile Wi-Fi, QuickLink® Wi-fi, QuickLink® Mobile Phonebook, QuickLink® Mobile for Palm OS®, and QuickLink® Mobile for Pocket.

CEOCFOinterviews: Mr. Smith, Smith Micro has been in business for over 20 years. Will you tell us about the vision when you started, and where you are today?

Mr. Smith: “Smith Micro has changed quite a bit over the years. When we started we were making stock market software. That led us to data communications software because all the stock market software needed to use modems to get stock quotes. From there, we moved into the wireless area. Today on the wireless side, we make a product called QuickLink® Mobile, which allows for communications via a mobile phone or a wireless PC card to the Internet. We sell this primarily through OEM channels and our largest customers are people like Verizon Wireless and Cingular.”

CEOCFOinterviews: How have you weathered the last few years?

Mr. Smith: “Clearly our business case changed. The case that we took to the public market in 1995 was built around the analog modem business, which after the 56K modem wars and the fact that analog modems could not move any faster than 56K, the analog modem market became a very difficult place to be and impacted our business case. We then had to go through some years where we had to reinvent ourselves. We found our way into the wireless space because it was a very logical extension from what we were doing on the modem site. The wireless side has been a growing area. It is over half of our business and should continue to grow to be even larger. We feel very fortunate because it has worked well for us.”

CEOCFOinterviews: How is the financial condition of the company?

Mr. Smith: “We are continuing to grow our business both on the wireless side and on our othe products and services we provide. We feel good about our business but we have to wait until our numbers are up in a couple of weeks before we can talk about it.”

CEOCFOinterviews: Will you tell us about some of the other products you have?

Mr. Smith: “In addition to the QuickLink® Mobile product, we also have a phone book updating product that allows you to easily take telephone numbers from Outlook or other application and upload them into your phones.  You can easily update and manage your phone list in your cellular phone from you PC, where you have a full keyboard for doing data entry. In addition to that, we still have a strong play in the fax software, particularly on the MacIntosh side. Our FAXstf™ X Pro product is the lead fax product for the MacIntosh. We sell a lot of the FAXstf™ and we continue to grow that product as Apple continues to make modifications and growth to their operating environment. We are also in the business of building e-business sites, and we have a product called WebDNA™. This allows you to easily and effortlessly build e-business sites and we also provide consulting service to some of our customers that do not have the in house talents to get their sites up and running.”

CEOCFOinterviews: What marketing techniques do you employ to sell all of this?

Mr. Smith: “In the past years we had been in the traditional retail channels and we did not find that particularly rewarding or profitable. We have moved all of our business to a web based model where profits can be found and we have been quite successful there.”

CEOCFOinterviews: How does Smith Micro stand out compared to the competition in this market?

Mr. Smith: “In the wireless space, which is our lead focus area, we have been very fortunate to be able to get some of the big names in that market place to be our customers. We focus hard, we have a great product and we are recognized for that. We grow by helping our customers grow. The wireless data market is still a very early stage young market. Verizon Wireless, our largest customer, is the leader in this market and as they continue to grow, we grow. We also are looking at other customers coming on board as more and more service providers see the wisdom of offering data services.”

CEOCFOinterviews: Do you anticipate a time when you are part of the wireless market for everyone?

Mr. Smith: “Yes, very similar to what we did in the fax days; if you built an analog modem, you most likely bought our software. We shipped a million to million and a half copies of fax software every month to the modem manufacturers. I do not know if numbers of that magnitude can happen in the wireless market but we believe that the wireless market has substantial growth.”

CEOCFOinterviews: What is the revenue model?

Mr. Smith: “It is an OEM model with a per unit royalty, based on the number of units shipped. We are shipping more and more data kits that are used with mobile phones and usually have a cable and the software or wireless PC cards and the software.  As our volumes grow, then our royalty base grows.”

CEOCFOinterviews: Do you do anything outside the U.S.?

Mr. Smith: “Yes, one of our largest customers outside of the U.S. is a company called Thuraya, based out of the United Arab Emirates. They are one of the largest providers of satellite wireless services and cover most of the Middle East and Africa and provide very effective, low cost service into Europe. We are constantly looking at China and trying to find ways to make money in that growth market. We also want to be certain that we have absolute control of the North American market, so that we have a good solid base.”

CEOCFOinterviews: Is there any research and development on the horizon?

Mr. Smith: “Presently, you see Verizon Wireless rolling out their high-speed wireless services and we are upgrading all of our products and have done so to support that kind of throughput. We plan to continue to grow our products to match other needs in the wireless space. There is a lot of effort to constantly update our products and matching what our software does with what the hardware is capable of.”

CEOCFOinterviews: What are you actually sending to Verizon Wireless?

Mr. Smith: “In the case of Verizon Wireless, we actually build their data kits for them. We are selling them the software and providing a turnkey solution.  We build the kit as branded to Verizon Wireless specifications and we ship it off to them for distribution to their retail outlets.”

CEOCFOinterviews: Why should potential investors be interested now, and what should they know that they might not realize?

Mr. Smith: “One of the most difficult things is that the product is sold as an OEM product and as a result you do not necessarily get the brand awareness that this is a Smith Micro product; you see it as a Verizon Wireless or a Cingular product, etc. We are the ones that are actually building it and making it. There is a strong growing market for wireless data; it is omnipresent. Many people have gotten excited about WiFi and we are also in the WiFi space, but when you have wireless data, wireless WAN as well as WiFi, there is a great deal of upside going forward.  These are early stage markets that have not gone through the rapid growth that you would see in a few years. At that point, our revenue rate and earnings rate should be different. Those are things that you just have to wait and see develop.”

CEOCFOinterviews: It seems as though you have adapted over time and done the things you needed to be ahead of the curve.

Mr. Smith: “You always have to be ahead of the curve. This is a market that changes rapidly and if you rest on your laurels, you are going to be in a lot of trouble, so you are constantly looking for the next great concept and trying to move towards it. We think we have identified one with the wireless data market and believe that it will serve our shareholders well.”

CEOCFOinterviews: In closing, tell us about your team and what gives you an edge as CEO?

Mr. Smith: “I have a strong staff, and I let my staff work but I have become the sounding board and the one they come to, to bounce off different ideas and try to provide some sort of direction to move forward. I also try to be the stabilizing force, the one that when there are ups or downs, does not go off the edge but keeps the ship on an even keel. That is what I think a good CEO does.”

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