Samsung invests $5M in 4G data-triage startup Stoke

Mobile data gateway maker Stoke already has two impressive investors from the telecom world, Japan’s NTT DoCoMo(s dcm) and India’s Reliance Communications, but it’s adding a third. Samsung is making a $5 million strategic investment, betting that its LTE data triage and security technology has a bright future.
Stoke is hardly a new startup. It raised its Series A round back in 2004 from Sequoia Capital and Kleiner Perkins. Since then it’s racked up about $97 million, yet has remained relatively quiet except for a high-profile deal with DoCoMo in 2009. But Stoke may have just been waiting for the industry to catch up to its technology.
Stoke makes complex gateways that serve several functions on a mobile carrier’s 3G or 4G network: they can aggregate millions of cellular radio or Wi-Fi nodes, provide secure encryption for normally vulnerable IP LTE data traffic, and can shunt, or offload, over-the-top application traffic to the Internet before it clogs up the network core. Regardless of which use case or cases a carrier adopt the gateway’s central mission to is the handle the enormous deluge of mobile data traffic the smartphone has wrought.
Stoke first started selling its gateway as a 3G mobile data offload element, but couldn’t find any carrier interested, said Dan McBride, VP of marketing for Stoke. Carriers were experiencing enormous traffic spikes from the iPhone(s aapl) and Android(s goog) devices, but they all said they weren’t interested in investing any more in 3G with LTE on the horizon, McBride said. So Stoke shifted gears and started positioning its product as a femtocell gateway and an LTE security and aggregation platform.
Femtocells didn’t exactly go gangbusters, but Stoke did begin winning LTE deals. The vendor has racked up 14 LTE contracts globally, McBride said, though apart from DoCoMo he wouldn’t reveal with whom. What’s more, with Wi-Fi’s new popularity among operators and the advent of small cells, McBride feels the marketplace doors are swinging wider. AT&T(s t) and Sprint(s s) are hinting at large-scale small cell deployments and wireline and wireless operators alike are bulking up on Wi-Fi access points– they will need something to secure and direct all of that traffic.
While Samsung’s cash is welcome, it wasn’t necessary to keep Stoke going, as it has been profitable for 18 months, McBride said. “It’s not the money that’s important – it’s not about operational funding,” McBride said. “It’s solely to bring us closer to Samsung.”
Samsung has made the rather audacious pledge to become a top three mobile infrastructure maker globally – a claim that would be almost laughable if it weren’t for some recent high-profile LTE wins such as Sprint’s Network Vision deal. If Samsung can really go the distance though — displacing half a dozen industry giants in the process – then Stoke would certainly enjoy the free ride.