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April 22, 2003 — Small tech companies are increasingly using the “last big thing” as a moneymaking tool: the Internet. Nanotech and MEMS companies are using e-commerce as a way to shrink sales costs.
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“The hype about it died and the revenue opportunity for investing in it died, but the usefulness for selling over the Internet never died,” said Laurie Orlov, research director for business applications and services at Cambridge, Mass.-based Forrester Research.
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Veeco Instruments of Woodbury, N.Y., recently set up an e-shop to offer accessories such as probes for atomic force microscopes. “We started e-commerce about eight months ago as a convenience to our customers,” said Fran Brennen, director of marketing communications. “They are very, very happy with the site. We have a growing number of customers registering.”
Veeco had talked about e-commerce for three years, she said, but the effort did not accelerate until major customers demanded streamlined buying.
So far, Brennen said, the move to sales on company Web sites is relatively unnoticed. Veeco, for example, has promoted its site only to their own customers.
“At one time, Web sites were mostly PR tools, with little detailed product information. Today, prospects and customers use our site as a way to get technical information on our products and applications,” she said.
Dennis Dauenhauer, president of All Sensors Corp., a MEMS company based in San Jose, Calif., said e-commerce eases communications between manufacturers and their customers. His company makes low-pressure sensors for medical and industrial applications. After four years of maintaining a fairly static Web site, All Sensors set up links for e-commerce about a year ago.
Those links are tied to the company’s distributors, which include Mouser Electronics Inc. and Digi-Key Corp. Customers can order All Sensors’ products from those sites using secure credit card links. Having standardized parts makes e-commerce easier because sites can list catalog items, data sheets and pricing, Dauenhauer said.
Richard Schally, manager of the U.S. office of Munich, Germany-based Sensortechnics GmbH, said his company added the ability to buy on its Web site two years ago in response to customer demand. Sensortechnics sells pressure transducers for original equipment manufacturers, plus its own standard and custom products.
Standard products are not leading e-sales growth for Sensortechnics. “Our whole bag is customization. We see it as a door opener,” he said. “We’re finally starting to see a smoother link between manufacturers and customers. The economy is forcing that.”
Adding e-commerce capabilities can be tedious for an international company, he said. “We have an extensive product line, plus we had to make our customization capabilities clear and get the site into several languages.”
Michael Dunbar, director of strategic marketing for Silicon Microstructures Inc. (SMI) in Milpitas, Calif., said the e-commerce trend demonstrates that “everything is about making it easier for the customer to get what they want.”
SMI makes MEMS-based silicon pressure sensors and custom microstructures and uses its Web site in a proto-e-commerce mode. There’s no Web-based purchasing, but online schedule-sharing with customers is growing.
“They tell us what their inventory levels and build plans are. We get [specific order] releases based on their schedule information,” Dunbar said.
Web portals function as industry matchmakers. An example is the International Frequency Sensor Association (IFSA) site www.sensorsportal.com. In 1999, IFSA, with offices in Canada and Ukraine, opened a portal dedicated to smart sensors, transducers, sensors instrumentation and MEMS. Sergey Y. Yurish, IFSA vice president, said the portal supplies scientific information and has commercial capabilities.
“The main sources of revenue are online advertising, e-commerce, consulting, research and development,” he said. “Europe has big potential in MEMS and e-commerce growth in the nearest future. The Internet business is not limited by regional offices. We are working for all the world,” Yurish said.
There are some information Internet gateways devoted to MEMS and nanotechnology in the United States and Europe, but none can be considered as the primary business-to-business e-commerce portal for these emerging technologies, Yurish said. “It seems to me, we are a pioneer in this area.”
Jennifer A. Jordan, vice president and senior equity research analyst for Wells Fargo Securities in Portland, Ore., and has seen increasing commercial use of the Internet in the companies she covers. In supply chain management, company managers exchange information about specifications related to parts contained in products they assemble. It could even be internally managed, she said. Other companies are only talking to their suppliers, not necessarily to their customers yet.
“The original definition of e-commerce was to sell stuff online,” Jordan said. “Now it has expanded. It’s using the Internet to facilitate commerce.”