May 31, 2001, 12:00 AM

Digiscents runs out of cents

The market didn’t develop fast enough for a company that was planning to smell up the web.

Internet Retailer

 

Oakland, Calif.-based Digiscents, a company that developed technology to provide the sense of smell to the Internet, shut down and laid off 70 employees in April because it couldn’t get the additional funding it needed to continue. Despite investments from two major flavor and fragrance houses and other investors the company could not meet its goals of digitizing scents for web sites and other online ventures.

 

The company had invested $20 million to build its business, including investments from Givaudan and Quest International, European fragrance and flavor houses. Other companies supporting the Digiscents plans included RealNetworks, which was hoping to develop technology that would have allowed consumers to download Digiscents’ ScentStream software free of charge. Procter & Gamble also had a strategic research alliance with Digiscents.

 

In spite of the shutdown, the company said it will continue to pursue funding in the hopes of relaunching the business.

 

Digiscents had set out to develop and market a peripheral computer device that consumers could plug in to receive iSmell-digitized scents from e-mail, online games and web sites. Although talks were in the works with several consumer electronics stores to distribute the device, development did not move fast enough for the company to launch and distribute the product. The company also expected to lure gaming companies into using its scenting software to make online games and video experiences more realistic with different smells, as well as food and flavor companies.

 

Among the problems that Digi-Scents faced was trying to market a service that required consumers to acquire another piece of hardware, say observers. “It’s case of ‘just because you can something on the web doesn’t mean you should,’” says David Taylor, senior vice president of consultants Operon Partners. “The complexity of a technology-driven product makes it a real expensive value proposition.”

 

Dexster Smith and Joel Bellenson, a duo who had helped scientists crack the DNA code with their software company Double Twist, founded the company in 1999. Digiscents officials would not comment on the latest developments.

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