Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
DigiScents says shoppers will follow their noses to the checkout aisle.
What do web pages smell like? To DigiScents Inc. and its investors, they smell like money.
If Dexster Smith has his way, they also could smell sweet, or musky or any other adjective to describe an aroma, odor, smell, scent or fragrance. Smith is president of DigiScents, which says its technology can produce thousands of different scents, triggered by software which commands a scent cartridge with 64 basic smells to mix compounds, then send the resulting aroma wafting into a computer user’s room.
Web users already see exciting color graphics and streaming video, and can hear live customer service and background music, so why, Smith wonders, shouldn’t smell be among their experiences?
Some major fragrance and flavor companies, as well as video game, e-commerce and web developers agree. They hope Oakland, Calif.-based DigiScents’ digital smell synthesizer and software applications that transmit scents will make their presence on the web smell like profit.
DigiScents, founded by Smith and Joel Bellenson in 1999, is aiming to crack open the market for scent sensory perception-commonly known as smell-for web usage. This won’t be the first time the two have broken down something as nebulous as smell into component parts. Their first company was Double Twist, which developed software that helped scientists crack the human genome DNA code. With its double-meaning name iSmell technology, the company plans to distribute peripheral devices that can transmit scents triggered from the web.
The smells in the cartridge last up to three months. Companies that are partnering with DigiScents believe the company’s scented web technology will become as common to end users as soundcards that allow consumers to hear streaming music and see streaming video over the Internet.
Digiscents has a number of developments that could propel it onto the web scene as well as into other areas, such as movie theaters and video game consoles. The argument for web-enabling scent is compelling: Smell is the strongest of the five senses, evoking an emotional response that manufacturers and sellers of fragrance, candy, food, flowers, greeting cards and many more products are eager to cash in on. “The broad range of applications gets people beyond their disbelief that this technology will work,” Smith says. “Selling perfume online is one of the smaller markets. Food is the larger market for this technology and household products such as lotions, soaps and cleaners are an even bigger consumer market.”
Smith argues that consumers are ready to embrace scent technology because there is increased interest in scent throughout the population, as evidenced by such phenomena as aromatherapy. “All you have to do is look at the rise in popularity of such stores that make their products based on scent such as Bath and Body Works and The Body Shop,” he says. Other areas DigiScents hopes to break into include entertainment and advertising. The company recently hired former Sony and Sega new technology veteran Jonathan Seidenfeld as senior director of business development, games and entertainment.
Digiscents plans to make its profit from not only selling its peripheral iSmell device, which will plug into computers to receive and emit scents from the web, but also through licensing agreements from companies that want to apply the digital scenting technology to their businesses.
DigiScents has had a lot of promising new developments in recent months that are bolstering its plan for bringing scent to the Internet. The company has raised $20 million in private financing. And two major flavor and perfume companies-Switzerland-based Givaudan and Netherlands-based Quest International-have invested in DigiScents. “These companies have a goal of raising the visibility of the sense of smell. Allowing people to use it as a mechanism of communication is a way to do that,” Smith says.
Quest, a leading fragrance, flavor and food ingredients manufacturer, says such technology is risky because it is new, high-tech and will need to be accepted by consumers. But it wanted to be involved with DigiScents to determine where the technology will go. “We are always looking for how our marketing will evolve,” a spokesperson says, noting that technology sharing is another key point of the deal. “DigiScents has a hugely ambitious project in odor reception to understand which molecules engage olfactory receptors and to essentially come up with an olfactory code, like a DNA code. It could be a hugely powerful asset to find that code.”
Givaudan, another leading fragrance and flavor company that does research, development, creation and manufacturing, also believes the application of scent on the Internet can expand its product distribution markets. “We are in a business with very limited growth possibilities,” a spokesperson says. “One possibility is to grab market share from a competitor and another is to look for new applications such as DigiScents’ technology that will do things with scent and flavor that have never been done before.”
Staying out in front
Another major coup for DigiScents is its deal with consumer goods giant Procter & Gamble, which markets more than 300 brands to nearly 5 billion consumers in 140 countries. Popular brands include Crest toothpaste, Tide laundry detergent, Oil of Olay cleansers and lotions and Pringles potato chips. Cincinnati-based P&G, which invests nearly $2 billion per year to develop and improve its products, formed a strategic research alliance with Digi-Scents in May 2000. The alliance will provide DigiScents with access to a range of proprietary P&G consumer research techniques and methodologies to help DigiSents better understand consumer perception and response and further evaluate the market potential for digital scent applications. P&G declines to comment on the deal but the company issued a statement that said it believes the deal with DigiScents will help it stay in the forefront of emerging Internet technology.