LV touted as center of fingerprint security industry

David Strow

Monday, Oct. 25, 1999 | 10:59 a.m.

For years the Nevada Development Authority has fought to steer technology companies into Southern Nevada -- a battle that NDA officials acknowledge has not been an easy one.

On Friday, however, the NDA proudly unveiled an alliance of four Las Vegas-based technology companies working on a concept that could revolutionize Internet-based commerce through the security offered by the ordinary fingerprint.

This alliance of technology companies -- attracted here and brought together by NDA networking -- is the first step toward creating the "critical mass" of companies necessary to kick-start a high-tech hub in the Las Vegas Valley, NDA President Somer Hollingsworth declared.

"We've been talking about this for many years, but it's really caught fire in the last couple of years," Hollingsworth said. "We're beginning to create that critical mass of industry leaders that will attract more companies to Southern Nevada."

The companies -- SAC Technologies, Orion Pharmaceuticals, CompuMark and All American Internet -- are close to launching an online system that will be used to order pharmaceutical products directly over the Internet. The system, operated by Orion, will use user fingerprints to ensure the identity of the purchaser. The readers for reading and transmitting these fingerprints will be manufactured by SAC Technologies, and sold by All American Internet. Consumers will connect the readers to their computers so their fingerprints can be transmitted on the Internet.

CompuMark, a high-technology incubation company, has assisted the companies in their early start-up and marketing efforts.

"When we decided to form an online pharmaceutical company, our biggest hurdle with the state licensing board was security," said Dave Raak, chairman of Orion. "We feel this technology will be required ... in a very short period of time."

Orion has received licensing from the Nevada Board of Pharmacy, pending a site inspection.

All American will begin selling the readers online in November at a retail price of $199, or $149 when purchased in volume. Orion's 42,000-square-foot warehouse, which will use robotic equipment to fill orders, will open in December, and begin shipping orders in February.

What excites the NDA so much about this particular effort is its uniqueness, and its potential to spawn a huge high-tech industry based in Southern Nevada. Security over the Internet has proven to be a difficult issue, but Barry Wendt, chairman and CEO of SAC Technologies, points out that the fingerprint is the most secure known biological identifier.

"With fingerprints, we've never found two that are alike in over 200 years of use," Wendt said. "This will be the least expensive (biological identifier) to market for mass-market applications."

After six years of research and development, SAC has developed a reader about the size of a human fist. As production volumes increase and research progresses, Wendt believes the reader can be reduced to the size of a button, functioning similarly to the communicator pins seen in "Star Trek."

Within 18 months, he believes the manufacturing price per unit can be reduced below $20 -- and the reader can be incorporated to a vast number of new applications, from ATMs to car locks. Dan Duley, managing partner of CompuMark, said there's been interest from the gaming industry in incorporating the readers into gaming machines, replacing the player tracking cards used today.

Founded in 1993 near Minneapolis, SAC relocated its corporate headquarters to Las Vegas in 1996, after former Lt. Gov. Lonnie Hammargren convinced Wendt that the area's business climate made it ideal for an expanding business. Hammergren is now a director with the company.

Besides their marketing alliance, the companies share a drive to help Southern Nevada take a place beside Silicon Valley, Boston's Route 128 and North Carolina's Research Triangle as a nerve center of high technology.

"There's truly a strong need for Las Vegas to become the technology hub of North America," said John Monteleone, CEO of All American Internet. "Las Vegas has been the best-kept secret in the technology industry."

That's still a goal that remains far off. High-tech firms located here have often experienced difficulties attracting skilled workers, and there's little capital available for their expansion. Efforts to allow the state to participate in providing loans to high-tech firms failed in voter referendums in 1992 and 1996.

The companies have bypassed the capital problem through other methods. SAC is a publicly traded firm, while Orion's parent company is also public.

"There is access to significant amounts of money, both public and private, for these technologies," Wendt said, without elaborating.

Wendt acknowledges that it might be a stretch to make Las Vegas into an R&D center overnight. Though his company is based in Las Vegas, its R&D center remains based near Minneapolis.

Still, he believes that the area's vast experience in marketing could allow Las Vegas to emerge as the technology marketing capital of the United States. It's an effort he believes will be assisted by COMDEX, the massive trade show held each November in Las Vegas.

"It's a brain tank of the best (marketers) in the world," Wendt said. "Your clients are coming to see you, so your marketing dollar goes 200, 300 percent further. You're in a free trade zone, so you're not paying tariffs and taxes.

"With some of these companies ... their business model could not have survived in California."

And NDA officials say the state's educational system stands ready to begin providing the training technology companies need to grow in Nevada, once the demand develops.

"(The educational system) is very open to creating the technology courses necessary for the technology employment base here," said Dennis Stein, former president of the NDA.