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After Sept. 11, 'Homeland Security' is marketers' mantra
By Jim Krane, Associated Press
NEW YORK — Since the days when Samuel Colt made a fortune peddling his Peacemaker revolvers to frightened frontiersmen and a budding U.S. Army, astute entrepreneurs have profited by selling to Americans worried about security.
Today is no different.
Since last Sept. 11, vendors of a cornucopia of protective gear have beseeched Americans and their government to buy in the name of "homeland security."
"If you phrase it the right way, you'd be amazed at what you can sell," said Loren Thompson, a military analyst with the nonpartisan Lexington Institute think-tank.
With the U.S. government and private companies girding to spend tens of billions of dollars to thwart -- or at least cope with -- future terror attacks, the business appears to be emerging as a sector all its own.
Offerings range from computer and communications technology to security consulting to concrete barriers, chain-link fences and private guards.
Companies are jockeying to position themselves for a piece of the $29 billion federal anti-terrorism package, along with the coming 2003 federal budget, which is expected to be piled with tens of billions more in homeland security funds.
A few firms are already doing some serious selling, including makers of airport luggage and passenger screening machines like L-3 Communications and InVision Technologies.
Before Sept. 11, InVision, based in Newark, Calif., built one bomb-scanning machine every 10 days. Now the company assembles a machine every day and a half, struggling to fill an order for 600 machines for the forthcoming federal Transportation Security Agency. The company's stock price zoomed from $3.11 on Sept. 10, 2001, to $49.76 in March and was trading in late August around $30.
Such sales are meager, however, when compared to the expected motherlode of government contracts.
So far, "there's been a heck of a lot more selling than buying," said John Pike, director of GlobalSecurity.org, a defense think-tank. "Everyone views this as the next big market but it hasn't happened yet."
Firms are opening Washington offices and staffing government sales departments with retired military officers. Others sell research attempting to divine hot sectors and probable government buyers.
Viisage Technology Inc., a small Massachusetts company that makes drivers' licenses, used a post-Sept. 11 investment of $25 million to purchase a biometrics firm, open an office with a view of the U.S. Capitol and recruit John Gannon, a former deputy director for intelligence at the CIA, as a board member.
The company hopes to sell face-recognition kiosks to the government.
"I would never spend this money if I didn't think we could get it back," said Viisage chief executive Denis Berube.
The homeland security sector will attract $100 billion in private and government spending by 2008, predicted Dani Inbar, co-founder of Homeland Security Research, a just-created firm that tracks the emerging sector.
Another expert, Don Dickson, publisher of the brand new Homeland Defense Journal, predicted that the Sept. 11 attacks will be the biggest catalyst for U.S. technological innovation since the Soviets launched their Sputnik satellite in 1957, spurring the competing U.S. space program.
Back then, the space program inspired a flurry of consumer products like Astroturf and Tang.
This time, too, the homeland trend is entering the home.
A sales pitch for DuPont's EVAC-U8 personal hood, which allows a person to breathe while escaping a burning building, declares "Here's an effective, inexpensive way to increase Homeland Security for you and your family."
Another company markets home radiation detectors under the banner "Homeland Protection," while warning of the potential for a "dirty bomb."
Other copycat products include an $18.95 "Department of Homeland Security" doormat and a Bally's Casino "Homeland Defense" gaming token.
In the short term, Dickson pointed to several items he expects the government to purchase, including sensors that monitor drinking water and air quality, such as those manufactured by Duluth, Minn.-based Apprise Technologies.
Other probable winners are perimeter security devices, such as fences and cameras for power plants and military bases, along with interoperable radio systems that link police, fire and emergency personnel, such as those made by Motorola.
Inbar predicts the screening of people will be an $8 billion business in five years, with airports, stadiums and governments installing machines that check identity, criminal history and scan clothing and luggage for drugs or explosives.
In the face of the marketing onslaught, experts warn that the government is susceptible to panic buying, especially of technology that isn't appropriate or fully developed.
The million-dollar bomb detectors Congress has demanded for hundreds of U.S. airports suffer serious problems with accuracy, said Paul Nisbet, an aerospace analyst with JSA Research in Newport, R.I.
"Politicians get political gain out of spending money and doing things even if it's not effective," Nisbet said. "There's an awful lot of wasting of money under the aegis of homeland security."
One of the most visible and relentless salesmen is Joseph Atick, chief executive of Identix Inc. Atick touts his company's biometric fingerprint and face-recognition scanners as "pivotal" to homeland security.
Another high-profile seller is Oracle Corp. chief executive Larry Ellison, who has suggested an Oracle database be used to hold the identities of all Americans, verifying them with a national identity card.
More quietly, IBM Corp. has beefed up its Washington presence, touting several security and surveillance products. Microsoft hired a chief security strategist this spring to chase after the same market. Computer maker Dell's federal homeland security offerings include disaster recovery and data protection services.
But many of the big winners will be the government defense contractors with knowledge of the labyrinthine rigors of government contracting, such as Boeing, Lockheed Martin, Raytheon, General Dynamics and SAIC, analysts said.
"It's a very tricky game, not one you learn overnight," Nisbet said.
The market is also beholden to the terrorists that spawned it. If new strikes don't happen as feared, spending will wither.
Thompson calls it an unpredictable "al-Qaida-driven phenomenon." Even Inbar's $100 billion spending forecast depends on another Sept.11-magnitude attack.
"Nobody can model that type of demand," Thompson said. "No one knows
whether there will be another attack, or three or five, or what form they