By Noi Mahoney, Business Writer
August 12, 2001, Annapolis Capital,
Business Section, Page B1.

The dust has yet to settle on the high-tech shakeout occurring nationwide, and many local Web-based companies are still licking their cyber wounds.

But small Internet entrepreneurs say their original plans and products have evolved to meet increasing demand for Internet services that provide a cost-effective communication tool.

"The Internet is growing up," said Mark L. Powell, president and chief operating officer of Annapolis-based AlwaysOnline.net, an Internet service provider that specializes in application hosting and wireless networks . "It is becoming a tool for businesses that can be utilized to save tremendous expenses, while creating great efficiencies."

Speed, reliability and especially communication are the catchwords for the new Internet, Mr. Powell said.

"The Internet is not fun and games anymore," Mr. Powell said. "It is about cutting cost, driving productivity and creating products that businesses can utilize."

Others said the days of million dollar Web sites are gone too, with businesses now looking for a cost effective site that tailors to a company's specific needs.

"A lot of business owners thought that the Internet was going to be putting up a Web page and everyone was going to come," said Wes Schiesz, president and chief operating officer of Crofton-based computer software designer TIPS Technology.

Mr. Schiesz said he founded his company last year after noticing many business owners were dissatisfied with their Web sites and the software available to design Web sites.

Meeting customers needs at low costs was a driving force in the design of software products, said Mr. Schiesz.

"I talked to a lot of business owners who knew exactly what they wanted to do on the Internet, but the technology wasn't there for them to do it," Mr. Schiesz said.

"What we did was to create software that can be used right out of the box and customized to any particular company's needs."

While Annapolis is know for big Internet companies including USinternetworking in Parole and Ciena and Ameritrade in Linthicum, smaller firms like TIPS and AlwaysOnline.net are carving a niche of their own.

These firms are ranging in size from two to 10 employees, tend to focus on either one or two very products for a very defined niche and garner sales anywhere from several hundred thousand a year on up to a $1 million.

No exact figures were available, but it is estimated there are almost 200 Internet companies in the county, with the majority of them having less than 10 employees, according to the Anne Arundel County High Tech Council.

At another small firm, Interactive Communication Solutions in Severna Park, the company emphasis used to be on Web site development and advertising, but changed when the founders saw a need for companies providing Web-based training tools.

"We've developed an e-training product using streaming media, engineering and simulation graphics and audio," said Brian Donnelly, who formed ICS with partners E.G. Gipple and Brian Kleeman.

"This media format is ideal for distance training and business presentations over the internet," Mr. Donnelly said.

ICS has developed e-training products for companies as diversified as pharmaceutical companies to publishing companies, with e-training projects ranging from $25,000 to $500,000.

Mr. Donnelly said the return on investment is quickly realized by their clients, who can save millions on training costs.

"For pharmaceutical companies we can simulate and engineer manufacturing and equipment training and working with expensive medicines and drugs," Mr. Donnelly said.

AlwaysOnline.net began offering VelocityDocs.com, an online data, document and image management system, three weeks ago.

The software, which ranges in price from $199 to $1,000 depending on the level of service, is designed to help customers save on staffing, faxing and overnight data.

"Clients want return on investment, now we've got to sell them technology solutions that will help save them money," Mr. Powell said.

But examples of the ecstasy as well as the agony the Internet can bestow on companies have both been present in the county.

So far this year, big Internet companies including USinternetworking in Parole, Allegis Group in Hanover and Mentor Technologies in Annapolis Junction have made significant job cuts as part of reorganization efforts.

But as the larger firms go through turbulent times, they spin off entrepreneurs who cut their teeth in the high tech trenches for years.

Former TCS employees Richard Smith and Johanna Wilson, founders of Annapolis-based software designer OpenPath, said they decided to found in March their own company after noticing a trend in high tech.

"We saw where the Internet was headed," Mr. Smith said. "Now that there is a lot of wireless companies and a lot of wireless devices , we saw a need for software that could make those devices more useful and meaningful."

They created Databow, computer software which runs on a client's own computer hardware and can be used to create and execute communication between different wireless devices such as Palm Pilots, pagers and wireless cellular phones .

Mr. Smith said he sees his company as a compliment to companies like TCS, TIPS and other local high tech firms.

"After working at TCS, we've seen the importance of having a business model that is very traditional and conservative," Mr. Smith said. "It is like we want to build this great big oak, but first we have to plant the tree and nurture it, so its roots can grow-- a lot of Internet firms grew to fast and failed."