The Digital Capital column in the July 22 Business section incorrectly characterized the financial performance of AWS Convergence Technologies Inc. The privately held company lost money in its most recent quarter but recorded a profit in 2003, according to AWS executives. (Published 7/24/04)
Just past the Motor Vehicle Administration office in Gaithersburg, deep in commercialized suburbia, a faceless warehouse contains the nerve center for the largest network of weather stations in the world.
It's also home to one of the Washington area's fastest-growing Internet content companies.
AWS Convergence Technologies Inc. is hardly a household name, but its online weather application, WeatherBug, had more unique visitors in June than Orbitz.com, CNET.com and Priceline.com, according to ComScore Media Metrix. And while the company started out selling meteorology lessons for classrooms, Internet advertising brought in 75 percent of AWS's nearly $30 million in revenue last year.
The company's executives give one reason for the company's survival: weather junkies.
"Weather is the number one reason people watch TV news -- period," said Robert S. Marshall, chief executive. "They say all politics is local. Well, all weather is local, I guarantee you."
Local is a word Marshall uses often. Most weather reports draw information from National Weather Service stations at major airports and other official sites. WeatherBug's information is "more local," Marshall explains, because it has five times as many sensors throughout the country. Users who have downloaded its Internet application can get vital stats on the rainfall, humidity and wind speeds in their own neighborhoods at any given moment.
AWS was founded in 1992 by a group of entrepreneurs including Channel 9 meteorologist Topper Shutt. The company's initial goal was to make money selling weather stations and an educational curriculum to schools. AWS solicited corporate sponsors to help schools pay $6,000 to $15,000 for sophisticated weather sensors. Marshall's wife, a middle school math teacher, wrote early versions of the science and algebra lessons the company offered with the sensors.
By 1998, AWS had weather stations at more than 3,500 schools around the country. Information gathered from those schools is sent via broadband networks to a data center in Reston, then filtered out to local television stations that have licensing deals with the company.
After Shutt left AWS in late 1993, Channel 4 meteorologist Bob Ryan signed on as AWS's biggest cheerleader in the weather industry. "Years ago we would report the weather at Dulles Airport and Reagan Airport and BWI airport and not a lot of people live there," recalled Ryan.
By 1999 TV meteorologists in more than 100 cities were reporting conditions at local schools gathered from AWS sensors.
In spring 2000, when dot-com companies were starting to purge workers and hold fire sales for office equipment, AWS raised $15 million in venture funding from HarbourVest Partners LLC of Boston and took its business to the Internet.
AWS created an application that users download onto their computer desktops. New WeatherBug users enter information about their neighborhoods. Then, every time they log on to their computers, they can click on the WeatherBug logo and pull up information about current conditions and forecasts for the area and see weather patterns moving along real-time radars.
About 1 percent of WeatherBug users pay $20 a year for an advertising-free, expanded version of the application, but the bulk of its revenue comes from ads. When users sign up for WeatherBug, they are asked to choose from a list of advertisers. Ads for the merchandisers they're most interested in -- Carnival Cruises or Netflix movies, for instance -- appear as backdrops for WeatherBug's display screen.
The company had 22.5 million unique visitors in June, and its executives say 100,000 new users download the application every day.
Only a few local companies of WeatherBug's generation are still around and kicking with businesses built around providing Web content. MDLinx Inc., a four-year-old D.C. company, sends 743 specialized medical e-mail newsletters to 230,000 physicians daily. YellowBrix Inc., an Alexandria company founded in 1997, does not create its own content but categorizes relevant news clips for corporate clients. The private company just finished its sixth profitable quarter, according to president and chief executive Jeffrey P. Massa.
David M. Card, an analyst with Jupiter Research in New York, says WeatherBug is succeeding in the essentials of a successful Internet content company: attract an audience and make sure that audience is willing to pay for the service or is valuable to advertisers who will foot the bills. But Card said the company's ultimate success is far from certain because its potential audience may have limits.
"Everybody's interested in the weather," he said, "but not everybody is that interested in weather."
AWS's executives are betting there are plenty of weather enthusiasts yet to be reached. The company lost money last year, but Marshall said he expects it to post a profit in 2004. It has 190 employees and will be adding 30 more in the next six months.
In April the company raised $23 million in fresh funding from Sequoia Capital, Polaris Venture Partners Inc. and HarbourVest and inked a partnership deal with the grandfather of local content companies -- America Online Inc. AOL's instant message users now have the option to add WeatherBug data to their screens. (It also named Alan Spoon, a partner at Polaris and former president of The Washington Post Co., to its board of directors.)
AWS now has 7,000 sensors throughout the country and is beginning to sell access to the data it has been collecting for the past decade to government agencies and corporations. Marshall leaves the window open on speculation that AWS may be among local companies considering an initial public offering.
"If a public offering is the right thing to do," he said, "I think it will be an option that will be available to us."
Ellen McCarthy writes about the local tech scene every other Thursday. Her e-mail address is firstname.lastname@example.org.