Nanotech: Dissecting What It Is, and Isn't

Investors trying to get a better handle on nanotechnology may find themselves confused about what it is and isn't. As with any technology that is complex and evolving quickly, there are a number of common myths surrounding nanotechnology. Here are five of them, along with the reasons why many people familiar with the science say they're false.

1. 'Nanotechnology is an emerging industry.'

The more we see of nanotechnology, the clearer it is that it will not be an industry unto itself. "Nobody makes nanotechnology," says Tim Harper, president of the U.K.-based nanotech-research firm Cientifica. "People make cell phones, they make computer chips, they make textiles, but people don't make nanotechnology."

In the era of computers and the Internet, technology has come to mean the PCs, the servers, the software applications and Web-based services that enable companies in every other industry to increase their efficiency. With nanotechnology, there are tools and nanomaterials made by companies such as FEI Co.(FEIC Quote - Cramer on FEIC - Stock Picks) and Veeco Instruments(VECO Quote - Cramer on VECO - Stock Picks) as well as modeling software from companies such as Accelrys(ACCL Quote - Cramer on ACCL - Stock Picks), but they only are the means of tapping into the science behind nanotechnology, not the industry itself.

The companies controlling access to different aspects of nanoscience will do so in part through patents. The patent holders won't be limited to any single nanotechnology industry -- they will be scattered throughout all industries. And the fruits of those patents will be everywhere, from General Motors(GM Quote - Cramer on GM - Stock Picks) to DuPont(DD Quote - Cramer on DD - Stock Picks) to Wal-Mart(WMT Quote - Cramer on WMT - Stock Picks).

"You've got all of these companies in wildly differing markets, all being lumped under this one umbrella of nanotechnology," says Harper. "Don't get hung up on the word nano. Nanotechnology doesn't exist in a vacuum. It has to be related to all of the other technology trends that are going on."

As an example, Matthew Nordan, vice president at the nanotech-research firm Lux Research, points to fullerenes, which are highly stable carbon molecules with a variety of potential applications.

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