War really is going out of style.

At least that’s what Joshua Goldstein, professor emeritus of international relations at American University, and Steven Pinker, a psychology professor at Harvard wrote in a New York Times op-ed piece last month.

Throughout the editorial, Goldstein and Pinker dissect the meaning of “war” today, its various categorizations, and the reasoning behind their sentiment that war has become passé. Among other rationales, the piece cites a lack of monetary gain as a key contributor, as the financial cost of war overshadows any acceptable gain:

“For centuries, wars reallocated huge territories, as empires were agglomerated or dismantled and states wiped off the map. But since shortly after World War II, virtually no borders have changed by force, and no member of the United Nations has disappeared through conquest.”

But is war really going out of style, or is the way it’s fought being changed?

As I wrote in a recent Threat Geek post, war is being redefined, not replaced. The battle for land in previous times has now translated into a fight over intellectual property, with nation states attempting to steal from each other using advanced, targeted cyber attacks. It’s not that war is passé, it’s that the landscape has changed. Land is no longer the primary motivator in global conflict, as the value of intellectual property has become, in many ways, priceless—just think of what China would pay for Pfizer’s next groundbreaking drug before it hits the open market.

Instead of bullets on battlefields, wars are being fought with keyboards over networks at a fraction of the price.

And it makes sense, doesn’t it? Why risk billions of dollars engaging in combat with a nation when you could steal their most valuable assets with the click of a mouse? Why thrust your country into global negative light, when you could be a faceless enemy attacking from thousands of miles away?

The perception that the United States has not been attacked by a foreign government since Pearl Harbor is false. Thousands of times each day, nation states like China and Russia are engaging in cyber warfare, trying to deploy advanced persistent threats (APTs) over American networks to gain access to our most crucial information. The United States has always been upfront in flexing its military muscle as a deterrent against potential threats, but when it comes to our capabilities in a cyber war, we have been secretive.

Maybe that’s about to change.

Recently, four-star General James Cartwright (a retired vice chairman of the Joint Chiefs of Staff) went on record as saying the United States needs to be more upfront about its cyber capabilities.

“You can’t have something that’s a secret be a deterrent. Because if you don’t know it’s there, it doesn’t scare you,” said General Cartwright.

It’s hard to argue with his logic of letting the world know of our offensive capabilities or employing a strong defense as a way to defeat cyber attacks. If a country is going to take a shot at U.S. interests, they are going to get hit back. Hard.

This is where Fidelis Security Systems and several other security companies can help to deal with these types of advanced persistent threats on a daily basis. In a way, network security companies are becoming the defense contractors of the future. What Raytheon and Lockheed-Martin were to the aerospace industry throughout the 1980s, has now been transferred to our shoulders. We can’t win the war for you, but we can equip you with the best weapons to help fight in the cyber war.

General Cartwright estimated that it could probably take hackers two to five years before they had access to disable a large percentage of the banking industry or the U.S. electrical grid. Even a smaller attack could undermine confidence in financial markets. It would appear to me that these threats are cyberspace’s version of the Cuban missile crisis.

Doesn’t sound like war is going anywhere, does it?

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A list of the most recent tech financings around Boston paints a pretty representative picture of what kinds of companies are getting built here (robotics, hardware, defense tech, custom goods via the Web). Consider:

—Billerica, MA-based Harvest Automation, a maker of agricultural robots, has raised $7.8 million in new funding led by Entree Capital. We first wrote about the company in 2008 when it was called Q Robotics. Since then, we’ve profiled Harvest here.

—Littleton, MA-based TeraDiode, a developer of high-powered lasers for defense and industrial applications, has closed $10 million in Series B financing led by Argonaut Ventures. I wrote about TeraDiode’s laser-weapon technology in July (yes, weapons). The company appointed a new CEO, Parviz Tayebati, in September.

—Cambridge, MA-based CustomMade.com said who its investors in its recent $2.1 million funding round are: Google Ventures and First Round Capital led the round, with a number of other firms and angel investors also participating. Earlier this fall, I wrote about CustomMade’s approach to online customization service.

That’s it for now, but there’s more financing news coming very shortly…

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Like a lot of big companies that offer contract R&D and specialized services, Columbus, OH-based Battelle has kept an office in San Diego for decades, mostly to manage technical programs and help clients like the U.S. Navy and Marine Corps on special projects.

That started to change, though, just over a year ago when Bhima Vijayendran arrived in San Diego from Malaysia. Vijayendran spent his previous three years leading research at a renewable energy laboratory in Kuala Lampur operated jointly by Battelle and Japan’s Mitsubishi Corp for PETRONAS, Malaysia’s government-owned oil and gas company.

“Until recently, this used to be more of a service office in San Diego,” says Vijayendran, a materials expert recognized for his work in polymers and surface chemistry. “Because of my background and my interests, I’m trying to bring a little bit more of a technology flavor” to Battelle’s San Diego operations.

Among other things, Vijayendran says he’s on the lookout for new business opportunities with local companies, as both an R&D partner and as a potential investor. Aside from managing seven federal research laboratories, Battelle has focused its business in three areas—national security, health and life sciences, and energy and cleantech. These focus areas coincide with some of San Diego’s most-prominent innovation clusters, so it would seem like a business match made in heaven.

Battelle is no ordinary business, however. It is the largest private nonprofit R&D organization in the world, known officially as the Battelle Memorial Institute, doing $6.5 billion in contract research with a global workforce of more than 22,000 employees. When Battelle licenses its technology, sells its stake in a startup, or acquires a new laboratory management contract, Vijayendran says the company donates 25 percent of the proceeds to charitable causes. Past inventions include xerography copier technology (which Battelle sold to Xerox), the scannable universal product code, the compact disc, and fiber optics technologies now owned by JDS Uniphase.

“We strongly believe that we’ve got to do creative work,” Vijayendran says. “We’ve got to make discoveries and inventions, but more importantly, these things have got to … Next Page »

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[Updated 4:35 pm] Bedford, MA-based iRobot laid off about 55 people last week from its government and industrial robots division, Xconomy has learned. I heard from a source familiar with the company that some of the layoffs came to light because ex-employees posted on social media looking for new positions. An iRobot spokesperson did not immediately respond to a request for comment.

The staff cuts come as the pioneering robotics company (NASDAQ: IRBT) announced its third quarter financial results this afternoon. The press release mentions that the company “implemented a reduction in force” because of “expectations for a reduction in government-funded research in 2012.” There is an earnings conference call scheduled for 8:30 am Eastern Time tomorrow.

The last significant layoff at iRobot was back in 2008, but this one is bigger, according to my source. The latest staff reduction is also notable because it affects the biggest division in the company—the one that houses some of its most famous products, like the PackBot military robot.

I have heard that iRobot has roughly 550 employees, which would make the layoff about 10 percent of the firm’s total workforce. Those numbers are not confirmed, however.

In the past year, Xconomy has reported on iRobot’s progress and expansion in Michigan, among other things. It’s not yet clear in which cities the staff cuts have occurred.

[Updated with comments from iRobot] A company spokesperson just confirmed the layoffs, but with slightly different numbers: “We can confirm that iRobot Corporation has had a reduction in force. This difficult action was taken based on our current view of future defense spending and a shift in program structure. In 2012 we see a significant decrease in our externally funded research and development. This transition from development to production requires our Government and Industrial robot division to reduce the size of its workforce. The reduction accounted for approximately 8 percent of the total workforce.

“We will be addressing this on the call tomorrow.”

[Updated 5:40 pm] iRobot has confirmed that 55 full-time employees were let go from the company’s offices in Bedford, MA; Durham, NC; and San Luis Obispo, CA.

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Ladies and gentlemen, your attention please. Ahem.

[A giant “6x6” fills the screen.]

Macho narrator voice:
Star Wars had The Empire Strikes Back (Vader: “I am your father”)
The Godfather had The Godfather Part II (Pacino: “You broke my heart”)
Mad Max had The Road Warrior…well, you get the idea.

Now Xconomy presents 6×6, the long-awaited sequel to its riveting, change-the-world program from last December, 5×5. (It was “5×5” because we weren’t in New York City yet. Now we are.)

Yes, for the second straight year, Xconomy has canvassed its national network to find the most original, sensational, and transformative tech ideas out there—across software, hardware, digital media, social technologies, robotics, and more. We are inviting a select few speakers to Boston for an afternoon of mind-bending presentations and business networking.

It’s all taking place on the afternoon of Thursday, December 1, from 1:30-5:30 pm, at the Fidelity Center for Applied Technology in downtown Boston. One featured speaker will be on hand from each of our six cities: Boston, New York, Detroit, San Francisco, Seattle, and San Diego. We hope “6×6: Six Cities, Six Big Tech Ideas” will be a rallying point for the Boston tech community to get together and discuss the future of their fields with our out-of-town guests.

The concept is to highlight some of the BIGGEST tech ideas out there—as well as the nuts and bolts of how founders are building successful businesses around these ideas. This event is about truly changing the world, so we’ve asked everyone to please check their daily deals, social network plug-ins, and run-of-the-mill mobile apps at the door.

Who better to set the table than Stephen Wolfram? We’ve invited the renowned scientist, inventor, and business leader to give the opening keynote. Wolfram is the founder and CEO of Wolfram Research and the creator of Mathematica and Wolfram|Alpha. So he knows a little bit about changing the world from a software, computing, and business perspective. Oh, and he also spent 10-plus years working to reinvent the entire landscape of modern scientific thought with his book project, A New Kind of Science. I’ll stop there, but you can read an interview I did with Wolfram around the beginning of last year. (As for what he’ll talk about on Dec. 1, it’s safe to say I have no freaking idea—but I’ll keep you posted.)

Here’s a quick rundown on who’s representing our six cities at 6×6:

—From the hometown of Boston, we have Dave Icke, the CEO of Cambridge-based MC10, a pioneer in developing flexible electronics and sensors for consumer, healthcare, and energy markets.

—New York City is sending Jason Baptiste, the CEO of OnSwipe, a scrappy young startup that is trying to invent the future of media through a new tablet publishing platform.

—Representing Detroit is Nathaniel Borenstein, the Chief Scientist of Mimecast, an e-mail management company headquartered in the U.K. Borenstein, who’s based in Michigan, is one of the fathers of modern e-mail systems, and will talk about the future of communication in the cloud.

—From San Francisco comes Adam Goldstein, the CEO of Hipmunk, an online travel search company that’s been making waves with its novel visual interface for finding flights and hotels.

—Seattle will be repped by Kabir Shahani, the CEO of Appature, a fast-growing startup specializing in social and relationship marketing technologies for the healthcare industry.

—And from the sunny climes of San Diego comes Bill Walker, Chief of Global Hawk Business Development at Northrop Grumman, the aerospace and defense tech giant. Walker will talk about high-altitude unmanned aerial vehicles (UAVs).

We also have a few intriguing “burst” bonus talks to highlight, from some of the most exciting startups around Boston. They will include Affectiva (CEO Dave Berman), an MIT Media Lab spinout that’s commercializing software to make your computer or smartphone understand your emotional state (talk about a big idea); Krush (CEO Gina Ashe), an ambitious startup focused on social commerce and marketing for apparel and lifestyle brands; and GrabCAD (CEO Hardi Meybaum), a company that’s connecting engineers with people who need stuff built, via an online community and marketplace.

We are really looking forward to 6×6, and we hope to see you there on Dec. 1. You can register at the special super saver rate here.

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Some big changes are afoot at an interesting Boston-area laser startup. TeraDiode, a Littleton, MA-based maker of laser systems for cutting, welding, and defense applications, said today it has named Parviz Tayebati the company’s new CEO and board member.

Tayebati, the former chief executive of telecom laser company Azna and photonics firm CoreTek, succeeds TeraDiode’s founding CEO and investor, David Sossen. Sossen is no longer listed on the company’s website as a member of the leadership team, and the firm isn’t taking interview requests today, according to a spokesperson.

Earlier this summer, Sossen told me about TeraDiode’s history and some of its technology’s far-out applications, such as laser weapons that could be deployed on a tank or ship to disable UAVs or blow up incoming rockets. That’s still years away, though. TeraDiode’s present applications include industrial welding, military target illumination, and heat-seeking-missile deterrents.

The company’s technology, based on a technique called wavelength beam combining, was developed at MIT Lincoln Lab to make direct-diode lasers brighter, more powerful, and more focused. In 2009, TeraDiode raised $4 million in Series A financing led by Stata Venture Partners. Last month, the startup said it had secured $3.2 million in new defense-related contracts.

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Here in the Boston area we like hard technologies. We like companies with weird names. We like companies that have vision. Ladies and gentlemen, I present to you: Tenebraex, SiOnyx, and MC10.

They are the micro-cluster of imaging tech companies. They are working on a mix of far-out stuff and closer-in products, with a multiple-focus approach that befits their chosen field. If they were superheroes, Tenebraex would have eyes in the back of its head (panoramic view); SiOnyx would see in the dark; and MC10 would morph into different shapes depending on what it was looking at. Taken together, they just might reinvent the cameras we use every day.

One example: Imagine an ultra-thin camera phone that can take high-resolution, wide-angle photos and video in a dimly-lit bar or restaurant, or outside at night. That’s what combining the companies’ capabilities could do—though, as far as I know, they are not working together.

Several months ago I first talked with Peter Jones, the CEO of Scallop Imaging, which is the fastest-growing division of Boston-based optical tech firm Tenebraex. Why am I telling you this now? One, I’ve been busy. Two, Scallop is about to debut its third camera product in September. Last week, Jones said the upcoming “as-yet-unnamed camera will be the industry’s first multi-megapixel panoramic camera for very low light environments.”

Scallop’s new camera follows in the footsteps of its earlier products: digital and analog versions of a device (see photo below) that stitches together images from five separate camera sensors into a 180-degree, distortion-free, high-res panoramic view, for security and surveillance applications. The advantage over traditional fisheye lenses and pan-and-tilt cameras? Image quality, cost, and convenience, Jones said.

Some recent customers include hotels, museums, retail stores, and the U.S. military. One of the more intriguing applications of the technology lies in robotics. Last winter, a U.S. Army research lab organized a contest at Fort Bragg, NC. A number of teams sent mobile robots into a remote area to beam back images—presumably to check out the surroundings without having to send troops in. The robot that used Scallop’s camera finished in the top two (in terms of meeting its objectives), and it was the only one that didn’t get stuck in the woods, Jones said. He attributed the performance in part to its wide field of view.

My colleague Wade first profiled Scallop Imaging back in 2008. Since then, the division has grown to about 50 people. Tenebraex, its parent company, is no flash in the pan either. The company started in 1992 and is profitable, having invested in Scallop “multiple millions” of dollars in research and development, Jones said. “The majority of our future growth will come from Scallop.”

The company’s upcoming low-light camera overlaps a bit with another local firm. … Next Page »

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Private research organizations employ almost 31,000 people in San Diego County, more than the number of similar employees in any other California county, according to a new quarterly innovation report from Connect, the local non-profit group for technology and entrepreneurship.

Researchers teased that statistic from U.S. Department of Labor data for the third quarter of 2010, the most recent quarter available, according to Steve Hoey, a project leader at Connect who called the new finding “a testament to the strong R&D base we have in our region.” The report ranked Silicon Valley’s Santa Clara County second, with almost 19,000 working at private research institutions. Los Angeles was third with more than 17,000.

Such findings in the report underscore how San Diego has become a hotbed for early stage technology and life sciences companies, despite a decline in the amount of venture capital invested here.

Entrepreneurs started 70 companies in San Diego during the first three months of this year— double the 35 startups formed during the same quarter of 2010, according to Connect’s First Quarter 2011 Innovation Report. The report also shows an uptick in tech sector employment, continuing strength in federal research funding, a sharp increase in patents issued to local inventors, and increasing mergers & acquisition activity. Venture capital investments in San Diego startups, however, continue to decline.

Here’s a breakdown of the report’s major indices:

—The 70 new startups founded in San Diego accounted for nearly 12 percent of the 597 technology and life sciences companies created throughout California during the first quarter. San Diego’s tech startups created more than 130 new jobs, nearly 8 percent of the 1,700 new jobs created by new startups statewide. Twenty-seven of San Diego’s new companies are developing software, an increase that was offset in the life sciences where only 11 new companies were formed. Another 17 were communications startups, with the rest focused on recreational goods, defense, computer, and environmental sectors.

—Communications equipment manufacturing, as usual, represented the largest employment sector of the local innovation economy, with almost 28,000 jobs. San Diego’s life sciences sector and software each accounted for 27,400 jobs, and defense … Next Page »

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Marc Andreessen, the Silicon Valley entrepreneur-turned-venture-capitalist, said something interesting in last weekend’s New York Times magazine interview. It wasn’t his “there’s no tech bubble” spiel, or even his prediction that we’ll all be riding around in self-driving cars in 10 to 20 years, thanks to Google.

No, it was that he singled out “wearable computing”—portable devices like a pendant around your neck that record “everything around you all the time”—as a Next Big Thing. (Like Twitter, Facebook, or the iPhone, this could either be the greatest thing since sliced bread, or the downfall of humanity—or both.)

Now one Boston-area startup is taking the mechanics of the idea a step further. MC10, based in Cambridge, MA, is developing flexible (“conformal”) electronics that can bend, stretch, and wrap around to conform to surfaces in the natural world, like the human body. That’s a far cry from the guts of today’s computers, which are based on rigid silicon circuits that are laid out on flat surfaces.

The three-year-old company has garnered increasing attention for its efforts, raising a $12.5 million Series B round led by Braemar Energy Ventures last month. (North Bridge Venture Partners was the original venture investor in 2009.) MC10 also has a deal with Reebok to develop a wearable product that’s very hush-hush (probably electronics integrated into footwear or other apparel for monitoring performance). The startup has also collaborated with Massachusetts General Hospital and other institutions to develop a new type of balloon catheter, equipped with sensors, to assist with heart procedures. Next up: wearable power and newfangled image sensors.

“We’re trying to change the world by reshaping electronics,” says Dave Icke, CEO of MC10. Icke is a semiconductor industry veteran who was previously an executive with Advanced Electron Beams and Teradyne.

The idea of flexible electronics isn’t new. But unlike other approaches over the past decade, such as using organic semiconductor materials or microwires (which tend to be slow), MC10 uses high-performance silicon circuits, which means the devices could be as fast as the computers you’re used to using. The trick is in exactly how the silicon is laid out and combined with stretchy materials. Imagine little islands of silicon linked by springy interconnects—“like a Slinky in between,” Icke says—with the whole thing deposited on a pre-stretched polymer. Depending on the application, the team adjusts the thickness of the islands and the interconnects so as to minimize the strain on the circuitry.

MC10's silicon-based photovoltaic cells could be used for portable or even wearable, personal power generation (image: John Rogers, UIUC)

MC10’s technology is based on research done in the lab of John Rogers at the University of Illinois at Urbana-Champaign, who is a co-founder of the company. Rogers, a former postdoc with chemist George Whitesides at Harvard University, was the winner of the prestigious Lemelson-MIT Prize announced last month. And the glue for the whole team is Carmichael Roberts, the general partner who led North Bridge’s investment; Roberts also worked with Whitesides as a postdoc, and he knew Icke from a previous company. (Icke, for his part, had gone to business school with North Bridge’s Jamie Goldstein.)

That’s all well and good, but making a living as a hardware startup is no easy task, especially when you’re selling a new technology. So MC10 has identified a couple of potentially lucrative markets for the next phase of its growth. One is portable (or even wearable) power generation—a set of projects supported by existing government contracts. Imagine a flexible sheet of solar-cell material that coats or is woven into the surface of a tent or an unmanned aerial vehicle (UAV) to absorb sunlight and store electricity. People have been talking about designing such a material for years, but MC10’s (see photo above) just might be good enough to make it work.

“Instead of having a bolt-on rigid box that gets attached to a roof or vehicle, [people could] integrate those efficient materials into a tent or awning, or into vests and clothing,” Icke says. … Next Page »

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San Diego’s Daylight Solutions, a six-year-old startup that specializes in mid-infrared laser technology, says today it raised $15 million in a Series C round of equity financing led by Northrop Grumman (NYSE: NOC), the Los Angeles defense contractor.

The funding comes less than a week after Daylight Solutions said its proprietary semiconductor laser had successfully completed U.S. Air Force field trials that tested the effectiveness of its infrared countermeasures technology against a variety of heat-seeking missile threats. Conventional infrared countermeasures typically involve firing a series of very hot flares that draw the missile away from targeted aircraft.

In a statement today, Daylight Solutions co-founder and CEO, Tim Day, referred to Northrop Grumman’s leading role in the round as an “additional endorsement of our technology and capability.” The company says the funding round, which was joined by existing investors, will enable Daylight Solutions to continue on a fast-growth curve while advancing its technology, expanding its product line, and improving its manufacturing capabilities.

As I explained in a 2009 profile of the company, Day and co-founder Paul Larson saw an untapped opportunity for solid-state lasers that operate at mid-infrared wavelengths, from 3 um to 12 um. It’s a part of the spectrum beyond visible light that Day described as “the color of heat.” The external cavity quantum cascade laser they developed is composed of extremely thin layers of Indium gallium arsenide, which the company now describes simply as a Quantum Cascade Laser (QCL).

The technology has a range of potential uses in medical diagnostics, environmental monitoring, scientific research, and defense because nearly all molecules absorb energy at specific wavelengths of the mid-IR spectrum. The company says multiple configurations of its JammIR product line were successfully tested by the Air Force and other defense contractors under environmentally demanding conditions for military aircraft, including both helicopters and planes. Daylight Solutions says its infrared laser can be mounted on aircraft and “aimed” at approaching missiles. The technology blinds and confuses a variety of missiles, including the ubiquitous shoulder-fired, heat-seeking missile that poses a serious threat to both military and civilian aircraft.

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If laser weapons and tools ever become mainstream, it might be because of a quiet little company called TeraDiode.

Sure, there are lots of more imminent (and perhaps more practical) applications for the Littleton, MA-based laser firm—welding, cutting metal, illuminating targets, and so forth—but blowing stuff up is what a laser was meant to do. At least if you grew up watching Star Trek phaser battles, Star Wars dogfights, and other forms of popular but admittedly dorky sci-fi entertainment.

TeraDiode, a two-year-old spinout from MIT Lincoln Laboratory, is commercializing a new kind of laser system, using what’s called a direct-diode laser, that it says is brighter, more powerful, and more focused than its predecessors. The technology is based on semiconductor lasers (which are electrically rather than chemically driven) plus a sophisticated optical system to manipulate individual beams to form a single output beam—a technique known as wavelength beam combining.

The 11-person company raised $4 million in a Series A round led by Stata Venture Partners in the fall of 2009, and is currently closing a second financing round from VCs and strategic investors, says founder and CEO David Sossen. The company has also landed some $3 million in U.S. defense contracts, he says.

Sossen, a veteran of Arthur D. Little and other firms, was a founding investor in TeraDiode, together with Fred Leonberger, a photonics expert from optical-tech firm JDSU. The startup’s laser technology, and its subsequent business development, is the handiwork of a couple of former Lincoln Lab scientists, Bien Chann and Robin Huang (no relation to the author), who both left to co-found the company in late 2009.

Lasers have been used in industrial applications for some 40 years. And the U.S. military has used lasers for decades, but in limited ways, because the devices tend to be bulky, inefficient (not enough power output), and prone to breakdown. To create a “directed energy weapon,” for example, a conventional chemical-based laser would need to be about the size of a building.

Until now, the limiting factors for laser diodes have been power output and beam quality. “We’ve broken through that barrier,” Sossen says, adding that his company’s relatively compact lasers (which for commercial uses are a bit bigger than a breadbox but smaller than competing devices) can output between several hundred and several thousand watts, and in principle up to 100 kilowatts (with a bigger laser)—enough power to do some real damage. And at different wavelengths, depending on the application.

TeraDiode envisions selling lasers “compact enough to be deployable on a tank or … Next Page »

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Cambridge, MA-based MC10, a startup focused on designing electronics that can bend and stretch with the natural world, said today it has raised $12.5 million in Series B financing led by new investor Braemar Energy Ventures. Previous investors North Bridge Venture Partners, Osage University Partners, and Terawatt Ventures also participated in the round. MC10 is working on flexible biomedical sensors and devices, consumer electronics, sports and military applications, and portable (and possibly wearable) energy-generation devices. The company was founded in 2008 based on research done at the University of Illinois at Urbana-Champaign (John Rogers) and Harvard University (George Whitesides). MC10 is led by CEO David Icke.

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[Corrected 8/1/11] Palo Alto, CA-based Palantir Technologies has raised $50 million in a sale of equity, option, and warrants, according to a May 5 regulatory filing. The company, which makes software platforms for visualizing and analyzing intelligence, defense, law enforement, and financial data, raised $90 million in Series D funding in 2010. Its investors include Fluke Venture Partners, Founders Fund, Glynn Capital Management, In-Q-Tel, Ulu Ventures, and Youniversity Ventures. [Correction: An earlier version of this article stated that Benaroya Capital Co. is an investor in Palantir Technologies. It is not. We regret the error.]

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Sometimes what’s bad for companies is good for business. That’s the case for a number of Massachusetts security software firms. These days, the Boston area seems to have renewed its claim as an epicenter of cyber security activity.

In the wake of the recent, much-publicized cyber attack on RSA Security, a division of Hopkinton, MA-based EMC (NYSE: EMC), I thought it would be a good time to check on efforts to meet new cyber threats by some local security companies. RSA classified the attack on its system last week as an “advanced persistent threat”—a phrase used to describe a sophisticated effort to target software applications, sensitive data, or end users—but the firm was vague about exactly how it was hacked, what kinds of data were stolen, and what risks its customers face. (RSA said it is working closely with customers, but security expert Bruce Schneier wrote in a blog post that “the company has lost its customers’ trust.”)

This kind of advanced threat is a far cry from the corporate hacking of the past couple of decades. Companies used to be able to defend themselves from rogue hackers by deploying technologies around the perimeter of their network—such as firewalls and “deep packet inspection,” which detects things like viruses and worms as they enter the network. But advanced persistent threats are what defense and intelligence agencies are used to seeing from nation-states (from China to the Middle East to Eastern Europe) trying to hack into government databases—except now their targets include banks, insurance companies, tech firms (Google, Adobe, and others), and critical infrastructure like energy and chemical firms.

All is not lost yet. In addition to big companies like EMC/RSA (which also includes security technology from Network Intelligence), a number of smaller but established software companies are working on ways to combat the latest security threats. One of these companies is Fidelis Security Systems, a nine-year-old firm in Waltham, MA, that is giving corporations and government agencies the ability to continuously identify and analyze threats from within their networks, down to the level of applications, files, and individual sessions.

That’s apparently crucial for fighting advanced persistent threats, which can take the form of anything from malware embedded in a PDF file to tricking an employee into accessing a website and then exploiting a software bug. “When somebody decides to make you a target, they will persistently and, in a very targeted way, try to infiltrate your network,” says Fidelis CEO Peter George.

One big emerging trend is government agencies working together with corporations to try to thwart such attacks. This increased cooperation was evident at the RSA Conference in San Francisco last month, George says, where a number of forums and panels featured “three-star generals sitting side by side with business leaders.” The U.S. government, he says, is “working in collaboration with the biggest enterprises in the world to show them best practices, to show them how to fight advanced threats.”

All of this points to a major mindset shift when it comes to corporate data security. “Organizations should continue to act under the assumption that the attackers are already inside, rather than dedicate excessive time and resources to securing their perimeter,” says Adam Bosnian, executive vice president at Cyber-Ark Software, a Newton, MA-based security company that specializes in managing privileged users and protecting against insider threats, among other things.

Fidelis and Cyber-Ark are part of a thriving cluster of Boston-area security companies … Next Page »

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Peter Hofbauer spent nearly a decade in advanced propulsion system research and nearly another decade in power train development at Volkswagen. After creating and developing the automaker’s first diesel engine, he was ready to relax.

“In 1997, I moved to Santa Barbara, CA, and my main idea was to retire—and that did not work,” says Hofbauer, founder, chairman, and chief technology officer of EcoMotors International, an Allen Park, MI-based engine developer funded by Bay Area and Seattle investors led by Sun Microsystems-cofounder-turned-venture capitalist Vinod Khosla, and Bill Gates.

Instead, he continued working on engine innovation and started his own company, Advanced Propulsion Technologies, in Santa Barbara in 2003. The company developed what’s called opposing piston, opposing cylinder technology that would eventually form the intellectual property of EcoMotors. (As I wrote last fall, the company sees the engine as a way to make cars cleaner and cheaper, and would involve an easier infrastructure transition than revamping fleets of vehicles with hybrid technology, according to CEO Don Runkle.)

APT worked on creating the engines for military applications, but needed a different setting, Hofbauer says. “We started to design it, but you cannot develop an engine in Santa Barbara,” he says. So he moved the company to work out of an engineering firm in Detroit.

In 2006 APT firm signed a deal with defense firm L3 Communications (which has a subsidiary in Michigan), creating a joint venture called Combat Advanced Propulsion, to continue working on the technology for military uses. Two years later, EcoMotors kicked off with $10.5 million in funding from Menlo Park, CA-based Khosla Ventures to continue advancing the opoc engine for civilian vehicles.

The opoc is named (as you no doubt guessed) for its opposing pistons and opposing cylinders, which have a single crank in the middle and together work to create a combustion event with every revolution. The design, which allows the units to be stacked to scale up to meet bigger engine needs, involves fewer parts and provides more power per size and weight than existing engine technology, according to Runkle.

EcoMotors’ plan has been to license its technology to automakers or engine suppliers, who would then develop opoc engines for specific vehicles. The company has already gained some traction on this strategy. Last year, it signed a deal with Chinese automotive parts maker Zhongding Holding Group. The firm will build an opoc engine development center in Shanghai, first focusing on truck engines, then on passenger cars. Because China has … Next Page »

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Adaptive Materials, an Ann Arbor, MI-based developer of solid oxide fuel cells for use by the military and in recreational vehicles, has been acquired by UK-based Ultra Electronics Holdings. Adaptive Materials announced in a news released today that it will continue to develop and manufacture its propane-powered fuel cell systems from its current Ann Arbor facility.

Adaptive Materials is considered to be a Michigan success story, having taken its product from a University of Michigan lab to military contracts totaling about $45 million in the last decade, all without taking a dime of venture capital or angel funding.

Michelle Crumm, co-founder and chief business officer, explained to me in a two-part interview last spring (Part 1 and Part 2) that the company’s success was due to a decade of building relationships with military customers and refusal to accept “other people’s money.”

Crumm also told me the company was poised for big growth, moving from hundreds of units sold to the Department of Defense and the U.S. Air Force to thousands, in part because of a need for long-lasting fuel cells for “eyes in the sky” missions over Afghanistan. She told me that Adaptive was having some trouble finding qualified engineers in the area to fill nine vacant positions. Today’s news release says that the company still needs to fill 10 positions.

Crumm and her husband, co-founder Aaron Crumm, will retain their positions in the company, according to the release. Ultra Electronics COO Rakesh Sharma said in a news release that the takeover will allow the company’s Ann Arbor workers more of an opportunity for career advancement. Adaptive currently employs 65 workers.

Ultra Electronics serves niches in the defense, security, transport and energy market sectors.

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General Atomics says a Navy F/A-18E Hornet aircraft was successfully launched using the company’s Electromagnetic Aircraft Launch System instead of the steam-powered catapult technology used aboard aircraft carriers. General Atomics has been designing the electromagnetic launch system for CVN-78 class aircraft carriers. “This event marks the first time in over 50 years that the Navy has been able to launch a carrier-based aircraft using a system other than steam,” said GA Electromagnetic Systems Division Vice President R. Scott Forney, III.

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A pretty big merger in defense tech this morning. Waltham, MA-based Raytheon (NYSE: RTN) announced it has agreed to acquire Sunnyvale, CA-based Applied Signal Technology (NASDAQ: APSG) for $38 per share—about $490 million in cash. The deal is slated to close in the first quarter of 2011, and is not expected to have a material effect on Raytheon’s earnings.

Defense contractor Raytheon made the acquisition to complement its intelligence, surveillance, and reconnaissance technologies, said CEO and chairman William Swanson, in a statement.

Applied Signal, which makes communications, analytics software, and cyberwarfare technologies primarily for government agencies, will be integrated into Raytheon’s Space and Airborne Systems business unit. Advanced sensor systems will be a particular area of interest for the two companies as they move forward together.

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San Diego’s General Atomics, one of the region’s leading defense contractors, said today that it has been participating in efforts to develop an electromagnetic railgun, which uses high-powered electromagnets instead of gunpowder to launch artillery-like projectiles. The private government contractor says it successfully test-fired aerodynamic rounds from a prototype electromagnetic railgun three months ago at Utah’s Dugway Proving Grounds.

General Atomics says the projectiles, developed for supersonic speeds by Boeing’s “Phantom Works” unit in St. Charles, MO, were launched by its “Blitzer” railgun prototype at Mach 5, or five times the speed of sound. The test was conducted in September under a contract with the Office of Naval Research.

General Atomics, or GA, has gained extensive expertise in electromagnetics systems in recent decades, stemming chiefly from its work during the 1990s with ITER (the International Thermonuclear Experimental Reactor) a multi-nation project to develop fusion energy. GA helped develop electromagnets powerful enough to contain the superhot plasma needed to sustain nuclear fusion. Since then, the company also began developing advanced electromagnetic technology for launching aircraft from naval aircraft carriers and mag-lev technology for public transit systems.

Blitzer Railgun Test

While efforts to develop railgun technology have been underway for decades, the Navy’s revived initiative became front-page news in 2008, when the Office of Naval Research set a new record by using an unprecedented pulse of energy (10.6 megajoules) to fire a seven-pound slug at Mach 7. With such technology, a railgun-equipped warship off the coast of San Diego could fire a projectile more than 200 miles, or almost two-thirds the distance to Phoenix. A projectile traveling at such speeds does not require explosives to … Next Page »

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OK, a flying Humvee doesn’t sound like a very green vehicle—but the U.S. Defense Advanced Research Projects Agency isn’t interested in green.

DARPA is interested in improving the safety and lethality of U.S. troops in dangerous environments. And it is willing to pay handsomely for it—to the tune of a five-year, $65 million research program to develop what it calls a “Transformer” vehicle that works like a Humvee on land, but can also fly.

No, this isn’t an Onion article. The goal is to be able to carry four troops and their gear (1,000 pounds) over a distance of 280 miles on one tank of fuel, by any combination of air and land, the agency says. The vehicle must be able to take off and land vertically—meaning it will fly like a cross between a helicopter and a plane (see drawing above). And, oh yeah, it has to be piloted by an average Marine Corps soldier without any flight experience. In other words, it needs to fly mostly by itself.

If it works—a big if, indeed—such a vehicle could swoop over obstacles or tough terrain, and potentially could help troops avoid ambushes and improvised explosive devices in roads. It could also be used for evacuation or rescue missions where it would be very useful to scan the situation from the air and then drop in at the right spot—in urban combat operations, say—while maintaining some mobility on the ground after landing. (You can read more details and speculation in this Popular Mechanics article.)

A key participant in the DARPA program is Woburn, MA-based Terrafugia. You might know it as the “flying car” company, though the firm much prefers the drier term “roadable aircraft.” Terrafugia was founded in 2006 by five MIT-educated pilots, and has been developing a light sport plane, called the Transition, that can be driven on roads and is slated for testing and production next year. The company declined to comment on its involvement in the DARPA program beyond the information in its press release this week. But it’s clear that Terrafugia’s expertise in combining flying and driving vehicles is valuable here.

Indeed, Terrafugia is “one of the few companies that has experience blending the disparate ground vehicle and aircraft requirements into a single functional concept,” says Stephen Waller, the program manager for the DARPA project, in an e-mail. “This is the primary challenge to successfully develop the Transformer vehicle.”

Terrafugia is one of several companies participating in the program—and a few have connections to the Boston area. Virginia-based aerospace firm Aurora Flight Sciences, which has a research and development office in Cambridge, MA, and technical consulting firm Metis Design, based in Cambridge, both have received small-business research grants to work on the project. For its part, Terrafugia is the largest subcontractor to AAI, a Maryland-based aerospace and defense company owned by Textron, a multi-industry conglomerate headquartered in Rhode Island. AAI is one of the two main contractors on the DARPA project; defense tech giant Lockheed Martin is the other (see drawing on left for Lockheed’s competing design concept).

Meanwhile, Carnegie Mellon University in Pittsburgh has been awarded $988,000 to develop an autonomous control system for the vehicle. Sanjiv Singh, a professor in CMU’s Robotics Institute, is leading that effort. And rocket engine company Pratt & Whitney Rocketdyne is working on the engine and propulsion technology for the … Next Page »

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