The offices have been laid out. The applications are flowing in. And come next spring, 10 proto-companies will meet in Seattle for a three-month bootcamp focused on new uses for the Kinect, Microsoft’s breakthrough motion- and sound-sensing system.

For Redmond-watchers, that may not seem like such a big deal. Microsoft already cultivates startups through its BizSpark program, and is putting plenty of steam behind the Kinect as a next-generation user interface. I have no idea how much money Microsoft is paying to bankroll the new Kinect Accelerator program, but it’s certainly in the realm of a rounding error.

But the thing that makes this Kinect program really interesting is Microsoft’s partner: TechStars, the startup accelerator with branches in Seattle, New York, Boston, and Boulder, CO.

TechStars is a top-tier example of the startup incubator programs that are sweeping the country right now, a phenomenon that challenges the established education and entrepreneurship systems. Those programs have already gotten plenty of interest from entrepreneurs, the press, and early stage investors. But now, mammoth tech companies are taking a longer look, too—and doing more than just offering free software or a few mentors.

“Corporations have been trying to create innovation ecosystems forever. Historically, those that do it themselves have tended to struggle in general,” TechSars co-founder David Cohen says. “We believe we can help Microsoft get it right. It appears to be working so far—we have some amazing applications and the interest is very high.”

“Traditionally, it’ll be, ‘Hey, here’s a toolkit and here’s some terms and conditions, and, essentially, have fun. Good luck,’” says Microsoft Studios general manager Michael Mott, the company’s point person for the Kinect Accelerator. “Now, we’re saying, here’s that same set of technologies … and here’s a little bit of expertise and guidance, not only from us but also from this great incubator of startups, TechStars. In that case, I think it’s a little bit more of a wraparound approach and a little bit more hands-on than we maybe have done in the past.”

The Kinect Accelerator will look very much like a typical TechStars class, with 10 companies chosen to participate in an intensive three-month program of product-building, testing, and business development. At the end, there will be a big demo day party, where the entrepreneurs can show off their work to insiders and potential investors.

But this version is a wholly Microsoft endeavor, and focused on one technology, the Kinect. “This is Microsoft’s program,” Cohen says. “We’re powering it, which means we’re responsible for making sure it’s awesome.”

That’s a first for TechStars, which, like other independent accelerator programs, chooses its own class of entrepreneurs from a wide-open field of applicants. This year’s Seattle class, for example, produced startups tackling everything from smartphone-powered robot kits to international money transfers.

That’s a totally new way of thinking about something like TechStars: Not only does it run bootcamps of its own, but it can be hired out to help the world’s biggest companies develop their own entrepreneurial ecosystems.

It’s a huge validation for the TechStars model and its people, and there’s a more concrete upside as well. Just like in a regular TechStars program, the companies will get an investment: $20,000 from TechStars in exchange for 6 percent equity. (Significantly, Microsoft will not take a stake in the startups or their intellectual property.)

When it was announced last month, the Kinect and TechStars partnership instantly reminded me of Google’s recent two-year deal to be a global sponsor of Startup Weekend, the Seattle-based entrepreneurship program that has been steadily growing beyond its signature hackathons.

Google’s deal with Startup Weekend is more than just a check. Googlers will also host developer workshops ahead of Startup Weekend events, and bring promising entrepreneurs from the global Startup Weekend network back to Google headquarters for a week of collaboration. In short, it’s tapping into the Startup Weekend network of more than 250 events worldwide to find promising talent—and make sure they’ve got Google on their minds.

Kinect Accelerator is different on the details, but it has the same flavor. It’s probably a smart move for a lumbering technology giant that is often criticized for being too bureaucratic to get out of its own way and innovate. Not coincidentally, Xbox and Kinect are very prominent examples of consumer offerings that Microsoft has actually done very well.

The Kinect Accelerator will be directed by Dave Malcolm, a former longtime Microsoftie who has been a TechStars mentor in Seattle. The startups will operate out of Microsoft office space in South Lake Union, a block away from the growing Amazon campus.

Teams will get Xbox kits, Kinect hardware, and the upcoming Windows software development kit for Kinect, along with the usual array of developer tools and software. Products that might have phone and tablet interfaces or other applications are also welcome, Malcom says: “The solutions these 10 companies create simply have to leverage the Kinect in some form.”

“We are looking for the 10 teams who have the most compelling, big ideas that we think, post this program, they have the best chance of getting follow-on funding and building real businesses that scale and have an impact,” Malcolm says. “We would like people to think big when they come to us with applications.”

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Step right up, ladies and gentlemen, and behold…the eighth wonder of the world. No, not King Kong, I’m afraid. But how about a computer that can read and interpret human emotions and mental states?

That would be from Affectiva, a Boston-area startup co-founded by Roz Picard, a 20-year veteran of the MIT Media Lab. Picard (see photo, right) is the founder and director of the Media Lab’s Affective Computing research group, and she has done extensive work in computer vision, machine learning, and human-computer interfaces, with applications in autism communication, health and wellness, education, marketing, advertising, and other areas.

Picard is speaking at this Thursday’s Xconomy “6×6” event (Six Cities, Six Big Tech Ideas) in Boston. In advance of her appearance there, I sat down with Picard at Affectiva’s offices this week to get a demo of the company’s technology and to talk a little about the future of emotional and gestural interfaces.

One of the demos involved a computer tracking my facial expressions via webcam (and also my heart rate via blood flow to my face) while I watched a series of TV commercials. Based on indicators like raised eyebrows, smiles, or a furrowed brow (see example, below), the software tried to figure out how engaged, interested, amused, or disturbed I was during the course of each ad. It’s hard not to be self-conscious during all this, but I’m pretty sure the computer concluded: this guy hates all commercials. (And since I haven’t smiled since 1995, we’ll enlist my fellow editor Erin Kutz for the live demo on Thursday.)

Affectiva also will be rolling out a new product on Thursday—one that has applications in finance and healthcare, among other industries—but I’ll let Picard speak for that when the time comes.

Meanwhile, I asked Picard whether the field of affective computing would continue to advance incrementally (like speech recognition, say) or whether it would undergo a breakthrough of some kind. “I think it’s going to make some leaps,” she said. “There’s going to be a lot more happening by indirect measurement—nonverbal [cues] that people don’t really think machines can do. That’s going to really progress.”

To me, Picard’s work exemplifies what truly big ideas are about—for the first 20 years or so, they might be more interesting scientifically than commercially. But once the technology and marketplace gets to a certain point, a viable business can be built around them, even as the science continues to advance. And then who knows what will happen?

We’re looking forward to a fantastic 6×6 program and some great networking this Thursday (you can register here). Hope to see you there.

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We got a look at one of Microsoft Research’s latest advanced-interface projects a few weeks back, during festivities for MSR’s 20th anniversary. The company actually prohibited anyone from taking images of one demo in particular, for a projected-touchscreen system called OmniTouch, just because the team was going to present it at an upcoming conference.

Well, that conference is starting—and here are the details about OmniTouch. It’s an advancement of something you may have seen before out of MSR, namely this project called “Skinput” that used sensors and projectors to turn forearms and palms into the equivalent of computer or smartphone touchscreens.

OmniTouch was developed by Microsoft’s Andy Wilson and Hrvoje Benko, and Carnegie Mellon student Chris Harrison, who’s also an MSR fellow.

Things are kicked up a notch from the Skinput project. OmniTouch employs a shoulder-mounted projector and Kinect-ish camera, and can recognize multiple nearby surfaces to do tasks simultaneously. So, you could project a main “screen” on a wall or desktop, and pull up your palm to flip back to a navigation menu, to pick a new video, e-book, or webpage.

The hardware is a little bulky in this prototype version, of course (Microsoft officials demurred when I asked at the MSR anniversary event whether there were plans to incorporate a laser blaster, Predator-style).

Here’s one of the videos from Harrison’s page, which also features a second, more technical video demo, the research paper, and more goodies. The Microsoft page also has details about a project called PocketTouch, which would allow users to interact with devices by tapping them while they’re still in a pocket, for instance.

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In computing, it’s hazardous to try to peer more than a couple of years into the future, let alone a decade. After all, if microchip makers find ways to keep miniaturizing transistors at the rate we’ve seen since the 1960s, there’s time for five or six more doublings in computer power by the year 2021. Processors could run 30 to 60 times faster than today’s fastest chips, storage costs could plummet to virtually zero, and broadband wireless access is likely to grow faster and more ubiquitous. Under those conditions, you’d be a fool to try to anticipate all of the innovative ideas engineers will be inspired to explore on the hardware and software fronts.

But on May 17, we’re going to throw caution to the winds. At Beyond Mobile: Computing in 2021, Xconomy San Francisco is gathering leading thinkers from the West Coast computer science community to talk about the big questions that will define the shape of consumer-facing computing technology over the next 10 years. You can join us for this after-work event on Tuesday, May 17, at SRI International in Menlo Park, CA.

We’re modeling Beyond Mobile after a very successful series of Xconomy life sciences events examining the 20-year future of biotechnology and drug development. (Our March event in San Francisco, Bay Area Life Sciences 2031, was a sold-out hit.) But in the information technology world, the pace of change is so blistering that we figured speculation on the state of computing 20 years out would devolve into pure science fiction. So we cut the figure to 10 years, and we went out to find experts brave enough to predict how computing devices and computer networks will look and act in the year 2021. We found several, and I’ll tell you about them in a moment.

Clearly, we’re in the midst of a major transition right now, from a long period of desktop-centric computing to a new age of mobile-centric computing. Portable, touch-driven devices like smartphones and tablet computers are usurping many of the old functions of telephones, desktop and laptop PCs, game consoles, and TVs; indeed, data out just today from IDC showed that global PC shipments continue to shrink dramatically, perhaps bearing out Steve Jobs’ assertion that we’re already entering a Post-PC era. Enabling that whole transition is an equally important shift away from local processing and storage and toward a reliance on far-away cloud computing resources.

But we tend to obsess so much about “mobile” and “the cloud” that we don’t talk much about what comes after all that. The iPad, surely, is not the end of the line. Ten years from now, will we still be using devices that are recognizable as smartphones, tablets, and desktop or laptop computers? Or will computing power simply be embedded all around us in our homes, vehicles, offices, and other environments?

Our featured speakers at Beyond Mobile make their living thinking about such questions. First up we’ve got Bill Mark, vice president of the Information and Computing Sciences Division at SRI International, which is hosting the event. (SRI is an Xconomy underwriter.) Formerly with Lockheed Martin and manufacturing software house Savoir, Mark leads a team of researchers and developers thinking about how tomorrow’s computers will perceive, plan, reason, and communicate.

With its strong practical focus, SRI has a history of transforming this research into commercial spinoffs, including Siri, a virtual personal assistant app for smartphones that was acquired by Apple in 2010. Siri can listen to questions that you ask in natural language and frame answers based on your location or context at that moment. But as cool as it is, Siri offers just a taste of the sorts of assistance software might offer in the future. Why shouldn’t your car, your office, or your home be equipped with similar capabilities?

After all, “Most of us aren’t mobile most of the time,” as Mark says. “We’re at home, in an office or school, in a restaurant. And we’re not alone most of the time: we’re talking with other people or sharing an experience with them. We don’t want or need to be interacting through a mobile device. We want computation in the environment to enhance our experience as individuals and as … Next Page »

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Memo to mobile-interface companies: Nuance is on the prowl.

The speech-recognition and imaging software giant (NASDAQ: NUAN), based in Burlington, MA, has acquired ShapeWriter, a Silicon Valley-based spinout from the IBM Almaden Research Center, for an undisclosed sum. Nuance has not spoken publicly about the acquisition, but a message on the ShapeWriter website as of yesterday reads, “ShapeWriter, Inc. is now part of Nuance. The ShapeWriter continuous touch application has joined Nuance’s portfolio of patented text input solutions recognized as the industry’s leading predictive text technology.” E-mail messages sent to Nuance’s media representatives this morning were returned, but the company hasn’t commented on the deal yet.

The deal is interesting on a few fronts. First of all, the technology in question—which lets you type on a touchscreen keyboard by sliding your finger to connect letters, instead of tapping them individually—is starting to take off. The key is that the software is predictive, so you can be sloppy and it will still get the words right most of the time. The big makers of mobile phones and operating systems are clamoring to offer consumers better ways of inputting text on touchscreens, so this technology seems to fit the bill. But given how similar the offerings look (at first glance) from tech companies like Nuance, ShapeWriter, Dasur, SlideIT, and Swype, I sense some patent battles and consolidation coming on.

Which brings us to interesting point No. 2. Seattle-based Swype is an early leader in the field, and a direct competitor to ShapeWriter and Nuance. Swype has venture backing from Samsung Ventures, Nokia Growth Partners, and Docomo Capital, and has been inking deals left and right with original equipment manufacturers and wireless carriers to put Swype’s software on mobile devices. Knowing the guys at Swype, they are probably following the Nuance news with great interest, but won’t comment on it. (Though they have been getting lots of national media interest lately.)

Swype was founded in 2002 by Cliff Kushler and Randy Marsden, and is now led by CEO Mike McSherry. Kushler is the co-inventor of T9, the predictive texting technology that is used in some 4 billion devices worldwide. Guess who owns T9? That’s right, Nuance.

Over the past few years, Nuance has pursued an aggressive strategy of acquisitions in computer interfaces and speech. [Full disclosure: My brother-in-law is a former employee of Nuance who now works at Vlingo, a Cambridge, MA-based company that competes with Nuance in speech recognition---GH.] Nuance has also developed plenty of its own technologies. Back in March, the company introduced T9 Trace, its version of predictive, slide-y, touchscreen text-input software. Presumably, ShapeWriter adds a new dimension to the technology, but we’ll see where all of this goes.

I haven’t even mentioned Apple yet, but clearly Steve Jobs and Co. are watching this stuff closely. According to the New York Times, Swype doesn’t have a deal with Jobs just yet, but “is tinkering with software for the iPhone and the iPad and hopes to show it to Apple soon.”

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For entrepreneurs, launching health IT startups to commercialize mobile or wireless technologies can be daunting. While there are many opportunities to create companies around mobile innovations in healthcare, there aren’t really many successful business models to follow. Sometimes it takes lots of smart people from multiple disciplines to rally around an idea to transform it into a viable venture.

So we’re bringing together five successful veterans from the healthcare arena for our mobile health panel at the annual Xconomy Summit on Innovation, Technology, & Entrepreneurship (XSITE) at Babson College next week (register here). With this group of panelists, and our expected audience of entrepreneurs and technologists, we expect there to be plenty of new ideas raised about mobile health to get our synapses firing.

Back from last year’s XSITE, Michael Greeley, a general partner of Flybridge Capital Partners (formerly IDG Ventures) in Boston, is going to lead the dialogue as moderator. Not only is Greeley an experienced investor in healthcare and technology companies, he’s not afraid to challenge the status quo in these industries. His firm backs Newton, MA-based PatientKeeper, which has found success in getting thousands of doctors to use its smartphone applications for automating their workdays. (Ask the moderator where his firm plans to make future bets on health IT.)

We’re anxious to hear more from Rick Lee, the CEO of recently launched Healthrageous, who recently told Xconomy that his mobile health startup aims to put individuals in the driver’s seat of their own healthcare, rather than leaning heavily on doctors to ensure that they stay healthy. The firm revealed yesterday that it raised $6 million in a Series A round of funding, so Lee obviously knows what it takes to attract venture money to mobile health startups.

Pam McNamara, president of the contract engineering company Cambridge Consultants in Cambridge, MA, is leading her firm as it develops new mobile health products such as this digital blood pressure device called “Vena.” Before she took the helm of the firm’s U.S. operations, McNamara was CEO of the electronic patient diary provider CFR Health from 2003 to 2008. So she knows how to develop a mobile health product and commercialize it. (For more about McNamara, see my profile, written shortly after she joined Cambridge Consultants in February 2009.

It helps to have a hospital chief technology officer in the room to keep everyone honest about what new mobile technologies will medical providers actually adopt. Cara Babachicos is the CIO of Partners Continuing Care, the branch of Partners HealthCare System of Boston that provides medical services to people both in traditional clinical centers and in their homes. There’s a big push to use information technology to improve care for people both inside and outside of hospitals, and Babachicos is on the front lines of this trend.

We knew we wanted a physician on the panel to inject his or her expert medical insights into the discussion, but we also wanted a doctor who is pioneering the use of technology in healthcare. John Moore, a physician and researcher at the MIT Media Lab, has both the requirements covered. At the Media Lab, Moore is working with his colleagues on a program called CollaborRhythm, which aims to use wireless devices and new interfaces to help patients stay connected with doctors from virtually anywhere. Here’s a link with a video demo of the project. (Moore is the doctor in the video, as one might guess.)

We hope you’ll come to the panel (which is one of four industry-focused breakout sessions during the afternoon of XSITE—here’s the full agenda) with bright new ideas about mobile healthcare. Bring your tough questions and your expertise, because both are needed to spark the meaningful debates and discussions we plan to have. To participate, make sure to register online as soon as possible.

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One of Microsoft’s most respected executives announced today he is leaving the company. Alex Gounares, who was previously vice president of advertising research and development, has been hired as the chief technology officer of New York-based AOL and will be moving to the East Coast to take the job. The announcement was made internally at Microsoft, and was first reported by All Things Digital.

I’ve confirmed the news with an ex-Microsoft source close to Gounares, who says Microsoft is losing its “best technical mind” and a “great professional” who “works behind the scenes, like any good architect.” He’s also an avid sailor who seems to have strong relationships throughout the company.

Gounares is perhaps best known for being Microsoft chairman Bill Gates’s top technology assistant for three years during the 2000s. One of his many duties was to handpick papers for Gates’s famed “Think Week,” a biannual tradition dating back to the 1980s in which Gates would sequester himself for seven days to recharge, read papers and books, and brainstorm ideas.

Gounares, known to many as “AlexGo,” joined Microsoft in 1993 as a software developer, after having worked at Los Alamos National Laboratory and several small companies, according to his bio on Microsoft’s website. He rose through the ranks in Redmond, working on major products such as Microsoft Office and the Tablet PC operating system (including digital pen and ink technologies). He moved on from his role as technology assistant to Gates, becoming vice president for corporate strategy before taking on his most recent role of vice president of advertising research and development, and then chief technology officer of Microsoft’s online services division.

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Stop me if this sounds familiar. You work in a tight-knit team that has one or two colleagues who are located in a different office—across the street, across the state, or across the country. You’d like to communicate with them more regularly, but phone calls, e-mails, and video conferences have to do. Inevitably, you feel like you (and they) miss out on some day-to-day interactions that help all of you stay fully connected to the company’s goals and culture.

Microsoft feels your pain—and its researchers are trying to do something about it. That’s why a group from Microsoft Research, based in Redmond, WA, is presenting a paper tomorrow at CHI 2010, the big international conference on human-computer interaction in Atlanta. The team, led by senior researchers Gina Venolia and John Tang, has developed a prototype system that gives a satellite colleague a “telepresence” not just in meetings but in the daily workflow of the hub office. They pull this trick with basically a laptop, speakerphone, and webcams on a cart, plus software to coordinate it all. Their project is called “Embodied Social Proxy,” or ESP.

OK, it’s a pretty jargony name, but it addresses a real and growing need in companies that have satellite workers or that expand to new geographies. The researchers have tested the prototype in four different product groups at Microsoft in addition to their own research group. They’re reporting that it increased the “attention and affinity” of the hub towards the satellite, and that it improved the interpersonal social connections between team members. (Of course, this might be difficult to quantify—more on that below.)

In this globalized era in which teams are being spread over long distances and “virtual” businesses, a number of tech giants are trying to help companies stay culturally tight-knit as they grow larger. The list includes Microsoft, Hewlett-Packard, IBM, Cisco, and Skype, who have led the way in developing technologies for Web conferencing and remote communications. A whole slew of startups are working in related sectors such as social business software (like Jive in Portland, OR) and online project management (like Smartsheet and LiquidPlanner in the Seattle area).They all share the goal of boosting productivity in the face of complexity. Recently, notable technology and business leaders Kelly Jo MacArthur and Stephen Wolfram have emphasized the importance of remote communications in running an organization.

The Microsoft project builds on years of social science and communications research. It also seems decidedly old-school and low-tech. That is part of what makes it interesting, as a complement to social-media efforts to improve business collaboration (including Microsoft’s relatively new FUSE Labs led by Lili Cheng). Microsoft’s ESP effort began in 2008 when Venolia and Tang’s colleague, principal researcher George Robertson, a co-author on the study, moved to Maine to work from home. The team decided to test out a system that was “as simple as possible, to fix what was most broken,” Venolia says.

That meant daily interactions and face-to-face contact. So the team assembled a PC, monitor, some decent wide-view cameras, and a speakerphone, and mounted them on a cart that could be wheeled into meeting rooms (see photo above), or left in a dedicated office space that has become Robertson’s de facto “office” in Redmond. In meetings, the Redmond team can see Robertson’s face at the table and hear his voice, and he can interact with people in the room by controlling different cameras that allow him to focus on a particular person, or a whiteboard, or slides. The most interesting thing is … Next Page »

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Seattle-based Swype, a maker of text-input technology for touchscreen mobile devices, announced today it has raised an additional $1 million led by Docomo Capital. The money is an extension of Swype’s $5.6 million Series B round led by Nokia Growth Partners and Samsung Ventures, announced in December. NTT Docomo is Japan’s leading mobile operator, and the move should help Swype continue to expand into international markets, languages, and mobile platforms. The company says its text-input technology works for 30 languages, and a Japanese version is slated for release later this year. Last week, Swype said it is now available on T-Mobile USA touchscreen devices, including a new Android phone and an upcoming Windows Mobile phone.

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Seattle-based Amazon has acquired Touchco, a touchscreen technology company based in New York, according to a report in the New York Times, which cites an anonymous source with knowledge of the deal. The acquisition raises some interesting questions about the future of the Kindle device, Amazon’s competition with Apple, and the role of technology firm E Ink out of Cambridge, MA, which makes the current Kindle display.

First of all, neither Amazon nor Touchco has confirmed the deal, and no financial terms were given. But according to the report, Amazon will merge the New York University spinout’s technology and staff (about six people) into the Kindle hardware division, Lab126, based in Cupertino, CA.

Second, nothing will happen right away. This kind of integration will take some time, probably at least a year. So don’t count on a touchscreen Kindle being available next Christmas, unless Amazon has other plans already underway.

Third, this doesn’t mean the E Ink display is going away in future versions of the Kindle. From what I can tell, Touchco’s force-sensitive resistance display (which can be transparent) could sit right on top of the current E Ink display, and would be separately connected to the microprocessor on the device. That would add touchscreen capabilities to an otherwise unchanged appearance and reading experience, while giving the Kindle on-screen controls similar to those found on Sony’s Touch Edition and Daily Edition e-readers. So then the keyboard under the current Kindle screen could potentially go away, and the device could get smaller, or Amazon could offer different screen sizes.

One issue is that the deal would mean Touchco’s technology, which hasn’t made it to market yet, won’t be available for a broad range of devices—it will be folded into Amazon’s proprietary tool chest before ever seeing the light of day. But if the integration goes well, it will probably boost Kindle sales—which would be good for all parties involved, including E Ink.

Unless, of course, Amazon decides to offer a full-color touchscreen device to compete more directly with Apple’s iPad tablet. Some prominent Seattle techies have weighed in recently about whether the iPad is a Kindle killer, and how Amazon needs to raise its game. Even before the iPad was unveiled, Amazon also announced that it wants software developers to create applications (“active content” like games and puzzles) for the Kindle Store, to be offered later this year.

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It was a busy week for Northwest deals, as companies tried to beat the holiday rush. Lots of action in software, mobile, and biotech.

—Seattle-based Swype, maker of text-input software for touch screens, raised $5.6 million in a Series B round led by Samsung Ventures, Nokia Growth Partners, and Benaroya Capital. Swype released its first product earlier this month and is planning to use its new funds to expand to mobile devices around the world.

—Seattle Genetics, the Bothell, WA-based biotech firm (NASDAQ: SGEN), inked a partnership with Millennium: The Takeda Oncology Company, based in Cambridge, MA, to co-develop and market an “empowered antibody” cancer drug for Hodgkin’s disease and related lymphomas, as Luke reported. Millennium will pay $60 million upfront and make milestone payments worth $230 million, in exchange for exclusive commercial rights to the drug in all countries except the U.S. and Canada. Meanwhile, last week, Roche’s U.S.-based Genentech unit canceled a three-year partnership with Seattle Genetics to co-develop an antibody for non-Hodgkin’s lymphoma and multiple myeloma.

—Seattle’s Widevine Technologies, which makes software for delivering online video to mobile phones, TVs, and other consumer devices, raised $15 million in equity funding from Liberty Global, Samsung Ventures, and an unnamed corporation. Widevine was founded in 1999 and has raised more than $65 million in equity and debt financing.

—Microsoft had a busy week. The Redmond, WA-based software firm (NASDAQ: MSFT) acquired Sentillion, a healthcare software company based in Andover, MA, for an undisclosed price. It plans to incorporate Sentillion’s technology into the Microsoft Amalga Unified Intelligence System for hospitals. Microsoft also acquired Toronto-based Opalis Software, a maker of data center and IT management software for process automation. Financial terms were not announced.

—Speaking of IT management, Microsoft also formed a three-year strategic partnership with NetApp (NASDAQ: NTAP), a Sunnyvale, CA-based data storage and virtualization firm. The deal calls for the two companies to collaborate on products in virtualization, storage and data management, and cloud computing. Financial details weren’t given.

—Dendreon, the Seattle biotech company blazing trails in prostate cancer treatment and “cancer vaccines,” raised $409 million by selling 15 million shares, plus 2.25 million more to its underwriters who exercised their options. Luke reported the story behind the stock offering here. Dendreon (NASDAQ: DNDN) has raised a total of $630 million this year to manufacture and market its cancer treatment, as it seeks FDA approval.

—Portland, OR-based Solar Nation raised $2 million in equity financing, as part of a $5 million commitment from Luxembourg-based Lynx Industries to help expand the startup’s North American operations. Solar Nation was founded in 2008 and develops solar energy technologies for government agencies, businesses, and nonprofits.

—Redmond, WA-based Sammsoft, a maker of security and privacy software for personal computers, was acquired by support.com (NASDAQ: SPRT), a Silicon Valley-based Internet firm, for $8.5 million in cash. The assets of Xeriton, Sammsoft’s parent company, were also acquired.

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Seattle-based Swype, a maker of text-input software for touch screens, has raised $5.6 million in Series B equity financing from new investors Samsung Ventures and Nokia Growth Partners, and returning investor Benaroya Capital. The funding should help Swype expand its technology to more mobile phones around the world, and eventually explore other types of devices as well.

This is one of the larger second-round tech deals we’ve seen in Seattle lately, and it is encouraging news for Swype. The company raised $1.3 million back in April, and just this month released its first product, on the Samsung Omnia II smartphone. The significance of the new funding, which the company hopes is the last round it will need, is that Swype now has two of the world’s largest mobile phone manufacturers supporting its technology—and could be poised for mass-market adoption.

Sort of like with “The Matrix,” nobody can tell you what Swype is—you have to try it for yourself to fully appreciate it. So I recently visited the company’s office in Seattle’s Fremont neighborhood to play around with its mobile interface. The basic idea is that instead of using your thumbs, or touch-typing like on a full-size keyboard, you drag your finger from letter to letter, picking it up between words, and the software figures out lightning-fast what you’re typing, on a word-by-word basis (even if you’re a little sloppy). It’s based on the relative likelihood of words—you’re more likely to type “this” than “thus,” for instance—and the program adapts to how often you actually type each word.

Swype’s chief operating officer, Aaron Sheedy, says that if you show Swype to anyone under 25, they immediately pick up the phone and start working it with one hand. Me, not so much. I could almost feel my neurons rewiring as I struggled to connect one letter to the next; one way to describe it is that I’m not used to typing serially, I do it more in parallel. But Sheedy says most new users get up to “high-level productivity speeds” of typing 30 words per minute or more within just a few days.

Sheedy says that the new funds will be used to advance the company’s “deployment of software in the market—more languages, more operating systems, more devices. So Swype can really be a global input mechanism for touch screens,” with the primary focus being on mobile phones first. That’s before it branches out into things like GPS units, tablet computers, TVs, and video game … Next Page »

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It’s been seven years in the making, but we might be looking at the biggest new text-input technology for mobile phones since T9 predictive texting. At least that’s what Swype is hoping. The Seattle startup is releasing its software for the first time today, on the Samsung Omnia II, an advanced smartphone with a touch screen and plenty of nifty features (some call it an iPhone lookalike).

Swype’s software is the most novel of these features. The technology lets you type quickly by sliding your finger, or a stylus, across the screen keyboard without tapping or pausing on the letters. The company says novices can learn to type 30 words per minute within just a few days of use. Swype tries to address one of the biggest complaints about touch screen devices—that they’re slow and frustrating to type on with existing methods.

I spoke with Aaron Sheedy, Swype’s chief operating officer, about the significance of today’s product rollout, as well as the broader strategy of the startup. First, some background. Swype was started in 2002 by engineers Cliff Kushler and Randy Marsden. Kushler had co-invented T9 at Seattle’s Tegic Communications (which has been installed on some 4 billion mobile phones), while Marsden developed the on-screen keyboard software installed in Microsoft Windows. The two got together after Tegic was sold to AOL in 1999 (it is now owned by Nuance), and they started working on alternative text-input systems, motivated in part by disability research.

Swype went through a rebirth of sorts in 2008, when Sheedy and CEO Mike McSherry (both former Microsofties) came on board. The company presented at last year’s TechCrunch50 conference, and announced a $1.3 million funding round from angel investors and company management in April of this year. It currently has 18 employees.

Samsung, which just announced it has sold its 50 millionth full touch screen phone, is a key partner in Swype’s product strategy. The prominent handset maker was also an early adopter of T9. “They’ve taken a good, aggressive approach to bringing new technologies to market,” Sheedy says. “We’re looking to deploy more devices with them next year, and with a few other partners.”

The Omnia II is available through Verizon Wireless, and it runs on Windows Mobile 6.5. Which raises the question of how Swype plans to expand its customer base. Swype gets paid by original equipment manufacturers (OEMs)—handset makers like Samsung—but it also has to have deep knowledge of the wireless carrier ecosystem. (Dan Shapiro of Seattle-based Ontela recently talked about how viral distribution is difficult in the mobile sector because of all the different platforms and carrier relationships.)

“We spend a lot of time outreaching to the carriers, as well as OEMs. The trajectory is fairly similar to T9. It’s very good business for us to make sure the carriers have a good handle” on what Swype’s value proposition is for their subscribers, Sheedy says. “To the extent you’re trying to deliver software to end users, you need to have relationships with both carriers and handsets.”

In any case, it sounds like Swype has solved an important problem for mobile phones (and other devices without keyboards, like tablet computers). What remains is to see how much consumer demand there is for what amounts to a new and better way of typing. I also asked Sheedy whether we’ll see Swype on the iPhone anytime soon. If so, he didn’t let on. “Right now we need to make sure our Samsung partnership is executed very well,” he says. “We need to stay focused on that aspect of our business.”

Lastly, I asked whether Sheedy sees the competition as primarily other text-input technologies—offerings from ShapeWriter, Dasur, and Nuance, for example—or things coming down the pike like speech recognition systems. Sheedy says it’s definitely the former. But he emphasized the bigger picture in terms of consumers. “Our goal is to be there as more and more people migrate to touch-screen phones,” he says. “[Swype] takes a frustrating experience and turns it into a fun one. It’s in line with the feeling of what a touch-screen phone should be.”

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Yesterday’s annual open house at Intel Labs Seattle, near the UW campus, did not disappoint. I got a whirlwind tour from incoming lab director Dieter Fox (who also talked with me about Intel and the future of robotics). In attendance were some prominent members of the Intel brass like chief technology officer Justin Rattner, and vice president of Intel Labs Andrew Chien. Vice presidents mixed with professors, researchers, students, and members of the tech startup community. (Among the luminaries I spotted were Matt O’Donnell, dean of UW’s college of engineering, Janis Machala from UW TechTransfer and Paladin Partners, and Matt McIlwain from Madrona Venture Group.)

There has been a lot of progress at Intel Labs since last year’s open house. Here’s a quick tour of the most interesting projects I saw, arranged by the type of technology:

—One of the main themes of the lab is everyday sensing and perception. That encompasses everything from smart sensors in the home that figure out what you’re doing in the kitchen to wearable cameras that help inform you about the world around you. Jeff Hightower, a researcher at the lab who did his Ph.D. at UW, showed me a demo of a project called “Personal 3D audio cursor” which involves a wearable camera, compass, gyroscope, and computer that senses where you are, who you’re with, and what you’re doing. The device then speaks to you over earbud headphones to identify the people around you using face recognition—and the sound appears to come from the direction of the person it is identifying.

It’s just an example of what can be done to enhance your information about the world around you. The real innovation, Hightower says, lies in the “online learning aspect” of the face recognition algorithm. You feed the computer three example photos of a person under different lighting conditions, and the software learns to recognize their face. Hightower says they are starting with photo albums to train the computer, and want to try things like people’s LinkedIn contacts as training examples. (Which makes me think of Learn That Name, the iPhone app for helping people recognize their LinkedIn contacts in the real world.) Hightower says this type of face recognition software will “absolutely be ready for prime time” in five years.

—Just across the room, UW Ph.D. Student Shaun Kane was giving a popular demo on “Bonfire,” a new kind of computing interface for extending your workspace from your laptop to your tabletop (see photo left). Using a camera pointed at the area around his laptop and virtual buttons projected onto the tabletop, Kane showed he could press the virtual buttons to do things like scroll through applications on his laptop. The camera tracked his hand movements and also captured an image of a business card placed on the table, which could be stored for reference. The software can potentially do things like make your laptop aware of all papers and objects on your desk; then the computer might do helpful things like turn off music when you take your headphones off and put them on the desk. This was the first time the project has been shown to the public; Kane will be presenting it at a research conference next week (UIST 2009 in Victoria, BC). The big-picture goal, he said, is to “make interacting with laptops richer, more involved, and smarter.”

—One of the big crowd pleasers was a mobile robot that could plug itself into a wall socket to charge up (see photo below). Software engineer Louis LeGrand, a UW alum, showed me how it works. The robot starts with an internal map of the lab space, so it knows where the electrical outlets are. It uses a range finder to get close to the wall, in the vicinity of the outlet. Then it uses an electric field sensor (not vision) to find the right electrical signature for the outlet—so essentially it senses the electricity in the wall. After about a minute of slow-moving adjustments, it plugs itself in. “We expect in the not-too-distant future, there will be a huge new market for robots—and Intel processors,” LeGrand says.

Next door, Dieter Fox showed me some interesting work on robotic manipulation of an object (like an apple or a bottle of water) using a robot hand and computer vision. Using a camera system, the computer figures out a physical model of what the robot is picking up. This way, Fox says, a robot can learn about the world around it the way a person would, by handling objects and looking at them. It’s a longstanding challenge in robotics, and quite a burgeoning area of research.

—Another theme of the lab is wireless power—everything from being able to charge your mobile device without plugging it in, to antennas and radio frequency identification (RFID) chips powered by the sun. Researcher Emily Cooper, who did her Ph.D. at MIT, gave me an update on the magnetic resonance project for charging devices like a laptop or a phone through the air (we saw it last year). The device now sends both radio signals and power in the same transmission, which could help you find power for your particular mobile device over a range of about one meter.

Lastly, outgoing lab director David Wetherall showed me “WISP” (Wireless Identification and Sensing Platform, see photo left), a type of enhanced RFID tag that contains sensors and a microcontroller and gets its power from an ultrahigh-frequency RFID reader. The device can also use solar cells to harvest more power. The lab is working with academic collaborators who use the WISP for everything from gaming applications to undersea neutrino detection.

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Microsoft announced today the beta release of a new image-based interface for its Bing search engine. Called “visual search,” the feature lets you browse pictures of search results—like celebrities, cars, and other products—instead of text links. It requires Microsoft’s Silverlight Web software, and so far works only for predetermined categories, but will be in full release by the end of September. Microsoft senior vice president Yusuf Mehdi unveiled the interface at TechCrunch 50 in San Francisco.

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[Updated 9/3/09, 3:00 pm. See below.] Bellevue, WA-based VoiceBox Technologies, a developer of speech recognition systems for use in cars and mobile applications, has raised about $13 million from corporate investors in Asia over the past year. The investors include AutoNavi, Inventec, MiTAC, and the Morningside investment fund.

[An earlier version of this story cited a regulatory filing stating that VoiceBox had raised $7.4 million in equity and options out of an $18.6 million offering, and said the investors were not disclosed---Eds.]

Chief strategy officer Victor Melfi of VoiceBox says the company has raised a total of about $21 million to date, including investments from friends and family, and InfoSpace. He adds that VoiceBox is now looking to raise an additional $15 million from institutional investors, for which it has signed on Seattle investment bank Cascadia Capital. Melfi says VoiceBox is sensitive to customers in Europe and Asia—particularly China—and that it is developing technology for nine different languages. [This paragraph was added at 3:00 pm after speaking with Melfi---Eds.]

VoiceBox is developing what it calls “conversational voice search” software that lets you search, navigate, and discover content and services using natural spoken language. An example would be telling your car to give you directions to a particular location, pick a song to play, and adjust the temperature—all while you’re driving. Or telling your smartphone to search for a stock quote or other information online while you’re on the go.

Technologically, it’s a very hard problem. That’s because of ambient noise, differences between people’s accents and the way they make requests, and, fundamentally, the challenge of correctly understanding the meaning of what they’re asking for. Voicebox has partnerships with a number of companies including IBM, Toyota, and XM Satellite Radio to refine its software. The company also has an iPhone app for voice dialing.

VoiceBox was incorporated in 2001, and is led by its co-founder, chairman, and CEO Mike Kennewick, a former manager at Digital Equipment Corporation and then Microsoft. Kennewick previously founded Saros, a document management software company that was bought by FileNet in 1996. As of January 2008, VoiceBox had not taken any venture funding, but was considering taking a round, according to VentureBeat.

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Think about the technological tools you use most often. For many of us, cell phones and computers rank high up on that list. But these devices are designed with the hearing and sighted in mind, and are constantly evolving, so there are numerous hurdles to clear to make a phone or a computer usable to the blind or deaf.

The University of Washington’s Richard Ladner, along with students in the electrical engineering and computer science departments, is using engineering and computational tools to work on several of these hurdles—and the commercial applications could have far-ranging impact.

“When you think about a person with a disability, such as a blind person, most people think that’s a medical problem,” he said in a recent interview. “Just restoring the human function may be a solvable problem, but probably not for a long time. But maybe there’s another way to get the same thing done, to allow a person to read a book or talk to their family. So thinking non-medically, as an engineer, there are other ways to solve these problems.”

Ladner, who was born to two deaf parents, also believes that technologies developed for the blind and deaf may eventually lead to broader technological advancements—not such a far-fetched idea, as it’s happened before. Mobile GPS was originally developed as an aid for the blind, Ladner said, as was optical character recognition, a technology developed in the 1960s to turn an image of text (such as a photo of a book page) into digital text, which would then be read out loud using speech synthesizers. Now, the same technology is ubiquitous in turning pictures of text into digital text;Google uses it to digitize books.

Ladner used to work on computational theory before shifting to accessible technology in 2002. He and colleague Eve Riskin, professor of electrical engineering, are now trying to take their long-running project on accessibility for the deaf, MobileASL, to the market. This project uses video compression technology to enable signing over video cell phones on low-bandwidth wireless networks (such as those in the U.S.). Currently, deaf people can’t reliably use video cell phones to communicate using sign language, because the videos are too choppy to be intelligible. Ladner and his colleagues are working with UW TechTransfer on commercializing MobileASL.

“We’re trying to get it out and get it in actual use,” he said. “It’s in high demand. I get hundreds of e-mails about it.”

Although designed with the deaf in mind, MobileASL could be used by anyone who wants better quality video phone calls, Ladner said. Bringing it to market is slightly complicated by the fact that … Next Page »

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Four professors from the University of Washington’s department of computer science and engineering recently presented their cutting-edge research to a private audience of tech executives and investors active in the game industry in downtown Seattle. The Interactive Media Technology Showcase was hosted on Wednesday by UW TechTransfer and enterpriseSeattle, and coincided with the Casual Connect gaming conference nearby. The moderator was gaming veteran Alex St. John, the founder of WildTangent and now entrepreneur-in-residence at UW TechTransfer.

As I understand it, the goal was to forge deeper ties between researchers and the gaming industry—presumably to explore the commercial applications of the professors’ work in areas like 3-D graphics, video processing, scene and motion generation, and human-computer interfaces. According to UW TechTransfer, the discussions led to at least one take-home message: that “control, simulation, and image manipulation technologies are at the point of radically changing the game development model.” Specifically, computers can now generate realistic-looking scenes, characters, and movements—potentially making it cheaper, faster, and easier to produce game-quality action and visuals, and “creating new possibilities for human control of game play.”

Just a brief recap of the talks here (you can also see videos here):

—Yoky Matsuoka, a neuro-robotics expert, gave an overview of her work on robotic hands and limbs, and control of virtual environments. She talked about how “neurobotic input devices” could let you grasp and manipulate virtual 3-D objects. Matsuoka’s work on measuring how challenging or stimulating it is to learn a repetitive action (like a hand motion) could potentially have impact on game design, in terms of being able to measure people’s enjoyment of a particular game or their ability to adopt new devices like the Nintendo Wii.

—Zoran Popovic, a specialist in computer simulations and animation, talked about artificial intelligence techniques for making next-gen Massively Multiplayer Online … Next Page »

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Much has been made of the fact that Microsoft is moving about half of its Live Labs applied research staff to other divisions, such as product groups and Microsoft Research. The news, announced within Microsoft a week ago, has been met with criticism from outside observers, who lament the reduction of one of the company’s most innovative groups (some would say its most innovative group). But there is another side to this story.

Live Labs was founded in January 2006 by Microsoft technical fellow Gary Flake, in a partnership between MSN and Microsoft Research. Its main goal was to accelerate innovation in Internet technologies like search, data mining, and distributed computing. Live Labs has been best known for developing visual interface technologies like Seadragon, a zooming application for all sorts of visual information, and Photosynth, which lets you create striking 3-D virtual environments from a series of photos.

According to the Live Labs blog, the current restructuring sends various team members to MSN, Windows Mobile, Microsoft Advertising, and Live Search. “Contrary to recent whispers and tweets, we are not shutting down, disbanding, dismantling, or anything of the sort,” the blog said. “In the coming weeks and months we’ll bring you updated developer tools, new ways to use Seadragon, and much more.”

Microsoft hasn’t said specifically what will happen to Photosynth and other favorite technologies from Live Labs. But the broader question on many people’s minds is whether the innovativeness of Live Labs will be crushed by plugging staff members into shorter-term product development instead of applied research.

Ed Lazowska, a University of Washington computer science professor and Microsoft watcher, has a very different take. “I think this re-org is great in terms of the company’s competitiveness and innovation potential,” he says in an e-mail. “The people from Live Labs who were doing research are now … Next Page »

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I spent a couple of days this week at CHI, the big annual meeting of the Association for Computing Machinery’s Special Interest Group on Computer-Human Interaction (ACM SIGCHI). It was the first time since 1994 that the conference—the main international gathering for scholars and practitioners in user interface design—has come to Boston. But it wasn’t the first time that a single company, namely Microsoft, has dominated the proceedings. Matching statistics from other recent CHI meetings, authors from Microsoft Research supplied nearly one out of eight papers presented at the conference, and researchers Ken Hinckley and Meredith Ringel Morris from MSR’s Adaptive Systems and Interaction Group in Redmond were co-chairs of the technical program.

I’m a sucker for this stuff, so I thought almost all of Microsoft’s 25 CHI papers were interesting. But two of the talks in particular, presented back-to-back on the closing day of the conference, contained enticing new ideas about how we might use computing devices in the future. One of them was Hinckley’s own paper on Codex, a prototype dual-screen computer system. The other was a paper by Patrick Baudisch on “back-of-device” interfaces, an intriguing alternative to today’s touch-screen-based devices.

Baudisch, a German native, is a former Xerox PARC researcher who joined Microsoft in 2002 and recently accepted a joint position at the Hasso Plattner Institute at the University of Potsdam in Germany. One of the questions he’s been studying over the past few years is whether it’s feasible to move the main touch interface for small mobile devices (think phones, mini-tablet computers, iPods, Zunes, and the like) from the front—where your fingers occlude your view of the screen—to the back.

After all, the smaller devices get, the less screen real estate they’ll offer, and the larger the fraction of the screen that’s covered up by your finger when you try to manipulate it. “The scientific term for this is the fat finger problem,” Baudisch deadpanned during his talk.

If the touch-sensitive surface on a mobile device were on the back instead, gestures like pointing, tapping, and selecting wouldn’t get in the way of the screen. At least, that’s the idea. But that creates a new challenge—seeing where your finger is going. So Baudisch’s team has been experimenting with a variety of approaches, including using transparent screens (which, unfortunately, don’t leave room for the electronic guts of most devices) and attaching a boom with a camera to a device’s backside (which is predictably clunky).

Baudisch’s newest prototype, and the one he described yesterday, is called nanoTouch. It’s a squarish little gadget resembling an iPod nano, with a 2.4-inch screen that dominates the front and a capacative trackpad similar to the mousepad on a laptop computer attached to the back.

The nanoTouch is designed to be held by the edges in one hand while you operate the trackpad with the index finger of your other hand. The cleverest touch, so to speak, is that the device uses “pseudotransparency” to provide visual feedback—basically, the “cursor” is a life-size picture of a finger that tracks with the position of your actual finger, as if you were looking through the device with X-ray glasses.

It’s a nifty effect that neatly captures the concept of back-of-device interaction; the tip of the simulated finger even turns white when you press harder against the screen, as if the blood were rushing away from that spot. Baudisch’s nanoTouch demo provoked a little flurry of publicity back in December, with coverage by Engadget and New Scientist, among others (I’ve embedded a nanoTouch video from New Scientist below). But as Baudisch explained yesterday, the finger is just for show—it’s there to quickly train the user on what’s happening. “You never see the finger in an application,” he said. “For any real application, we reduce the touch to a single point—which is how we get the finger out of the equation and enable high precision.”

By masking the screen of the nanoTouch prototype and leaving less and less of the trackpad active, Baudisch’s group has been studying just how tiny manufacturers might be able to make future devices without sacrificing usability. They’ve found that as long as a target (meaning, say, an onscreen button) is more than about 3 millimeters across, it’s possible to accurately manipulate a device with a screen measuring as little as 8 millimeters diagonally—less than the size of the fingernail on your pinky.

Baudisch suggests that such devices might be made into pendants, wristbands, or belt buckles—all of which would surely be more fashionable than wearing your smartphone on a geeky belt holster. “Back-of-device interaction is the key to making extremely small pointing devices,” Baudisch concluded.

But while certain types of devices such as music players may keep shrinking (as this classic Saturday Night Live skit about the “iPod Invisa” predicted), we’ll probably still want to … Next Page »

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