Our partnership with the folks at WGBH continues as we join forces again this week to bring you the Xconomy Report. In this week’s innovation news, TripAdvisor goes public and independent, breaking ties with Expedia. Seattle-based Amazon.com makes plans for a Boston-area office, which will open in Cambridge early next year. And much more, including news from Akamai, Nuance, and Metamark Genetics.

In case you missed it this morning, have a listen below. The Xconomy Report airs every Friday at 7:49am on 89.7FM.

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Acquisitions and IPO announcements dominated the deals news in New England this week.

—Boston-based Third Rock Ventures put $34 million in Series A funding into Ember Therapeutics, a startup that’s developing drugs to fight obesity in a new way. Ember, also of Boston, is harnessing new understanding of the bodily tissue known as brown fat, which can help mammals burn off the more commonly known white fat tissue.

—Cerulean Pharma inked a $15 million Series D investment from new investor CVF, an affiliate of Henry Crown and Company, as well as existing backers Polaris Venture Partners, Venrock, Lilly Ventures, Lux Capital, and Bessemer Venture Partners. Cambridge, MA-based Cerulean’s lead drug is a so-called nanoparticle, a tiny chemical package designed to work its way into cancer cells and kill them.

—IBM made its 20th acquisition in the Bay State since 2003, with the purchase of Burlington, MA-based Emptoris, a maker of supply and contract management software. Emptoris has 725 employees across the globe and will become part of IBM’s software group. The financial terms of the acquisition were not disclosed.

—Coronado Biosciences  (NASDAQ: CNDO) started trading on the Nasdaq on Monday at an opening price of $6.50 per share. The formerly New York-based biotech, which moved to Burlington, MA in August, took an unconventional path to going public, by registering its private shares as common stock, rather than undergoing an IPO.

—Coskata, a cellulosic ethanol developer backed by Boston-area venture firms Advanced Technology Ventures and Greatpoint Ventures, filed documents with the SEC indicating its intent to raise $100 million in an initial public offering. The Warrenville, IL-based startup has raised $80 million in venture funding since founding in 2008, and is also backed by GE, Khosla Ventures, and Blackstone Group.

—Woburn, MA-based Excelimmune took in $12 million in financing from an undisclosed private investor to help fund the development of its molecules focused on fighting infectious diseases, like methicillin-resistant Staphylococcus aureus (MRSA).

—And in the week’s more shocking news, two speech software makers that had been battling in court over allegations like patent infringement and commercial bribery announced they would become one force. Burlington, MA-based Nuance Communications (NASDAQ: NUAN) is acquiring Cambridge-based startup Vlingo for an undisclosed sum. The deal enables the two to team up as players like Apple and Google and are focusing more on voice-enabled applications for mobile phones.

—A deal that had been talked about for more than half of this year finally went live. Newton, MA-based online travel company TripAdvisor officially began trading on the Nasdaq on its own (NASDAQ: TRIP), after being spun out by Bellevue, WA-based Expedia (NASDAQ: EXPE).

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It’s hard to believe that two companies that have spent the last three years suing each other really mean it when they say that together they will be stronger. I’m talking about speech recognition competitors Cambridge, MA-based Vlingo and Burlington, MA-based Nuance Communications.

The two software makers announced Tuesday that Nuance would acquire the younger, smaller Vlingo. It came as a shock, just months after Cambridge, MA-based Vlingo hit Nuance (NASDAQ: NUAN) with a lawsuit that included allegations like commercial bribery and unfair competition.

On the surface it looks like a potential last resort option for the smaller startup after years of costly legal battles (covering patent infringement, false advertising, and more). But the marketing machines of Apple and Google and their newest voice-controlled smartphones, such as the iPhone 4S, could mean a host of new threats in the speech software space, causing the formerly embattled companies to join forces to survive, a number of Boston mobile experts have said.

All pending lawsuits between the companies are now “stayed,” Vlingo CEO Dave Grannan told me, meaning that they’ll be put in limbo until the acquisition closes, at which point they’ll be officially dismissed. Grannan has previously said he’d be open to an acquisition by Nuance if the terms were favorable. In a phone interview Tuesday afternoon, Grannan declined to discuss how much Nuance paid for Vlingo, but did want to talk “the timing of the transaction.”

The shotgun marriage of Nuance and Vlingo comes two months after Apple introduced its iPhone 4S with the built-in voice-controlled virtual assistant Siri, which can handle everything from searching for weather information to calling a cab.

“That has caused just a legion of new competitors to enter the space,” Grannan said. His company makes voice-recognition software that exists as a standalone application sold in the Google Android, Blackberry, and Apple iTunes app stores, and built into devices like Samsung mobile phones.

Facing other voice recognition startups doesn’t seem as menacing, but confronting one major Internet giant does. “It’s more scary for us that Google is going to double down its investment to try to catch Apple’s Siri,” Grannan said. “Both sides realized that we’ve long since passed the value of competing. If we’re going to survive in this marketplace we need to cooperate.”

Mountain View, CA-based Google (NASDAQ: GOOG) recently acquired Clever Sense, the maker of a mobile assistant app called Alfred that makes recommendations on nearby bars and restaurants. The purchase has been pegged as part of Google’s strategy to take its share of the voice-enabled virtual assistant space.

“Rather than spend the next year in legal battles, [Nuance and Vlingo] decided to join forces on this,” said Mark Lowenstein, managing director for the consulting firm Mobile Ecosystem. The acquisition … Next Page »

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Cambridge, MA-based voice-to-text tech startup Vlingo, which just three months ago charged Nuance Communications with unfair competition, commercial bribery, breach of contract, and intentional interference with prospective business relationships, is being acquired by the Burlington, MA-based speech software giant, according to an announcement today.

Nuance (NASDAQ: NUAN) and Vlingo, which develops speech-recognition technology for cell phones that has been likened to Apple’s Siri, have spent years wrangling in court, starting with a 2008 patent infringement lawsuit filed by Nuance, covering its patent known as ’295. As of this September, the two companies were involved in seven open lawsuits with each other, five of which were filed by Nuance and two of which came from Vlingo.

[Disclosure: the brother-in-law of Xconomy Boston editor Greg Huang is a co-founder of Vlingo. Mr. Huang was not involved in the planning, directing, reporting, or editing of this story.]

Today’s announcements make no mention of the lawsuits. Nuance said in its statement that consumer demand for voice-enabled controls on devices like phones, tablets, televisions, and navigation devices prompted the deal, and that “Nuance and Vlingo will combine their deep innovation and R&D expertise to deliver next-generation natural language interfaces across numerous markets and industries.”

Vlingo’s statement was much less detailed, noting that the transaction was subject to customary closing conditions, that it is expected to close in 2012, and that its purchase price is not being revealed. The startup also noted that it will operate as an independent company until the closing is complete. The Nuance press release quotes Vlingo CEO Dave Grannan as saying: “Vlingo and Nuance have long shared a similar vision for the power and global proliferation of mobile voice and language understanding. As a result of our complementary research and development efforts, our companies are stronger together than alone.”

In its September lawsuit against Nuance, Vlingo revealed the complicated relationship it shared with Nuance. The lawsuit alleged that at one point Nuance CEO Paul Ricci attempted to bribe three Vlingo executives by offering them $5 million each if they could convince their board of directors to sell to Nuance (which was already an investor in Vlingo). Despite all of it, Grannan mentioned that he wasn’t opposed to selling his startup to Nuance, but that they “don’t want to be forced into doing it at a low price based on these tactics that they use.”

When I spoke with Grannan back in the summer, right after Nuance accused Vlingo of false advertising based on statements Vlingo made on its website about its technology, he noted that the bigger company was using litigation as a business strategy. “They just want to get us into court to cost our startup time and money,” Grannan said.

Vlingo appeared to have gained some ground in August, though, when a federal jury in Boston found that Vlingo did not infringe on the Nuance ’295 patent, which covers the technique for making computerized transcriptions of a users’ speech more accurate over time using audio samples from multiple sessions. But it’s presumably been a costly road for Vlingo. Grannan hasn’t disclosed the startup’s exact legal expenses, but noted that each patent trial can run a company between $2 million and $3 million. And in 2010 Vlingo bought a crop of patents from Bellevue, WA-based Intellectual Ventures as aid in the patent litigation.

Both companies say that they are committing to innovating and taking a bigger share of the voice-driven virtual assistance space. It will be interesting to see whether the two companies are truly “stronger together,” given their bitter and embattled history.

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When New York-based website Calorie Count wanted a way to set its app apart from the competition, co-founder and vice president Igor Lebovic literally talked up its latest feature. Calorie Count’s iPhone app uses speech-recognition technology supplied by iSpeech, a startup in Newark, NJ, to help dieters keep track of what they eat.

While demonstrating Calorie Count’s new feature at the NY Tech Meetup on Sept. 6, Lebovic described a meal aloud, and the app counted the calories. He says Calorie Count leveraged iSpeech’s technology to distinguish itself from rivals, who also provide calorie tracking apps and websites. “We believe that voice is a vastly underrated way of interacting with the Internet,” Lebovic says. He believes voice technology will find its way into more Web-based activities such as posting comments or drafting blog entries.

Heath Ahrens, CEO of four-year-old iSpeech, says his company is one of the few independents left in the speech-technology market, and he’s always looking for innovative ways to collaborate with others. Ahrens is out to make his mark in an industry dominated by the likes of giant Nuance Communications in Burlington, MA, which acquired smaller rivals Loquendo in Italy in August and Switzerland’s SVOX in June.

Lebovic says tapping iSpeech’s technology was part of an overall effort to shorten the steps necessary to use the Calorie Count app. Lebovic says counting calories can be work-intensive and finding ways to speed up the process may keep dieters committed to his service. “Whenever we made a feature that … Next Page »

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A federal jury in Boston found Cambridge, MA-based Vlingo’s speech recognition software did not infringe on a patent owned by Nuance Communications (NASDAQ: NUAN), the companies said in two separate announcements (here and here). Burlington, MA-based Nuance has alleged that Vlingo has infringed on a number of its patents, but this particular patent, 6,766,295, covers the technique for making computerized transcription of a users’ speech more accurate over time using audio samples from multiple sessions. The jury of the Federal District Court in Boston found that Vlingo did not infringe on any of the 30 claims Nuance had alleged in this particular patent case, but it did find that the Nuance patent was valid—Vlingo had claimed it was not.

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A local tech startup that has been toiling away for four years saw its first partnership with a big company come to fruition last week—and it could be a sign of bigger things to come.

Back in February, Cambridge, MA-based OfficeDrop, a digital filing software company, inked a deal with Nuance Communications (NASDAQ: NUAN), the speech and imaging tech firm in Burlington, MA. OfficeDrop provided the software and expertise for Nuance’s new cloud-based scanning and document-managing service, called PaperPort Anywhere, which rolled out last week.

It’s a big deal for OfficeDrop, which stands to get about $1 million in revenue from Nuance in the first year of the partnership, says Prasad Thammineni, the co-founder and CEO of OfficeDrop. Nuance’s scale could help the startup reach millions of new users—so it’s a distribution model that Thammineni is looking to replicate with other big companies in the next year or so.

OfficeDrop lets people (primarily in small businesses) organize, index, and share their digital data, and look at their documents instead of a list of files, for example. “We take visual elements of paper and replicate it,” Thammineni says. “And we bring search to the table.”

The startup sits somewhere in the middle of a swirling ecosystem of companies, many with Boston roots, offering cloud-based services like data storage (EMC), online backup (Carbonite, Backupify), paper digitizing and document management (Iron Mountain), personal file management and search (Evernote), and file hosting and sharing (Microsoft SharePoint, Box.net, and Dropbox, the astronomically-valued startup du jour).

OfficeDrop (formerly called Pixily) started in 2007 as a service to help people scan in and digitally organize their paper documents. It has evolved to include collaborative features and mobile apps, so people can scan documents and access their files from their iPhone, iPad, or Android device. The company has 20 employees, split about equally between the Boston area and Brazil, where most of its software developers are.

Interestingly, although the three founders are Indian, OfficeDrop has no employees in India. Thammineni says that’s because most software developers in India have a big-company mentality that doesn’t mesh well with a startup. Brazil, on the other hand, has a lot of “out of the box” talent that fits with the OfficeDrop culture. “They challenge you at every turn,” he says.

Thammineni’s company, his fifth so far, was self-funded in its early days. It raised a small financing round in 2009, followed by a $1 million angel round this spring—and it will be looking to raise more money this fall, he says. But for now, OfficeDrop’s main focus is on “making the product better and better,” Thammineni says. And on squaring away its next big-company deal.

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Blade Kotelly thinks that any Radio Shack salesman and Steve Jobs are telling the same exact story. Jobs is just better it at. That would be: “Here’s the problem, here’s the product, here’s the call to action,” he says.

It all plays into Kotelly’s theory that there are the same few story lines recycled throughout the world, and that some people just convey them more successfully than others.

The idea is the driving force behind his startup, 1Minute40Seconds, which is developing story templates for businesses and marketers to plug images and words into. It then pops out quick, compelling videos that it hopes will engage viewers better than existing ads or text. “If we can codify those stories in a way that allows you to tell it better, you can capture [your audience] emotionally and intellectually,” he says

Kotelly, who teaches engineering innovation and design at MIT and has previously taught design at Tufts University, said the idea for the company came to him late last year. His company formed this spring and has been developing its Web-based software technology throughout the summer, with the help of three current Tufts students and a couple of recent graduates working part-time. Kotelly has staffed the startup with a 2:1 ratio of designers to coders.

“It’s a platform that very flexibly allows you to integrate your words, your pictures, your video, your sound, in a template,” Kotelly says of his technology. “You drop it in and it assembles it for you.”

The platform also allows users to pull existing content from the Web, like YouTube videos, and uses third-party technology to translate written words to voice recordings throughout the video. That’s a field Kotelly is familiar with—he spent much of his career in design and marketing at SpeechWorks, which was eventually acquired by Burlington, MA-based speech software developer Nuance Communications (NASDAQ: NUAN) (called Scansoft at the time).

1Minute40Seconds isn’t the first startup to recognize that plenty of businesses don’t have the budget to hire professional video production teams for marketing content and the like. Cambridge, MA-based Pixability provides customers with Flip video cameras to take their own footage, and hires video editors to produce marketing videos from that content.

But Kotelly says his is the first company to center that process entirely on technology and turn out a finished product in minutes. “This is at the core of what makes this technology different—we can do it very, very, very fast,” he says.

The speed of the process extends 1Minute40Seconds’ reach to beyond … Next Page »

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“Call John Smith.”

“I wanna call John Smith.”

At first glance, these sentences look pretty similar. But try telling that to the voice recognition technology behind Ford Motor’s SYNC system. You might as well be speaking Greek.

Voices recognition software has come a long way in recent years. Google’s Android platform, for example, allows users to search for information by speaking into their smart phones. But mastering the subtleties of human language remains beyond the reach of even our most sophisticated technology. (Remember how the IBM supercomputer Watson was kicking some serious butt on Jeopardy! until the final round when it answered “Toronto” to a question about U.S. cities?)

Voice commands are a key component to Ford’s SYNC system; the company, based in Dearborn, MI, promotes SYNC as a safety feature because it allows drivers to do stuff without taking their hands off the wheel.

With that in mind, Ford recently said it will partner with the appropriately named Nuance Communications, based in Burlington, MA, to develop software that can not only recognize specific words/phrases but the intent of the person speaking them.

Normally, SYNC relies on what’s called “structured commands.” The company basically records phrases that drivers must speak in order for the car to execute their wishes.

There are two problems with technique. First, there are an awful lot of commands. Drivers today can order their cars to do everything from make phone calls and find directions to play music and adjust the cabin temperature.

Secondly, Ford is only really guessing what people will say, which, more often than not, is not what they will actually say. For instance, Ford initially programmed SYNC to recognize the command “Play Tracks.” Unless you work in the music business, you probably don’t even know what a track is. A better command would be “Play Songs.”

“You can’t stop someone from saying something,” says Brigitte Richardson, Ford’s lead engineer on its global voice control technology/speech systems.

In other words, Ford can’t force people to adjust their speech to use its commands. People are going to speak how they are going to speak.

Working with Nuance, Ford wants to develop software based on more advanced algorithms called “statistical … Next Page »

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The patent litigation between Burlington, MA-based Nuance Communications (NASDAQ: NUAN) and Cambridge, MA-based Vlingo is nothing new.

A false advertising lawsuit is, though. Earlier this week, Nuance filed such a lawsuit against Vlingo in Suffolk County Superior Court. The suit asserts that Vlingo, on its website and elsewhere, “makes numerous false and misleading representations of fact to induce consumers to purchase or use Vlingo products and services,” according to court documents provided to Xconomy by Vlingo.

[Disclosure: the brother-in-law of Xconomy Boston editor Greg Huang is a co-founder of Vlingo. Mr. Huang was not involved in the planning, directing, reporting, or editing of this story.]

These allegedly false and misleading claims include the statement that Vlingo’s technology achieves unprecedented accuracy, that it applies “automatic adaptation” to pronunciation and vocabulary, that it learns for example, “over time that a particular user tends to ask for Mexican food,” and that the adaptation process is “new technology.” Nuance calls these claims unfair and deceptive—for instance, at one point the suit says “Vlingo claims that certain technology is ‘new’ when in fact it is not”—and has sought unspecified monetary damages for the harm Vlingo has caused it as a result. Nuance also states that the claims “harm the consuming public and are contrary to the public interest.”

A representative from Nuance said that the company does not comment on matters of litigation.

Here is the PDF of Nuance’s false advertising complaint against Vlingo and supporting documents.

Nuance says in its suit that it became aware of the false advertising as part of the discovery process—specifically when it deposed key Vlingo employees—in one of the pending patent infringement cases. Nuance says a protective order issued in that case prevents it from using at least some of the information in the new false advertising suit at this time, but that it is seeking ways to do so.

“To me it looks like a real sign of desperation,” Vlingo CEO Dave Grannan told me on a call Thursday. “It’s just a measure of the fact that they’re trying to increase our legal expenses and create some sense of uncertainty and doubt against our customer base.

“It’s continued to be part of the Nuance strategy to compete in the courtroom rather than in the market,” he says.

Vlingo offers a mobile app that consumers can buy themselves and also powers voice recognition features for device makers like Samsung. Grannan says his company has recently inked some big customer deals —which he didn’t name—in which it went head to head with Nuance. “Every time we have a market victory, they sue us again,” he says.

The false advertising lawsuit is the latest step in the three-year legal wranglings between the two software companies. Earlier this month, Nuance hit Vlingo with … Next Page »

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New England biotechs and IT startups don’t seem to indicate a summer slowdown. They’ve been inking some pretty massive financing deals this week, as well as an acquisition or two.

—Cambridge, MA-based drug developer Aveo Pharmaceuticals (NASDAQ: AVEO) raised $100 million, selling 5.75 million shares of stock at $17.50 apiece in an underwritten public offering. Aveo had $233 million in cash and investments as of March 31 and enough cash to operate through 2012, according to federal documents.

—Burlington, MA-based Nuance Communications (NASDAQ: NUAN) acquired Zurich-based embedded speech software firm SVOX, for 87 million Euros (about U.S. $125 million), in a mix of upfront cash and cash and stock over the next two years.

—Westford, MA-based Aylus Networks raised $16 million to put toward its software for improving video communications on mobile phones. The deal was led by London-based m8 Capital, with participation from previous Aylus investors Matrix Partners and North Bridge Venture Partners.

—Performable, a Cambridge-based marketing automation startup, was acquired by Cambridge-based HubSpot for an undisclosed sum. Performable’s 18 staffers will join HubSpot, a marketing tech company with more than 260 employees now, at its Kendall Square digs, with Performable founder David Cancel becoming HubSpot’s chief product officer.

–1366 Technologies, a Lexington, MA-based developer of silicon wafer technology for solar cells, said that it received a conditional commitment from the U.S. Department of Energy for a $150 million loan guarantee.

—Boston-based ad tech startup OwnerIQ nabbed a $7 million investment from its existing backers, Atlas Venture, CommonAngels, Kepha Partners, and … Next Page »

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[Updated 6/17/11 with terms. See below] Some big news in the world of speech software today. Burlington, MA-based Nuance Communications (NASDAQ: NUAN) is acquiring Zurich-based embedded speech software firm SVOX, Xconomy has learned from a source with knowledge of the deal. The acquisition price wasn’t disclosed, but is said to be in the triple-digit millions of dollars.

[Update] Nuance filed a Form 8-K with the SEC on Friday, which reveals the aggregate price was 87 million Euros (about U.S. $125 million)—57 million Euros in cash upfront, 8.3 million in cash or stock after one year, and 21.7 million in cash or stock by the end of 2012.

The deal seems to make sense for Nuance, which is trying to dominate the fields of speech, imaging, and communications technologies—especially speech.

SVOX, a profitable private company founded in 2000, develops speech interfaces for the automotive, mobile, and consumer electronics industries.

Nuance has an aggressive (and controversial) reputation when it comes to acquisitions of speech technology companies, as this recent Bloomberg BusinessWeek article details. The company has made a number of acquisitions in the Seattle area and has a sizable presence there—which is the subject of a separate story.

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Acquisitions headlines were big this week in New England, and spanned the semiconductor, life sciences, mobile, and software spaces.

—PlumChoice, a Billierica, MA-based provider of remote IT services to businesses, nabbed $25.6 million from new backers M/C Venture Partners, Gold Hill Capital, and Eastward Capital, as well as its previous investors.

—Gloucester, MA-based Varian Semiconductor Equipment Associates (NASDAQ: VSEA), a provider of ion implantation products for semiconductor chips, was bought by Applied Materials of Santa Clara, CA for $4.9 billion, or $63 per share in cash. The deal reflected a 38 percent premium on Varian’s 30-day average closing stock price, and a 55 percent premium on its closing stock price the day before it was bought.

—Jumptap, a Cambridge, MA-based mobile advertising network provider, confirmed that it had raised $25 million from new and existing backers. The month before, an SEC filing showed the company had brought in $20 million in funding.

—Sensobi, a mobile startup the was in TechStars Boston’s inaugural class in 2009, was bought by New York-based mobile group messaging firm GroupMe for an undisclosed sum. GroupMe has raised about $11.5 million in funding.

—Waltham, MA-based Alkermes (NASDAQ: ALKS) said it paid $960 million for the chemical formulation and manufacturing unit of Ireland-based Elan Drug Technologies (NASDAQ: ELN). The new company, to be called Alkermes plc, will be incorporated in Dublin, and Alkermes CEO Richard Pops will stay on to lead the new firm. The acquisition adds 450 Ireland-based employees to Alkermes.

—Cambridge-based drug developer Merrimack Pharmaceuticals could pay up to $220 million to Taiwan-based PharmaEngine for the rights to develop and commercialize one of its drugs Europe and Asia. Merrimack paid $10 million upfront, with up to $210 million to come in milestones and royalties tied to MM-398, a potential treatment for gastric, colorectal, and pancreatic cancer originally developed by Hermes BioSciences, bought by Merrimack in 2009. (PharmaEngine previously held the rights to market MM-398 in these regions.)

—APriori Technologies, a Concord, MA-based maker of software for cost management in manufacturing, raised $4.9 million in an equity offering from four investors, an SEC filing showed.

—Burlington, MA-based speech software maker Nuance Communications (NASDAQ: NUAN) announced it had agreed to acquire Equitrac, a maker of print management software, for $157 million in cash.

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Nuance Communications (NASDAQ: NUAN),a Burlington, MA-based maker of speech software, announced today it has agreed to acquire Equitrac for $157 million in a cash transaction expected to close in Nuance’s fourth quarter of fiscal year 2011. Equitrac is a maker of print management software and will be rolled into Nuance’s document management units.

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[Update: 3:45 pm] Turn on a TV, and you’ll see Microsoft running commercials touting something few men on the street know much about—cloud computing. So if the concept is starting to go mainstream, it shouldn’t come as a surprise that one of Seattle’s early movers in the space, Skytap, has already made some serious headway with its cloud computing offering in the past year.

Skytap made news yesterday when it said it pulled in a $10 million Series C venture round, led by Boston-based OpenView Venture Partners, and which included a trio of the company’s Seattle-based backers—Madrona Venture Group, Ignition Partners, and the Washington Research Foundation. I chatted with CEO Scott Roza yesterday to find out more about what the company is really doing to collect that kind of cash.

[Updated: 3:45 pm, to include Gribble and Richardson as co-founders.] The company was founded in 2006 by University of Washington computer science professors Brian Bershad, Hank Levy, and Steve Gribble, as well as grad student David Richardson, back when there most certainly weren’t TV commercials on cloud computing. The basic idea with the cloud is that customers rent servers on a pay-as-you-go basis, and get access to their data (and processing power) anytime over the Internet. It’s supposed to allow organizations to save money and headaches by not having to buy and maintain their own in-house servers and other equipment. The big boys of tech—Amazon, Microsoft, Google—are all duking it out for market share in the early days of what some analysts predict will grow into a $60 billion market based on this recent model of computing.

So where does a little company like Skytap, with 30 employees, fit into this equation? While the big players are providing the essential infrastructure, Skytap sees itself as a maker of software that sits on top of the cloud systems offered by the other guys. The software applications are supposed to make sure everything runs automatically and seamlessly, especially when engineers are testing a new product, and teams from multiple geographic locations are trying to collaborate. The software layer of the cloud computing market, where Skytap sees itself playing, is probably worth more like $4 to $8 billion over time, Roza says.

Scott Roza

“The power of Skytap is in the software, not infrastructure,” Roza says.

These are still very early days in the shift toward the cloud, and there’s a lot of curiosity among customers about what they might consider doing there, Roza says. Skytap has certainly had an interesting lens on how this market is evolving. The startup introduced its product about two and a half years ago. So far, early adopters on the IT side of organizations like Ellie Mae, Nuance Communications, Apptio, and Hargis Engineers have bought what Skytap is selling. Skytap also found its way into an important new stream of government agency customers last September when it struck a partnership with CSC (NYSE: CSC) to provide software for that company’s cloud-based development and test service.

Last year was a big one for market adoption, and that caught the eyes of the VCs. Skytap doubled its customer base, and has a goal of doing it again this year. The company doesn’t disclose its finances, but it has 150 customers now, and it’s close enough to profitability that the $10 million financing provides “indefinite runway,” Roza says. It’s possible that Skytap could double … Next Page »

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Editor’s Note: This is Part 1 of a three-part story that we originally published on January 3, 5, and 6, 2011. We’re highlighting it today because the series was just named by Longform.org as one of its top technology stories of 2011.

Already, it’s hard for anyone with a computer to get through a day without encountering Google, whether that means doing a traditional Web search, visiting your Gmail inbox, calling up a Google map, or just noticing an ad served up by Google Adsense. And as time goes on, it’s going to get a lot harder.

That’s in part because the Mountain View, CA-based search and advertising giant has spent years building and acquiring technologies that extend its understanding beyond Web pages to other genres of information. I’m not just talking about the obvious, high-profile Google product areas such as browsers and operating systems (Chrome, Android), video (YouTube and the nascent Google TV), books (Google Book Search, Google eBooks), maps (Google Maps and Google Earth), images (Google Images, Picasa, Picnik), and cloud utilities (Google Docs). One layer below all of that, Google has also been pouring resources into fundamental technologies that make meaning more machine-tractable—including software that recognizes human speech, translates written text from one language to another, and identifies objects in images. Taken together, these new capabilities promise to make all of Google’s other products more powerful.

The other reason Google will become harder to avoid is that many of the company’s newest capabilities are now being introduced and perfected first on mobile devices rather than the desktop Web. Already, our mobile gadgets are usually closest at hand when we need to find something out. And their ubiquity will only increase: it’s believed that 2011 will be the year when sales of smartphones and tablet devices finally surpass sales of PCs, with many of those new devices running Android.

That means you’ll be able to tap Google’s services in many more situations, from the streets of a foreign city, where Google might keep you oriented and feed you a stream of factoids about the surrounding landmarks, to the restaurant you pick for lunch, where your phone might translate your menu (or even your waiter’s remarks) into English.

Google CEO Eric Schmidt says the company has adopted a “mobile first” strategy. And indeed, many Googlers seem to think of mobile devices and the cameras, microphones, touchscreens, and sensors they carry as extensions of our own awareness. “We like to say a phone has eyes, ears, skin, and a sense of location,” says Katie Watson, head of Google’s communications team for mobile technologies. “It’s always with you in your pocket or purse. It’s next to you when you’re sleeping. We really want to leverage that.”

This is no small vision, no tactical marketing ploy—it’s becoming a key part of Google’s picture of the future. In a speech last September at the IFA consumer electronics fair in Berlin, Schmidt talked about “the age of augmented humanity,” a time when computers remember things for us, when they save us from getting lost, lonely, or bored, and when “you really do have all the world’s information at your fingertips in any language”—finally fulfilling Bill Gates’ famous 1990 forecast. This future, Schmidt says, will soon be accessible to everyone who can afford a smartphone—one billion people now, and as many as four billion by 2020, in his view.

It’s not that phones themselves are all that powerful, at least compared to laptop or desktop machines. But more and more of them are backed up by broadband networks that, in turn, connect to massively distributed computing clouds (some of which, of course, are operated by Google). “It’s like having a supercomputer in your pocket,” Schmidt said in Berlin. “When we do … Next Page »

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The long Thanksgiving weekend put an early punctuation mark on last week’s technology and business news in the Bay Area. Here’s a glance back:

—StumbleUpon, the San Francisco “discovery engine” company founded in 2002, now rivals Facebook in the amount of social-media traffic it sends to websites. I profiled the company, which has had a fascinating trajectory as an independent startup, an eBay subsidiary, and now a privately owned eBay spinout.

—Apple co-founder Steve Wozniak briefly drove up the stock price of Burlington, MA-based Nuance Communications (NASDAQ: NUAN) with a remark to the effect that Apple had purchased the $5.3 billion speech technology company. Wozniak later said he’d been mistaken, but not before the story was picked up by numerous news outlets.

—Wireless carriers are searching for ways to lessen the burden on their 3G data networks, and I profiled a Sunnyvale, CA, company, Ruckus Wireless, that has a solution: adaptive, beam-forming Wi-Fi antennas that could help carriers “offload” data streams from 3G to Wi-Fi in dense areas such as public plazas or train stations.

—Here at Xconomy, we helped Boston-based Marginize launch its new Publisher Widget, a tool that shows social media conversations pertaining to each page on our site. You can use the widget (see the brown tab at the far right of your browser screen) to add your own Twitter posts or status updates on Facebook or Google Buzz.

—New York-based location services startup Foursquare announced that it’s staffing up its San Francisco office, which is co-located with Jack Dorsey’s Square in the Mission district.

—SolFocus, a Mountain View, CA, startup that makes photovoltaic panels featuring unique optical concentrators, raised $20 million from unnamed backers.

—YardSellr, founded by former eBay executives to help consumers buy and sell items over social media channels, raised $5 million from Accel Partners and Harrison Metal Capital.

—Menlo Park, CA-based Sequoia Capital led a venture round for New York-based blog platform provider Tumblr amounting to $25 to $30 million, according to reports. Tumblr hasn’t confirmed the details.

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[Updated, see below] Proving that he has the power to move markets with an odd aside, Apple co-founder Steve Wozniak sparked rumors this week that Apple is buying Nuance Communications (NASDAQ: NUAN), the giant Burlington, MA-based maker of speech recognition software.

The source of the speculation is a passing remark in a video interview about the future of the Apple iPhone between Wozniak and TVDeck.com founder Romil Patel (see below, at about the 0:45 mark). “I think voice recognition is going to become more and more a big part of these machines,” Wozniak says in the video. “Apple is probably thinking the same way. They recently bought the company Nuance, that does a lot of really great voice recognition for that program I just described, Siri Assistant.”

That was enough to set off the blog 9to5Mac headline “Whoa! Did Apple buy Voice Recognition company Nuance?,” a meme which quickly spread to mocoNews, MobileBeat, and TechCrunch.

Neither Nuance nor Apple have issued official statements about the rumors, and Nuance makes no mention of acquisition discussions with Apple in its quarterly report, issued yesterday. However, Mass High Tech is reporting today that it received e-mail from Nuance spokesman Richard Mack calling Wozniak’s statement “speculation.”

Several commentators conclude that Wozniak’s remark is a misstatement born of confusion over the Siri iPhone app, a voice-driven personal assistant that can make restaurant reservations, book concert tickets, look up weather forecasts, and the like. Apple did acquire Siri, the maker of app, in April 2010. And the voice recognition software used in the app is licensed from Nuance.

Nuance is valued at about $5.3 billion, so Apple, which has more than $51 billion in the bank, could easily afford to snap up the company if it wanted to. But such an acquisition would be unusual for Apple, particularly given that Nuance’s speech recognition products are in such widespread use within businesses and on Windows computers, markets that Apple has traditionally shunned.

Nuance shares were up as much as 12 percent on the rumors today, the stock’s largest intraday gain since April 2009, according to Bloomberg News. As this article went to press, Nuance was trading at $18.16, up about 6 percent.

Update, 6:25 pm PST 11/23/10: Reuters is reporting that Wozniak has acknowledged that he misspoke. “I thought I’d read about it but obviously got it all wrong,” Wozniak told the news service in an e-mail.

Here’s the video that started the whole hullabaloo:

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Acquisitions were a big theme in the New England-area deal news this past week. We also saw several funding rounds and an intellectual property deal.

—Providence, RI-based Alektrona, a maker of smart-grid software and hardware, grabbed $250,000 in funding from the Slater Technology Fund, also of Providence. The money comes as part of a $510,000 seed funding round, which also included backing from NStar’s former chief information officer, Gene Zimon.

—Cara Therapeutics, a developer of treatments for pain and inflammation, raised $15 million in a Series D funding led by Rho Ventures. Alta Biopharma, Ascent Biomedical Ventures, CT Innovations, Devon Park BioVentures, Healthcare Private Equity, Mitsubishi International, and MVM Life Science Partners also participated in the financing for Shelton, CT-based Cara, which has now raised a total of around $43 million.

—Boston-based Gazelle, a website that facilitates the selling and recycling of used electronics, raised $12 million in a Series C funding round led by Physic Ventures. The financing also included Gazelle’s existing investors, Venrock Associates and RockPort Capital Partners. Gazelle says it will put the money toward scaling its businesses to meet new customer demand.

—Acton, MA-based Mintera, an optical-switch maker, was acquired by Oclaro, a San Jose, CA-based optical communications and laser technology firm, for $12 million in cash upfront. The deal could total $32 million if Mintera brings in revenues of $70 million over the next year and a half. Its revenue for the most recent fiscal year was in the neighborhood of $20 million.

—Euthymics Bioscience, a Cambridge, MA-based startup working on depression treatments that lack the side effects of many existing drugs, said it pulled in the first tranche of its Series A funding round, led by Novartis Venture Funds and Venture Investors. The financing could total … Next Page »

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Once again it has been a pretty slow week for Seattle-area technology companies in terms of deals—word must have gotten out that the weather is nice and warm here in the Pacific Northwest! Nevertheless, of the few deals that have gone on this last week, a few were pretty substantial. A number of startups both originating and operating out of Seattle have had some hefty investment dollars thrown their way, two companies were acquired, and a local venture group found some of its patents to be hot commodities. Take a look at the highlights:

—Portland, OR-born (though Palo Alto, CA-based as of May) social business software company, Jive Software, brought in $30 million in Series C financing led by Kleiner Perkins Caufield & Byers and Sequoia Captial, bringing the developer’s financing total to $57 million over the last three years. This round of funding was the biggest joint investment both Kleiner and Sequoia had done since partnering up to back Google. Jive provides social-networking, communication, collaboration, and social media monitoring tools for businesses.

—SynapticMash, a Seattle-based educational software and management company, was acquired by UK-based Promethean World for $10 million in cash this week. The company, founded in 2007, develops cloud-based formative assessment software that allows educators to cater to and evaluate student performance in a more comprehensive and individual way. Promethean, an interactive learning technology developer, said the acquisition will significantly strengthen its existing learning systems.

—Tukwila, WA-based custom design printer RPI raised $5 million from San Diego private equity firm Huntington Capital, proving that companies that make physical stuff can still be relevant in the digital world. The company, which has been profitable since 1979, was forced to address some economic and technological factors that threatened its stability in the last few years. However they’ve pulled through and adapted, using a new software-integrated manufacturing system, and are now boating 30 percent revenue growth in the most recent fiscal year.

—Seattle-based project management and collaboration software developer Daptiv, has entered into an agreement to sell its assets to Laguna Hills, CA-based private equity firm Parallax Capital Partners for a reported $12.6 million. The 13-year-old company has raised over $20 million in venture capital so far. According to a spokesperson for Daptiv, the company will retain all 90 of its employees and plans to continue working with its current customers under the same name.

—Gist, a Seattle-based startup that develops online social software to help business people keep track of and manage contact information, nabbed another $4 million in equity financing from investors Vulcan Capital and Foundry Group. The company, which offers Web-based and mobile dashboards integrating contact information across a variety of social networks and e-mailing clients, raised $6.75 in financing from the two firms in May 2009, and has been rolling out new services under its product umbrella ever since.

—Bellevue, WA-based Intellectual Ventures sold a number of patents to Cambridge, MA-based voice-to-text software provider Vlingo this week. The deal comes on the coattails of a legal battle between speech software developer Nuance Communications and Vlingo.

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