Entrepreneurs in the crowdsourced-services niche must be feeling a lot like the knights battling the killer rabbit in Monty Python and the Holy Grail these days. San Francisco service-networking site TaskRabbit, fresh off a $17.8 million funding round, is eating up the competition.

According to an e-mail received Tuesday night from TaskRabbit marketing staffer Johnny Brackett, the startup plans to announce Wednesday that it has acquired SkillSlate, a New York startup similar to TaskRabbit in some respects. The financial terms of the acquisition aren’t being disclosed. SkillSlate, co-founded by former UBS investment banker Bartek Ringwelski and former Yahoo Real Estate product manager Brian Rothenberg, is a services marketplace that closed a $1.2 million round of angel and venture funding in August 2010, according to a regulatory filing.

SkillSlate’s specialty is matching service professionals such as movers, handymen, and programmers with consumers who post service requests. Like TaskRabbit, it does the matching online. But in contrast with TaskRabbit’s workers, many of whom handle less-skilled jobs like grocery pickup or office cleaning, SkillSlate workers focus on “skill-based and artistic tasks,” in the words of a TaskRabbit blog post shared with Xconomy. “By integrating SkillSlate’s platform with TaskRabbit’s, we will be able to provide an even more enhanced service—one where folks can get help with practically anything,” the post says.

TaskRabbit, which was born in Boston in 2009 under the name RunMyErrand, has raised more than $23 million in funding and has expanded to seven regions, including New York City. Ringwelski will become TaskRabbit’s's director of financial planning and analysis and Rothenberg will become director of online marketing, according to the post. SkillsSlate chief technology officer Mike Nelson will join TaskRabbit’s engineering team.

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One Seattle-area company is more than a little happy about Amazon Web Services opening a new South American computing region: Livemocha, an online language-learning service that counts about a quarter of its more than 11 million members in Brazil alone.

Livemocha runs its Web-based software on AWS, but previously, the closest region for South American markets was still in the U.S. And that meant a distinct difference in quality. The more static elements of the site, like logos and other images, were hosted locally. But the main Web experience—the core of Livemocha’s product—had to make too many hops to get to the end user.

“When I’m in Brazil and I’m using Livemocha, it’s kind of painful in comparison to what it’s like in the U.S.,” CEO Michael Schutzler says. “It’s not terrible, but … it’s like the difference between 1999 and 2011.”

So when the AWS Sao Paulo region started coming to fruition, ”We were like, ‘Yes! Hallelujah,’” Schutzler says. “Because if we’re doing really well in Brazil now—serving from, you know, Dallas—it’s just going to be awesome for Brazilians using Livemocha.”

Livemocha added a Brazilian investor earlier this year, and is looking to the fast-growing country as a possible template for how to expand into other foreign territories in the future. That comes as the company has significantly grown its user base by branching out from consumers and into professional markets, including corporate users, and people in the public-sector sector who are seeking language lessons.

“There are a lot of companies that are starting to get serious about Brazil now, and kind of waking up to the fact that there are 200 million people there,” Schutlzer says. “And, hey, they have a middle class with disposable income. Maybe we should pay attention to that.”

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Amazon Web Services has opened an eighth global center to serve cloud-computing customers, expanding to South America for the first time with a new computing region in Brazil.

The company says the new region, known as Sao Paulo, will improve speeds for end users in South America. On his blog, Amazon CTO Werner Vogels says the new region “has been highly requested by companies worldwide,” and will help serve a fast-growing economic region.

“Local companies have not been the only ones to frequently ask us for a South American region, but also companies from outside South America who would like to start delivering their products and services to the South American market,” Vogels writes. “Many of these firms have wanted to enter this market for years but had refrained due to the daunting task of acquiring local hosting or datacenter capacity.”

The choice of Brazil for AWS highlights that country’s rise globally—it has designs on becoming the world’s fifth economic power. Vogels noted that “over the past 10 years, IT has risen to become 7% of the GDP in Brazil.”

This is the second addition in two months for AWS—the company added a new computing region in Oregon in November, pricing it at 10 percent lower than the Northern California region. That pricing put the Oregon region on par with the Viriginia-based AWS computing region, the site of an epic crash earlier this year.

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In a remarkable test of will, I’m going to avoid any Thanksgiving-related puns and just dive straight into this wrapup of the past week in Xconomy Seattle’s tech headlines, covering everything from Black Friday shopping apps to the latest rumblings of possible doom from a local wireless company.

—The crew at Seattle startup Decide made the obvious leap into a full mobile app, released just as bargain-hunters were warming up for the holiday shopping frenzy. Decide is among several sites that help consumers decide whether to buy electronics, or wait for a better price. But the company, co-founded by University of Washington search expert Oren Etzioni, takes things a significant step further by employing a sophisticated price-prediction technology.

—I profiled Avalara, a Bainbridge Island-based company that sells web-based software to help merchants calculate and pay sales taxes. That’s a complicated task, with some 11,000 taxing districts of all shapes and sizes littered around the country. Avalara’s been posting impressive growth numbers, and the trend could continue as Congress, Amazon, and traditional retailers try to hash out a deal over charging sales tax on more online purchases.

—Xconomy’s Greg Huang brought us the scoop on a speech by all-star investor Brad Feld, who told entrepreneurs and angel investors at Microsoft‘s NERD Center in Cambridge, MA, that product and people should be their main focus. Feld is the co-founder of TechStars, a startup bootcamp program with a branch in Seattle. He’s also a board member and investor, through the Foundry Group, in Seattle startups BigDoor Media and Cheezburger Network.

—I looked at a recent tactical shift made by MiNeeds, a Seattle-based site that pairs users up with local service providers who bid for their business. It’s a relatively active area for Web companies to target, but MiNeeds thinks it found a significant edge in the wedding market when it decided to break those services out from the plumbers and carpenters and house painters on the main site. That was something the co-founders resisted—but, as good data geeks, they changed their minds after testing showed it was the right move.

—PaperShare opened up its doors to the public—or at least the cloud computing and virtualization slice of the public. The startup, headed by longtime server computing consultant Doug Brown and former Microsoft virtualization director David Greschler, is a new twist on the sometimes ancient websites that many professionals still use to spread technical info and industry insights.

—And finally, we had some contrasting bits of news: Clearwire, which is trying to simultaneously slow its losses and raise money for a network overhaul, publicly said it would consider delaying a big debt payment. Shares, of course, took a beating. On the other hand, Ignition’s Frank Artale led a $15 million investment in ServiceMesh, a cloud platform company in Santa Monica, CA.

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After a year of epic battles with politicians and brick-and-mortar competitors, Amazon.com has made sales-tax policy a relatively sexy topic in the business world. But another Seattle-area technology company has been working for years to navigate complex sales tax systems—and it’s growing like a weed.

That company is Avalara. Started by an accountant/developer and based on Bainbridge Island, WA, the company provides web-based software that helps businesses automatically calculate and pay sales taxes with precision, no matter where the sale takes place.

How big a problem is that? There are about 11,000 different taxing districts in the U.S. alone, with overlapping boundaries, shifting rates, and long lists of exemptions. Selling the same item to two homes in the same neighborhood could actually mean charging two different amounts for sales tax, if they’re on opposite sides of a tax boundary. And retailers are deputized as the tax collectors, taking in all the revenue up front and sending the government its cut.

It’s the kind of complex, constantly shifting set of data that has been practically begging for a software solution for years. But even businesses that were already using accounting software to keep their books traditionally had to punch in the nitty-gritty details of sales tax data manually.

Avalara makes it automatic by tracking the sales tax zones nationwide, tying them to a sale’s location, and plugging in the information exactly where it’s needed in accounting or e-commerce software. And since the Internet has expanded the sales footprint of virtually any business, making it possible for even a small retailer to find customers nationwide, making those calculations has become increasingly necessary.

It’s also downright fun, if you ask the Avalara guys. Even though their particular island is of the more frigid San Juan variety, the company embraces a pretty lighthearted culture that counters the potentially dry subject of sales tax policy. The executive team donned tropical shirts for their official headshots, and when we met recently at the company’s Seattle office, CEO Scott McFarlane’s shirt stripes, watch face, and laptop skin were all being employed to display Avalara’s signature bright-orange color scheme.

“Some people want to put a computer on everybody’s desktop. I just want to calculate everybody’s transactions,” McFarlane says with a powerful laugh.

Avalara got its start in 2004, and now has about 250 employees worldwide. The company, which has raised $21 million in financing this year, is led by three co-founders: CEO McFarlane, technical chief and board chairman Jared Vogt, and tax chief Rory Rawlings, the accountant-developer who has also been instrumental in helping to develop national sales tax policy through the Streamlined Sales Tax initiative.

Avalara’s rise has been quick enough to land it on the Inc. 500 list of fast-growing companies in 2010. It made the larger Inc. 5,000 list this year (No. 682), with last year’s revenues pegged at $16.7 million. This year, the business will grow again by 50 to 75 percent, McFarlane says, putting Avalara’s sales in the neighborhood of $25-$30 million. … Next Page »

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Those guys in Portland are pretty busy these days. Urban Airship, the Oregon-based supplier of push notifications and other services for mobile app developers, is being named today as one of the first two investments from a new $100 million mobile application-focused investment fund from the venture arm of tech giant Intel (NASDAQ: INTC).

The amount of Intel Capital’s investment wasn’t disclosed, but the money is part of Urban Airship’s $15.1 million Series C round announced last week, which also included Salesforce.com and Verizon as investors.

In addition, Urban Airship and Intel are partnering to make the startup’s notification, payment, subscription, and location services available for developers working on apps for Intel’s own PC app store, called Intel AppUp, which focuses on portable devices like ultrabooks and netbooks powered by Intel’s Atom processor.

That could be a significant step for Urban Airship. The startup, which had previously been focusing solely on smartphone app developers, already has about 20,000 customers and says its revenue has grown “exponentially year over year.” But adding the Intel collaboration raises the possibility of expanding into millions of devices that run the Atom processor, which could pose a fresh challenge to San Diego-based Qualcomm (NASDAQ: QCOM) and its Snapdragon wireless “system on a chip” technology.

“Our mission is to shape mobile experiences that are constantly getting smarter, more fun and more useful,” Urban Airship CEO Scott Kveton said in a release today. Intel made the announcement at its Intel Capital Global Summit in Huntington Beach, CA. The other company named as an initial investment for the new AppUp Fund is German developer 4tiitoo.

The news also comes on the heels of Urban Airship acquiring San Francisco’s SimpleGeo, a mobile location-services startup. Not bad for a team that first started wooing developers by bringing donuts to people waiting in line for an Apple conference in San Francisco.

Intel has a large semiconductor research and manufacturing office in Hillsboro, OR, which is about a half-hour outside of Portland. The company is one of Oregon’s largest private employers, according to the Intel website.

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For most of its four-year history, Seattle-based Livemocha has built its international language-learning business through the online equivalent of hand-to-hand combat: Amassing individual consumers into a big user base and earning money through advertising or premium services.

It’s worked pretty well, with about $14 million in venture funding raised and more than 6 million members as of last fall. But when Livemocha started taking its service to big businesses and government clients, things really got interesting.

“The fastest-growing segment for us by far, both in the U.S. and abroad, is the enterprise business where we have created language-learning solutions for organizations,” CEO Michael Schutzler says. “That’s been a huge shift for us, just in the last six months or so.”

That shift has helped keep Livemocha’s revenue growing in the triple digits over the past three quarters and pushed its membership past 11 million, Schutzler says. Combine that ability to provide large-scale services with a significant global footprint, and it’s easy to see why Livemocha was able to land a new partnership in Brazil with education company Abril Educacao.

As part of the deal, Abril has taken a 5.9 percent ownership stake in Livemocha, leading a $5 million investment round (reported in July, without much detail at the time) with participation from previous investors August Capital and Maveron.

Abril will take on sales and marketing in Brazil, while Livemocha uses the growth capital to beef up its product and technology to supply the new partnership. Brazil is seeing higher demand for English learning ahead of the country’s hosting of the 2014 World Cup and 2016 Summer Olympics, two blockbuster events that showcase the country’s quest to position itself as the fifth global power.

Brazil already had been a significant market for Livemocha, accounting for about 2.5 million users, and consistently supplying between 20-25 percent of the company’s global user base. The Abril deal should throw some fuel on that fire: “I would be really, really disappointed if we didn’t grow that by a factor of 10x over the next few years,” Schutzler says.

And even though that seems like a good chunk to bite off for a 42-person Seattle company—Schutzler says the Brazilian language-learning market could be worth $35 billion—Livemocha doesn’t want to stop there.

“Brazil, hopefully, in a way becomes for us a template that we can use and say, ‘OK, that worked well for us in Brazil. Let’s do that in Japan now,’ or ‘Let’s do that in France now,’ or other countries,” Schutzler says.

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When the customer that would transform their business came calling, the entrepreneurs behind Seattle’s EVO Media Group weren’t exactly flying high.

After a $1.5 million fundraising round and a period of rapid hiring, the three-year-old startup was confronting an intractably slow economy and a target market that wasn’t generating enough sales. EVO was forced to cut staff—again—as it looked for a way to wring more money from its flagship website-building service, DevHub.

Things were about to get better. In October, EVO got an unsolicited lead on not just a new customer, but a whole new line of business, when a major phone directory company contacted the company to ask if DevHub was available as a private-label service.

Uh, yeah, they could handle that. Less than a year later, the private-label business is the primary revenue source—about half of revenues now, and growing every month—and has EVO on the road to sustained growth and higher profit margins.

The customers in DevHub’s sweet spot now are businesses like domain registration sites or yellow pages directories, which can offer website-building services as a way to land more small- and medium-sized business customers of their own. Those bring a lot larger base all at once than DevHubs’s old method of upselling a free product to small website or blog owners.

“We’re really targeting and talking to companies that have these captured bases of probably a minimum of 5,000 small businesses,” co-founder Daniel Rust says. “But we’re flexible, as long as they have a market or a base sort of idea. Right now, we’re working on rolling out a new implementation in New Zealand with a partner that’s going to start doing franchised website building.”

Rust and his co-founder, Mark Michael, sound cautiously optimistic that they’ve hit upon a strong, sustainable business at this point. But they’re also not shying away from the difficult lessons of the past few years, offering a remarkable frankness that might serve as a warning to young entrepreneurs bewitched by tales of swift success and seven-figure checks.

Right now, they say, EVO costs about $20,000 per month to operate. Contrast that with the biggest-spending days, when the company was burning through $120,000 to $150,000 a month. But here’s the rub: All that spending and a staff of about 20 allowed EVO to crank out the … Next Page »

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Woburn, MA-based LogMeIn (NASDAQ: LOGM), a maker of software for remote access on Internet-connected devices, said today it acquired Pachube in a $15 million cash deal. Pachube (pronounced Patch Bay) offers a Web service for connecting sensor-enabled devices and sharing data among that network. The acquisition is designed to strengthen LogMeIn’s connectivity and data sharing platforms, and expand its service to devices beyond computers, smartphones, and tablets.

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Cloud Technology Partners, a Boston-based consulting firm, says that it has acquired Global Green Consulting Group. Financial terms of the deal weren’t announced. Global Green Consulting Group’s services will become part of the offerings of Cloud Technology Partners or CloudTP. Jim Lampert, founder and president of Global Green, will be joining CloudTP as executive vice president of sales and marketing. Earlier this year, my colleague Erin Kutz covered CloudTP and its strategy of helping companies use cloud computing to reduce energy consumption.

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Kirkland, WA-based Clearwire (NASDAQ: CLWR) switched on its WiMax wireless broadband service in the Puget Sound region of Washington today. The coverage area for fast Internet access is about 1,300 square miles around Seattle, extending as far as Arlington, Lakewood, North Bend, and Silverdale. Clearwire’s service is expected to go live in more than 25 markets around the U.S. by the end of the year. Sprint (NYSE: S), the largest shareholder in Clearwire, also rolled out its 4G mobile broadband service in Seattle today; the service runs on Clearwire’s network.

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Xerox (NYSE: XRX), the document-management giant headquartered in Norwalk, CT, said today that it will buy Affiliated Computer Services (NYSE: ACS), a Dallas, TX-based business process outsourcing firm, for $6.4 billion in cash and stock. The acquisition will turn Xerox—like IBM or Dell—into a hybrid technology and services firm; ACS has 74,000 employees focusing on IT support, human resources, finance, and customer support for clients in government, healthcare, and other industries.

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I spent nine years working for a Customer Relationship Management software provider called Onyx Software. Our CRM systems were (at the time) largely implemented and run on-site at our customers’ locations. I ran the Professional Services team for the Americas—we were responsible for aligning business strategy with our software implementations, conducting business modeling, installing and customizing our software, performing training, and supporting our product.

Today I run Deneki Outdoors, a company that owns and operates fly fishing lodges in Alaska, British Columbia, the Bahamas, and Chile. We’ve got six year-round employees spread across those locations, and 40 folks who work for us seasonally.

What in the world could you learn at an enterprise software company that also applies to a fly fishing lodge business? Here are three big lessons.

—As a small business in 2009, you probably don’t need to own a single server.

Just a few years ago, running sophisticated business systems like CRM, financials, document management, and heck, even e-mail and calendaring, meant buying enterprise software packages, installing them on servers that you own and maintain, and paying a person or a team of people to keep things running smoothly. In 2009, the vast majority of small business functions can be supported by hosted applications that are simple, cheap, and close to zero maintenance.

Our business runs on Google Apps, Salesforce.com, and hosted Quickbooks. Other modern productivity tools like Skype help too, but our ability to run our core business functions on hosted platforms leads to a huge savings for us in terms of time and money. We don’t own a single server. We’ve never had to perform an upgrade. Customization is a piece of cake. Our “core systems” have been down for all of about three hours in the past five years combined.

If you run a small business, let the SaaS [software as a service] folks do the dirty work … Next Page »

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Marcelo Calbucci, the founder of Sampa and Seattle 2.0, announced today his team has launched TweepML, a service and format for Twitter users to share lists of other users quickly and efficiently. The service makes it easier to follow multiple Twitter users at once (at a given company, say), instead of having to find them individually. A number of startups have agreed to support the TweepML format, including Gist, OneRiot, and Gnip.

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Verizon Wireless announced today it has successfully tested its fourth-generation wireless network in Boston and Seattle, by making “data calls” involving streaming video, Web browsing, and file uploads and downloads from mobile devices. Verizon’s technology, called Long Term Evolution, is supposed to be much faster than existing 3G wireless networks, and competes with Clearwire’s WiMax system, which has already launched in four cities (including Portland, OR). Boston and Seattle will be the first cities to deploy Verizon’s 4G service.

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Earth Class Mail, a Seattle-based company that delivers physical mail digitally announced today that it is working with Kansas City, MO-based Perfect Output to create a combined document and mail-processing service. Financial details were not released. Earth Class Mail, which creates digital forms of paper letters and mail for businesses, will provide key technology for Perfect Output’s document-management service.  According to the release, Earth Class Mail’s system saves companies 75 percent on document storage and retrieval costs.

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Times are still tough out there—and maybe getting tougher—despite faint rumblings of an economic recovery on the horizon. In the past two weeks, young startups and big public companies alike have shed workers in layoffs big and small. Here’s a quick recap of the bloodletting in the Northwest.

—Vidoop, a Portland, OR-based maker of online security and authentication software, laid off an unspecified number of staff members this week, according to its blog. The company cited “the current economic climate and its impact on our target market” and a longer sales cycle as reasons for the cuts. In November, Vidoop reportedly laid off nine of its 37 workers. The company moved to Portland from Oklahoma last September.

—Seattle-based TeachStreet, an online community site that connects students and teachers in six metro areas around the U.S., laid off four staff members on Monday. The move, which was first reported by TechFlash, was made to give the startup a longer runway. Dave Schappell, TeachStreet’s founder and CEO, confirmed the news but declined to say how many staff are left in Seattle. (Last August, the startup had about 10 people in its headquarters.)

“These were not performance-related layoffs,” Schappell said. “The world changed since we raised the first round.” Speaking of which, TeachStreet is expected to announce the close of a new funding round in the next week or so.

—Finnish mobile-phone giant Nokia (NYSE: NOK) is closing its office in Kirkland, WA, as part of a strategic shift to streamline investments in its services business. The number of local employees affected has not been disclosed, but Nokia said about 450 staff will be affected globally. The Kirkland office was built around former startup Twango’s mobile-media technology for sharing photos and videos online. Nokia bought Twango for an undisclosed sum in 2007.

—Kirkland, WA-based Pathway Medical Technologies slashed 39 positions (19 percent of its workforce) early last week, as Luke first reported. The move was made because the company didn’t raise as much as it hoped in its most recent venture financing round in March—Pathway brought in just $42.3 million out of the $55 million it was shooting for. Pathway makes a medical device that clears out blockages in leg arteries, but sales in the U.S. have fallen short of projections so far.

—Microsoft (NASDAQ: MSFT), the Redmond, WA-based anchor of the tech community, implemented last week the second round of job cuts it originally announced back in January. About 1,200 workers in Washington state are losing their jobs, and there has been speculation that further staff cuts could be made if the company’s sales figures don’t improve in the coming months.

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Intel and Clearwire are announcing the launch of WiMax, a next-generation wireless broadband service, today in Portland, OR. It will provide high-speed Internet access to laptops and mobile devices across Portland, which is the second U.S. city to deploy the service (after Baltimore, MD). Last month, Clearwire received a $3.2 billion investment from Comcast, Intel, Time Warner Cable, Google, and Bright House Networks.

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Today’s news that Bellevue, WA-based software firm Bsquare (NASDAQ: BSQR) is buying Minneapolis, MN-based TestQuest for $2.2 million has sparked some lively discussion. Bsquare founder and former CEO Bill Baxter, who left the company in 2004, wrote in to say “the investment is not a huge thing for the company” and that “they might benefit marginally,” as long as “they can contain the costs.”

Brian Crowley, Bsquare’s president and chief executive since 2003, has a different take, and called me to make sure he got his point across. “I’m really pretty excited about the deal,” he says.

Some quick background: Bsquare’s strategy since the 1990s was to grow its software services and products together, says Crowley. It peaked with $63 million in revenue in 2001, but that declined to $37 million the following year. “My mandate from the board was ‘Hey, let’s turn this thing around,’” Crowley says. “Let’s do what we do best, which is services, and offer our own products along with it. That’s been our mission for five years since I’ve been CEO.” Last year, Bsquare generated just under $60 million in revenue, with $2.8 million in net income. Through the first nine months of this year, it has reported $48.6 million in revenue and $2.6 million in net income.

Bsquare’s broad strategic goal, as Crowley outlines it, is to bring its products and services to bear on smart devices and help businesses take products to market faster with better quality. “The issue is the increasing complexity of these devices,” he says, meaning getting software to work across different platforms and operating systems, for instance. “We’ve been growing our services practices.”

So what TestQuest brings to the table is “a full, automated test framework,” says Crowley. “You can connect to any kind of device using any kind of operating system. You can verify that the experience the user is having is what you intended. It’s a great fit for Bsquare.”

More specifically, he points to three reasons why the acquisition is a big deal for his company:

1. It could potentially double product sales. Most of Bsquare’s revenues come from the resell of third-party software, Crowley says. Its smallest revenue line is products. Last year it sold about $4.2 million of products. TestQuest also did $4.2 million in sales of its own products, which could be a significant addition to Bsquare’s top-line sales, and bottom line profit.

2. Geographic expansion. “We’re heavily focused in North America,” says Crowley, adding that it’s where 95 percent of Bsquare’s current business is. (Bsquare also sells in Taiwan and Japan.) But TestQuest has “really good, established people and relationships” with customers in China, Korea, Japan, and Europe, he says.

3. Big new customers. “We’ve been super-strong at selling services to OEMs [original equipment manufacturers]. But TestQuest sells to wireless carriers,” Crowley says, including Verizon and Virgin Mobile. Other prominent customers are the U.S. Postal Service and FedEx (for testing field automation applications on devices).

Crowley says the acquisition brings Bsquare’s total workforce to just under 300 people (22 TestQuest workers are joining). “Combining our own capability with TestQuest, it’s a really nice solution for enterprises who want to test devices. Strategically, it’s really important.”

And finally, on the issue of the cost of maintaining the Minnesota office, Crowley says, “We’re pretty low overhead. It’s not a big deal having remote offices.”

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This morning, there was news about Bellevue, WA-based Bsquare buying the assets of TestQuest, a Minneapolis, MN-based mobile software firm, for $2.2 million. It made me think about the strategy behind the deal, and whether it signifies a shift in Bsquare’s business.

So I pinged Bill Baxter, who founded Bsquare as CEO in 1994 and took it public in 1999. Baxter, who left the company in 2004, is now chief technology officer of Seattle-based Cozi (and an Xconomist). He sent me the following insights about the direction of Bsquare (NASDAQ: BSQR) and the significance of today’s deal, in an e-mail:

“The original plan for taking the company public was to focus on increasing the IP portfolio to increase the value per engagement with OEMs [original equipment manufacturers]. We invested heavily in that strategy during the downturn and developed a number of valuable assets. Those assets were to be deployed with our services which included design, development and testing of embedded devices (mobile phones, set-top boxes, etc.). We developed a product called CEValidator which was used to assist us in performing QA [quality assurance] services and then we’d license that product to OEMs at the end of the service engagement, along with other IP.

Having said all that, my departure from the company in 2004 reflected a fundamental change away from that strategy to focus more on the core service business. BSQUARE cut investment in IP and the bulk of revenue shifted towards a service business.

The acquisition of TestQuest (discussions about which started before my departure) is reflective of a continuing focus on delivering testing services. TestQuest offers two things:

1. New technology to automate testing of mobile devices.

2. An existing customer base.

Overall, the investment is not a huge thing for the company. They now have a new office to manage with little or no critical mass. But it was cheap and offers them some benefit. I don’t see how they can sustain the site in Minneapolis. But I do see how they might benefit marginally. It will not change the business in such a way that would make them a more attractive public company. But it should be accretive to the business if they can contain the costs.”

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