It wasn’t so much the predictions as the discussion that was most interesting at last night’s annual predictions dinner, organized by the Washington Technology Industry Association. Will Twitter be acquired in 2010, and why? Who will have the dominant cloud computing platform in the next couple of years? What kind of startup are you looking to build or finance, and which areas are you staying away from?

A panel of Seattle-area tech entrepreneurs and investors gamely took the bait and had some lively exchanges over the course of an hour. OK, these guys all know each other, and we’ll take what they say with a grain of salt since it’s a public forum—but here were some of the most interesting points they made. (You can read more comprehensive recaps of the panel on Brier Dudley’s blog at the Seattle Times, and soon on TechFlash by moderator John Cook.)

The panel was split 3 to 2, with the narrow majority guessing Twitter will get bought next year. Andy Sack of seed-stage fund Founder’s Co-op predicted Twitter will make more money than Facebook in 2010 (surprising, given the current disparity in the other direction). Glenn Kelman, the CEO of Redfin, an online real estate firm, said Twitter should charge for search (as it has begun to do in partnerships with Google and Bing). Kelly Smith from Curious Office and the startup Pressplane argued that Twitter could be “absorbed by a big company,” but “it’s going to go nowhere.” By the end of the evening, Sack was predicting that Microsoft would buy Twitter next year.

There was a consensus that 2010 could be a big year for acquisitions. Bill Bryant of Draper Fisher Jurvetson boldly predicted that Amazon will buy Netflix, Blockbuster, and Hulu, while opening brick and mortar “Amazon media stores.” Greg Gottesman from Madrona Venture Group said Cisco might buy EMC (for VMware) and Seattle-based F5 Networks, while Microsoft might buy Research In Motion, the maker of the BlackBerry smartphone. Sack predicted Adobe would pick up Seattle photo-editing startup Picnik. Rupert Murdoch (News Corp.) would buy Seattle’s Cheezburger Network, and someone would buy Redfin.

Looking back on 2009 for a minute, the big deals that were questioned by the panel included Adobe’s acquisition of Omniture (Gottesman said it just didn’t make sense strategically) and …Next Page »

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We’ve all been wondering how the Adobe layoffs, reported earlier this week, may affect the Seattle area—especially given the slew of other recent cutbacks in the local tech industry. Adobe (NASDAQ: ADBE), which is headquartered in San Jose, CA, has a strong presence in Seattle. As of recently, it employed some 500 people, focused on product development, operations, and advanced technology and research, at its Fremont offices.

Well, one prominent executive who’s leaving the company locally is Bill McCoy, Adobe’s general manager of ePublishing Business. McCoy is Adobe’s main e-book person. He made key contributions to Adobe’s PostScript and PDF technologies, and his team has helped lead projects like Adobe Reader Mobile SDK, Adobe Content Server, Adobe Digital Editions, and Adobe InDesign. He’s on the board of the International Digital Publishing Forum, and has been heavily involved in the EPUB standards movement. (You can read more about McCoy at TeleRead.org.)

In a blog post this week, McCoy said he’s leaving Adobe “in the near future” to pursue other opportunities yet to be determined. “I will be taking a little bit of time off, but there is no doubt that I’ll continue to be involved in the future of digital books, especially where that future intersects with web standards and open source,” McCoy writes. “I believe that Adobe will continue to play a critical role as an enabler of interoperable solutions, but I also believe that the community needs to stay vigilant to ensure that for-profit corporations don’t just talk the talk about being open, but also walk the walk.”

It sounds like Adobe is overhauling its efforts in the area, as its competition with Amazon and other e-publishing companies heats up. In a blog post, Adobe said it “has made the decision to expand its investment in digital publishing, creating a new organization focused on delivering products to increase digital revenue opportunities for book, newspaper and magazine publishers. This organization will combine the efforts of Adobe’s eBook business responsible for the Adobe Reader Mobile SDK, Adobe Content Server, Adobe Digital Editions, and PDF and EPUB authoring support in Adobe InDesign with Adobe’s digital newspaper and magazine efforts.” The company added, “We are particularly excited about what we have in store for 2010. We plan to further our reach to emerging mobile reading platforms to allow readers to read anywhere, on any device.”

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You know how listening to music on a friend’s pricey Bose headphones makes it harder to tolerate your tinny little speakers at home, or watching your favorite show on a high-definition screen spoils you for regular TV? I’m at a moment like that in the way I look at photographs. For the last few weeks, I’ve been playing around with a new computerized technique called high dynamic range (HDR) photography, which can lend a stunning level of brightness, contrast, and detail to digital images. And now every traditional non-HDR image that I see looks flat and dull by comparison.

It’s a dilemma, actually, because the HDR “look” can be peculiar, artificial, even surreal. If you lived in a world where every photograph was made this way, you’d have a constant migraine. But for now, I’m a little bit addicted to HDR. And at the risk of getting you addicted, too, I want to talk this week about how the technique works, what you can do with it, and how it can help all of us question some of the conventions and expectations we’ve built up around the art of photography, and around the related art of looking at photographs.

HDR images are unusual because they don’t represent a single moment in time, like most photos, but rather are digital fusions of several images of the same scene, taken at different exposure levels. (In photography, the longer the exposure time, the more light gets captured by a camera’s film or digital sensor, and the brighter the resulting image.) To collect raw material for an HDR image, photographers generally take at least three pictures: one that’s underexposed, one that’s overexposed, and one at a normal exposure. This is called exposure bracketing. The easiest way to explain is to do a bit of show-and-tell:

1. Normal Exposure

2. Underexposed

3. Overexposed

Digital cameras have come a long way in the last 10 years, but the sensors inside them are still nowhere near as good as the human eye at handling the huge variations in luminance that occur in the natural world. (Photographers call this variation dynamic range.) As you can see from Photo 1 above—the one taken at the standard exposure level that my camera chose automatically—the trees look okay, but the sky is pretty washed out. That’s because the camera, in choosing an exposure that would capture some detail in the hills and leaves, wound up gathering too much light from the much brighter sky above.

The HDR process offers a way to compensate for this technological limitation. If you examine the underexposed image (Photo 2) above, you’ll notice that the landscape is pretty dark, but there’s a lot more detail in the clouds—you can actually see how shapely they are. Conversely, in the overexposed image (Photo 3), the sky is a featureless white blur, but you can see a lot more stuff happening in the trees—detail that was largely lost in the shadows in the normal exposure.

…Next Page »

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GenArts, the Cambridge, MA-based visual special effects startup, has added sparkles to its glints.

Which is to say, it has acquired a small St. Louis, MO-based company called Wondertouch that specializes in software that generates so-called “particle-based” special effects—think fireworks, explosions, smoke, clouds, comets, and pixie dust. Executives at GenArts say the technology nicely complements Sapphire, its own library of special effects, which is strong in area like flashes, lens flares, lightning, and glowing auras.

Along with Wondertouch’s technology, the Cambridge firm is acquiring its founding visionary, Alan Lorence, who will become a full-time developer at GenArts. Financial terms of the acquisition aren’t being disclosed.

“We’re really excited about this acquisition, as it fits GenArts from a number of angles,” GenArts CEO Katherine Hays told Xconomy. “First, particle technology has been a gap in our technology portfolio, and one our customers have been asking for. Second, Wondertouch has over 10,000 customers, and it’s a quite different group from the GenArts customer base in many ways, so it allows us to reach a broader set of customers. Finally, it allows us to bring Alan onto the team, which we couldn’t be more excited about.”

Increasingly these days, the special effects seen in movies and TV shows aren’t generated from scratch, but are built from customizable components provided by companies like GenArts and Wondertouch; these companies are in some ways the modern-day equivalents of manufacturers of fine-art oil paints such as Winsor & Newton. The Wondertouch acquisition will give GenArts customers single-stop shopping for a larger variety of special effects, Hays says. After some planned integration work—and the coming launch of a version of Wondertouch’s Particleillusions effects library that is compatible with Adobe’s widely used After Effects software—effects artists will have …Next Page »

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In case you missed it yesterday, the New York Times ran a sweeping review of Microsoft’s position in the tech world on the eve of its Windows 7 rollout this week. That’s the latest version of Microsoft’s iconic operating system for personal computers. But the article smartly goes beyond the company’s strategy for PCs, and examines its near-term prospects in areas like search, mobile, entertainment, and cloud computing.

It’s arguably the most challenging time in Microsoft’s 34-year history. The Times piece points out the company’s revenue declined for the first time ever in its 2009 fiscal year, and it faces increasing competition from the likes of Apple, Google, Amazon, and Salesforce.com. Nevertheless, top Microsoft execs like CEO Steve Ballmer and chief software architect Ray Ozzie continue to defend the company’s position in the market, reiterating its focus on phones, PCs, and TVs—the idea of “three screens and a cloud” that Ozzie talked about back in May. Microsoft also has earmarked nearly $10 billion for R&D spending over the next year, according to the piece.

The conclusion? The Times calls the overall forecast for Microsoft “partly cloudy.” It’s a bit of a letdown, but the story does cover a lot of ground in terms of different technology areas, and competitors coming from different angles.

The story also includes critical comments from a couple of former Microsoft veterans who have strong ties to the Seattle tech scene. Bruce Chizen, the former CEO of Adobe Systems—and now a venture partner with Seattle-based Voyager Capital—is quoted as saying about Microsoft, “They are not the company they once were in terms of market position…They no longer have a monopoly that is critical to the future of computing.”

And Bryan Trussel, the former head of Xbox Live Arcade and now CEO of Glympse, a Seattle-area mobile startup focused on location sharing, is quoted in the context of Microsoft’s recent efforts to work with developers, students, and cloud-computing startups— crucial audiences that company execs have worried about losing touch with. “They got scared,” Trussel says in the piece. “I think they get it now, but the question is how far behind they are.”

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Engineers long ago figured out how to deliver high-definition TV signals via over-the-air broadcast and cable, but the Internet is a different animal. Trying to squeeze that much data through a home or office Internet connection can lead to stutter and long “buffering” delays. For some time now, Akamai has been working on upgrades to its global distribution network that will allow it to deliver clients’ high-definition video streams without interruption—including a partnership with Microsoft last October to adapt HD signals for the company’s Silverlight video format and a deal with Inlet Technologies in July that did the same for the Apple iPhone over AT&T’s 3G network.

Today the company added Adobe’s Flash format to the mix and unveiled a comprehensive “Akamai HD Network” that, according to Akamai, can deliver HD-quality video to broadcast-scale audiences. The key to the network, as we reported in the July iPhone story, is a technique called adaptive bitrate streaming, which allows Akamai to raise or lower the quality of a video stream to match the available bandwidth without any interruption in viewing. Deploying this adaptive technique to its network of 50,000 servers around the world will allow Akamai to transmit smooth video to audiences in 70 countries, the company said. Over the HD network, users can also pause and rewind a video stream, just as they would if they were using a DVR.

“We’re entering a different online world, where many content owners and publishers need to deliver HD-quality video to a much wider online audience, with a higher level of interactivity for consumers,” Akamai president and CEO Paul Sagan said in a statement. “With the Akamai HD Network, we are revolutionizing the way content traverses the Internet with a new approach to bringing an HDTV-like experience online.”

To watch a replay of Akamai’s live webcast today announcing the HD Network go here and choose Flash or Silverlight. Or if you’re browsing from an iPhone, go to iphone.akamai.com/hdnetwork.

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Seattle-based Voyager Capital is announcing today it has added a new venture partner—Bruce Chizen, the former chief executive of Adobe Systems (2000-2007). Chizen started in his new role this month, and he’s based in Silicon Valley, but he’s already making an impact on Northwest companies in Voyager’s portfolio.

First things first, I had to ask Chizen an obvious question: what does he think of Adobe’s $1.8 billion bid to acquire Omniture, the Web analytics firm, which was announced this week?

“It’s strategic and bold,” Chizen replied. “Now it’s all about execution. If [Adobe] can incorporate metadata into the flow, it’ll give them a competitive advantage.” He added, speaking from experience (he led Adobe’s $3.4 billion purchase of Macromedia in 2005), “Acquisitions are funny in that they’re hard to do. If an acquisition is successful, no one talks about how much they paid.”

OK, more about the actual VC news here. The addition of Chizen as a venture partner clearly strengthens Voyager Capital’s expertise and connections in the digital media industry. It’s the latest strategic hire at the venture firm, which in the past year and a half has recruited a new talent stable that includes Daniel Ahn in Silicon Valley, Diane Fraiman in Portland, and Geoff Entress in Seattle. “Voyager is increasingly a West Coast firm, with its roots in Seattle,” says Voyager co-founder and managing director Bill McAleer.

But that doesn’t mean we should expect to see more investments in California at the expense of the Northwest, McAleer says. “We’re going to stay consistent with what we’re doing,” he says. (About two-thirds of Voyager’s investments are in the Northwest, and one-third are in California.) “We’re helping our companies up here with partnering strategies and talent in the Valley. Part of what we look at is how to interconnect companies,” McAleer says.

Chizen stepped down as the CEO of Adobe (NASDAQ: ADBE) in December 2007, and stayed affiliated with the company through April 2008. He has been an adviser to Voyager since July of last year. He also serves on several boards, including Oracle (NASDAQ: ORCL), Synopsys, and Portland, OR-based Elemental Technologies, and is senior adviser to the private equity firm Permira Advisers. “What was missing for me was in the area of really working with and looking at young, cool startups with great technological differentiators. Fundamentally, what excited me about Adobe was its technology and reaching new, different, and exciting markets,” Chizen says.

He calls Voyager Capital a perfect fit—culturally, technically, and intellectually. “They really care about their companies,” Chizen says. “I think I can help them a lot. There’s a lot of deal flow in the Valley …Next Page »

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These are dark times for the newspaper business, which has been suffering from revenue erosion as classified ads, corporate recruiting, and other forms of advertising—not to mention readers—have moved to the Internet. You’d think that means the outlook also would be gloomy at San Diego-based VMIX, a venture-backed startup that provides Web-based software used primarily by media-owned websites to manage their video clips.

But the media world is full of contradictions. Even with its business focused primarily on newspapers, VMIX president and CEO Mike Glickenhaus tells me, “We’re still seeing steady, consistent growth.”

Mike Glickenhaus

The reason VMIX has continued to grow—despite the recession and the decline of its newspaper customers—is that video is by far the fastest growing medium on the Internet, including newspaper websites. When I sat down recently with Glickenhaus and VMIX co-founder Greg Kostello, they told me they expect their revenue to grow by 70 percent this year—after growing by 170 percent in 2008. “We’re still not quite profitable,” Glickenhaus adds. “That’s probably still a quarter or two away.”

The outlook wasn’t always so optimistic. When Kostello started VMIX with co-founder Terry Ash in 2005, their idea was to create a website for video sharing and social networking. Their concept was an extension of what they had learned at MP3.com—one of San Diego’s biggest contributions to the dot-com phenomenon. Kostello, who was MP3.com’s executive vice president of technology, became president of Vivendi-Universal Net Technologies following Vivendi-Universal’s 2001 buyout of MP3.com. Ash, who was a senior vice president of advertising sales at MP3.com, also worked at Vivendi-Universal and Universal Music Group before VMIX.

“Even at MP3.com, we understood that video was going …Next Page »

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With just under two weeks to go until Seattle’s first-ever Battle of the Tech Bands, I thought I’d give you a quick preview of the event. It’s all taking place on July 30 at the WTIA Summer Celebration, at the Pyramid Alehouse (registration and ticket info here). The music will start at 6pm, and we’ll stick to a pretty tight schedule.

Five bands will compete for two prizes—Audience Favorite (voted on by you, the attendees) and Most Innovative Band (voted on by the event judges). Each of the five finalists will get a 15-minute set. I’ll follow up next week with a more extensive preview of the bands, but for now you can check out their music on their respective sites:

Afraid of Figs
(representing MorphoTrak and Robert Half Technology)

Between These Lines
(representing Hewlett-Packard)

Indigo Soul
(representing Microsoft and Adobe)

Juda’s Wake
(representing Microsoft)

Lions Ambition
(representing Boeing)

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And last, but not least, we have an honorary sixth entrant that will be there in spirit—that is, unless Paul Allen and Bill Gates decide to drop in for an unannounced set (one can always hope…stranger things have happened. OK, maybe not). It’s the Protingent Man comic, the latest installment of which appears below, courtesy of David J. Locher and Donn Harvey of Protingent Staffing:
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And then there were five. Here at Xconomy, we have made our selections for the five finalists who will compete at our inaugural Battle of the Tech Bands in Seattle, to be held on the evening of Thursday, July 30 at the WTIA Summer Celebration at the Pyramid Alehouse. We are looking forward to putting on a spectacular show. (Registration info is here.)

It’s been a long road. We put out the call for bands more than two months ago. We got a couple dozen competitive entrants (thanks to all the bands who applied). We listened to demos, sorted through band bios and websites, consulted our esteemed judges, and listened some more. After a few days of intensive discussions, we arrived at our top picks.

Five finalists, and five words: They are going to rock.

Their mix of musical styles, personalities, and companies represented (each band has at least one member from a Northwest technology firm) is pretty awesome. Most of all, each of them has a legitimate chance to win. In music, as in business, it all comes down to execution, right?

Two awards will be given at the event on July 30. One will be for Audience Favorite, based on voting by all of you, the attendees. The other will be for Most Innovative Band, which will be decided by a select panel of judges, together with Xconomy and WTIA staff.

So here they are—the five bands—along with the tech companies their members represent, my personal impressions of them, and why each has a real shot at winning. Please check out their stuff, come out and support the local tech-music scene, and cast your vote on July 30. We’ll see you there.

Drumroll, please…

Afraid of Figs
(MorphoTrak, Robert Half Technology)
Light, infectious pop rock reminiscent of Barenaked Ladies and Cake.
Why they could win: With a song called “I Ate a Vegan,” anything is possible.

Between These Lines
(Hewlett-Packard)
Contemporary alt-rock quintet with a polished, radio-ready sound.
Why they could win: With expertly crafted songs and strong stage presence, they might be hard to top.

Indigo Soul
(Microsoft, Adobe)
The melodic intersection of classic rock, 80s pop, soulful lyrics, and rocking rhythms.
Why they could win: Their music might be just perfect for a warm, mid-summer evening celebration.

Juda’s Wake
(Microsoft)
Killer metal chops. Need we say more?
Why they could win: This band would have a chance to win any contest they entered—and I mean any.

Lions Ambition
(Boeing)
Energetic hip-hop, rock, and soul with monstrous hooks and catchy lyrics.
Why they could win: The whole city might be dancing after one song.

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While tech deals remained scarce last week in San Diego, Qualcomm served up some of the biggest news by launching the delayed expansion of its Media Flo network and signaling an increase in its wireless chip sales, at least in the current quarter. More on all that, and the rest of last week’s San Diego business and technology news below:

—MadCap Software CEO Anthony Olivier says the four-year-old startup has had no trouble staying ahead of rivals, such as Adobe, that develop competing software offshore. “Generally, you get lower costs” by moving software development offshore, Olivier says, “but you don’t really get innovation.” MadCap, which specializes in authoring software that is used to create technical user guides, introduced new versions of its software this past week.

—Just in time for the summer travel season, San Diego-based TelCentris said an update of its VoxOx universal communications service makes it easier to place low-cost international calls through a clever adapation of its text messaging service.  For example, if you’re abroad and send a text message of the U.S. phone number you want to call to a special access number, the VoxOx system automatically dials that phone number and connects it to your cell phone, sparing you often sky-high international rates.

—Following a four-month delay in a nationwide plan to convert to digital TV broadcasts, San Diego’s Qualcomm was finally able to expand its satellite-based Flo TV network to more U.S. cities, including Boston, Houston, San Francisco, and Miami, when the switchover to digital finally took place last week. Qualcomm invested at least $800 million to buy the broadcast spectrum for what was UHF channel 55 for its Flo TV service. But the company’s plans to expand Flo TV coverage got postponed at the beginning of the year when Congress decided to delay the digital TV conversion until June 12.

—The Campo Band of Mission Indians plans to add 100 electricity-generating wind turbines on its reservation, about 60 miles east of San Diego, in a renewable energy venture that will add 160 megawatts to the local power grid. If the project is completed in 2012 as expected, it will generate enough electricity at peak production for more than 100,000 homes. Chicago-based Invenergy will build and operate the estimated $300 million facility for the 351-member tribe.

—One of the main engines of San Diego’s tech economy transmitted some mixed signals last week in its financial outlook. Qualcomm raised its guidance for the fiscal third quarter that ends June 28, based on expectations of slightly higher revenue and increased shipments of CDMA-based devices. But the average sale price of CDMA devices is slipping, and Qualcomm said it expects sales of its chipsets to decline through the summer, as cell phone sales remain sluggish.

—Venture capital partners around the world are expecting some enormous shifts in their business, beginning with a retreat among the pensions, endowments, and institutional investors who usually account for much of their investment capital. But VCs in the U.S. anticipate that foreign investors will largely fill the need for more capital, according to a survey of 725 VC partners released last week by the National Venture Capital Association and Deloitte.

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San Diego’s MadCap Software may stand as an exemplar in showing how a small American technology company can compete against rivals that take advantage of low-cost development offshore.

The startup, founded in 2005, specializes in developing authoring software that is used by technical writers and others to create owners’ manuals, user guides and other types of technical documentation. MadCap announced late yesterday the release of new versions of its mainstay Flare software for print and online publications, and Blaze, its alternative to Adobe FrameMaker.

The updated versions of both products support DITA, the Darwin Information Typing Architecture, which MadCap’s Mike Hamilton says is significant because the companies that have adopted the DITA standard tend to be Fortune 500 companies. “This opens up a whole new world to us in terms of gaining entry to enterprise-level customers,” Hamilton says.

The privately held company says it has more than 4,000 customers, and boasts that Microsoft Health Solutions Group, for example, is using Flare to streamline publishing for the just-released version of its Amalga Unified Intelligence System. The results were encouraging enough for Microsoft to allow MadCap to use the Redmond, WA, giant as a promotional case study on MadCap’s website—and to extend Flare across its entire Health Solutions Group. As Hamilton puts it, the introduction of Flare 5.0 and Blaze 2.0 also moves MadCap away from competing directly against Adobe and its RoboHelp software—and therein lies the lesson of MadCap’s origins.

Hamilton and MadCap CEO Anthony Olivier were both at San Diego-based eHelp, which originally developed the RoboHelp software, when San Francisco-based Macromedia acquired the little company for $69.3 million in 2003. Olivier had been eHelp’s CEO, and had stayed on as business manager following the Macromedia buyout. But Olivier says what Macromedia really wanted was RoboDemo, a Flash-based program used to create software simulations (which is now known as Adobe Captivate). Macromedia soon began to lay off members of the RoboHelp development team in San Diego and moved the work offshore, first to the Philippines and later to India.

Adobe, which acquired Macromedia for $3.4 billion in late 2005, was even more indifferent about RoboHelp and the rest of the eHelp product line. Adobe moved more software development work from San Diego to India, and according to Olivier, the products languished.

Seeing an opportunity to create a more versatile sourcing tool, core members of eHelp’s development team, including Hamilton and Olivier, founded MadCap in 2005 with less than $1 million in funding from angel investors who were former software industry executives. “We wanted the VC help without the VC strings attached,” says Olivier. Although eHelp had originated in 1990 as a bootstrapped business, Olivier says venture investors who invested …Next Page »

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Over the last couple of years, we have been witnessing a resurgence of the “Internet as the new computing platform” idea. I say resurgence because that was the premise of the late 90’s “Internet Bubble.” Given that history, it would be a mistake to use the same term, of course. Instead, we’ve coined a new one— “cloud computing.” New term aside, the core premise of providing applications & services over the Internet remains at the heart of this resurgence. The Internet Bubble has taught our industry to be more circumspect. Furthermore, with 10+ years of multiple successful Internet services under its belt, the industry is that much more mature. Amazon, Google, Hotmail, Yahoo, and SalesForce.com are all great proof points of this maturity.

Yet, as I observe this resurgence, I see the hype is rebuilding and we might be getting carried away again. History is a great place to look for patterns to help predict patterns in the future. Here are some I see.

Fallacy of paradigm shifts

Mainframes to PCs, and now PCs to the Cloud. I’ve noticed that when there is a paradigm shift, a set of people take on the task of re-implementing existing applications in the new paradigm. Somehow, a mindset develops that “paradigm shift” means it is an opportunity to replace the incumbent solutions by re-implementing them in the new paradigm and suddenly the world will move over. I believe that it is a waste of time & energy to re-implement applications that work well in the existing paradigm. ROI for making the shift rarely exists for the majority of the market. It is important to internalize that computing is a tool for most organizations and individuals, not a way of life (like it is for some of us) so they won’t make the change unless there is a very good reason to do so.

Historically, when computing shifted from mainframes to PCs, some believed that mainframes would go away and even tried to rewrite key mainframe applications on PCs. Mainframes remain and continue to be a very healthy business. Most batch/transaction processing applications that worked extremely well on these systems continue to do so. What popularized the PCs was killer applications such as spreadsheets, word processing, etc. that made computing tools much more accessible to businesses and individuals at large, and significantly increased efficiency and productivity compared to using paper and typewriters.

The same is going to be true as we make the shift from PCs to the cloud. PCs aren’t going away—in fact, they are at the heart of popularizing the Internet and fueling the adoption of this new computing paradigm. So PC applications such as Microsoft Office and Adobe PhotoShop that harness the power of local computing capacity, storage, and huge existing user bases aren’t going to be easily replaced, if at all. In fact, I believe that such efforts will see very limited success. I encourage entrepreneurs and innovators …Next Page »

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Portland, OR-based Elemental Technologies, a video processing startup, announced today the beta release of its server product, which uses off-the-shelf graphics processing units and advanced software. Elemental Server is meant to help studios, online video platforms, and large Internet video publishers deliver huge volumes of video to consumers smoothly, efficiently, and cheaply. Beta customers include Adobe and Cambridge, MA-based Brightcove. Co-founded in 2006 by CEO Sam Blackman, Elemental has developed software to do efficient encoding and transcoding of video using parallel-processing graphics chips.

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Cambridge, MA-based video hosting provider Brightcove has long had all of its eggs in Adobe Systems’ basket: the company’s entire platform is built around Adobe’s Flash streaming media format. But now the two companies’ relationship is growing even closer.

At the National Association of Broadcasters convention in Las Vegas today, Brightcove and San Jose, CA-based Adobe (NASDAQ: ADBE) are announcing a collaboration intended to make it harder to pirate Flash-based streaming media files and easier for users of Adobe’s video production software to publish their videos through Brightcove’s system. Brightcove also says that it intends to make its platform compatible with Strobe, a new media player development framework unveiled by Adobe today.

Strobe is a response to complaints from Web developers that it’s too difficult to build extensive Web-based media sites using the existing Flash development tools. It provides building blocks that developers can use to create customized, interactive websites that include games, software, advertising, and the like. Brightcove—which serves customers like the New York Times, Showtime, and the Discovery Channel and is the single largest host of Flash-based video for big media companies—says it wants to make sure that developers who turn to the Strobe platform can still use Brightcove to host the video portions of their sites.

I caught up with Jeff Whatcott, Brightcove’s senior vice president of marketing, by phone last week before he set out for Las Vegas. Whatcott, who’s an Adobe veteran and also helped to launch Drupal publishing company Acquia, says he believes Brightcove was “the first phone call” Adobe made when the media software giant set out to find partners for the Strobe launch. I asked him to explain, among other things, how Strobe’s features overlap with those of Brightcove 3, the new, more customizable hosting platform the company introduced last October.

Xconomy: The Strobe platform that Adobe is introducing today sounds like it actually has a lot of the same features as Brightcove 3, when it comes to customizing the look and feel of a Web video player.

Jeff Whatcott: It’s similar in some ways. But we’re coming at the market from two different directions. They are coming at it from the application developer side—people building totally customized user experiences, which is certainly a valid set of use cases. We’re coming at it from the complete solution side, where people want to do a lot of deep branding that…affects the appearance of the player, as opposed to completely tweaking it out. The two kind of meet in the middle. With Strobe and Brightcove 3, the full spectrum of use cases is covered.

There’s nothing out there like Strobe from a company of Adobe’s stature. If that’s going to be in the marketplace, we want to make sure that people can use it with Brightcove’s service. So we’re going to working with Adobe on interoperability between their player and our backend service, so it will work in that environment.

X: Don’t most Brightcove customers—companies that host their videos on your backend—use the Brightcove player almost by default? I’m not clear on how the Strobe integration would benefit them, unless you’re saying that customers could substitute Strobe-based players for the Brightcove player.

JW: The vast majority of our customers absolutely do use our player today, although with the rollout of Brightcove 3 last fall we made our whole platform something that you could adapt in whole or in part. Our server side has a bunch of APIs [application programming interfaces] for getting video out of our system into whatever framework you want to offer to build a custom user experience. So yeah, customers could theoretically substitute those two.

But again, the focus of Strobe is more application developers who are building completely custom applications that have video as a part of them. The way to think about it is, a lot of times, with video on the Web, you see a Web page with a video player in it, and that video player needs to be customized to look like the rest of the page. That is the classical use case for the Brightcove 3 player today. Whereas Adobe is focusing here on people building out completely custom websites in Flash. For example, think of a major shoe manufacturer running a multimillion-dollar advertising campaign. They are going to run a splash page that will be a completely customized experience, where you can …Next Page »

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Bellevue, WA-based Bsquare (NASDAQ: BSQR), a maker of software for embedded devices, has announced it will port Adobe’s Flash technology onto Google’s Android operating system for a top-tier wireless carrier. More specifics and financial terms were not disclosed. The news is significant because, with Bsquare’s work, Android may get Flash before the iPhone does.

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Want to know who’s hiring the top young business talent around town? Just ask Saleem Hussain, an MBA student from Boston. In a brutal market for tech industry jobs, he gave me a fresh perspective on the next-generation talent pool and where it’s headed, in terms of both big companies and startups.

Hussain is a first-year MBA student at MIT’s Sloan School of Management in Cambridge, MA. He is one of the organizers of a 16-student Sloan contingent that made a “tech trek” to Seattle last week, on Thursday and Friday. It’s part of an annual program that takes 150 Sloan MBA students to companies in Seattle, Silicon Valley, and the Boston area to make job and internship contacts and learn about the respective markets.

In the Seattle area, the group visited Amazon, Microsoft, Expedia, Adobe, Starbucks, and Digeo. The students met with recruiters and executives to ask about business challenges the companies are facing, and to learn what MBAs need to do to land jobs in the current market. “As far as internships go, there are lots of opportunities at big companies,” says Hussain.

Despite the economy, he says, Amazon and Microsoft “seem to be really hiring in full swing” on the MIT campus. Adobe has a lot of openings in Silicon Valley, he adds, but not as many in Seattle. Interestingly, Google and Yahoo usually host the Sloan students (in Silicon Valley), but did not this year. “A lot of companies are delaying,” says Hussain. “They’ve held back interviews, putting hiring on hold.”

I also asked Hussain about Sloan’s contacts with Seattle-area startups. If there’s one hiring issue I hear about in the innovation community, it’s the relative dearth of top management, sales, and business development talent—so tapping programs like Sloan’s seems like an obvious way to address the matter. The Sloan tech trek focuses on bigger companies that tend to hire on campus, but Hussain says organizers would embrace meetings with startups as well. “In Boston, we have a lot more access to small companies and strategy consulting firms, because of neighbor relationships,” he says.

As for broader impressions, some in the Sloan group were expecting a wary market for new jobs and internships, given tightening budgets and the prospect of layoffs seemingly around every corner. But the Seattle companies were very receptive, Hussain says. “They seemed surprisingly welcoming in talking to MBA students.” As for any wariness or uncertainty (about internships anyway), he says, “we didn’t see any of that.”

“A lot of people in business school are excited about coming out in this economy,” Hussain says. “For companies, it’s very pivotal for them. It’s such an important time to be working at these companies. That’s what makes it so exciting, and that’s what drives our visits.”

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Want 54 hours to start a tech company? You got it. In a few weeks, Google will be hosting a talented group of entrepreneurs from the startup community, giving them time and space over a weekend, and adding stimulating discussions, activities, and, yes, food. With that potent mix at work, local organizers want to see how many viable ideas, products, and even new startup companies may emerge.

That’s the concept behind Startup Weekend, a traveling event that’s coming to Seattle February 6-8. It will be the second Startup Weekend in Seattle; the last one happened last January at Adobe’s offices. This time, the weekend will be hosted at the Google offices in Fremont. It seems to me like a great way for the Internet search giant to get to know local developers and startup community leaders.

“We reached out to Google for hosting of the event,” says Rob Eickmann of Seattle-based Six Hour Startup, who is one of the local organizers. “They were more than willing to talk to us about it and provide us with space at their facility in Fremont.”

In the past few months, Eickmann and other entrepreneurs had meetings with local startup organizations around the question of what Seattle startups need. “Startup Weekend was highly praised for the way it created a core group of Internet entrepreneurs here in Seattle,” Eickmann says. “We hope to have that same effect this year as well.”

Startup Weekend is itself a startup, founded by Andrew Hyde of Boulder, CO-based TechStars. Since the summer of 2007, Startup Weekend has taken place in cities like New York, Boston, Boulder, London, Hamburg, Toronto, San Francisco, and Los Angeles. The events tend to create a lot of buzz, and are known for helping build collaborations among entrepreneurs that last well after the weekend itself. “I met some of the best people in the community,” says Nathan Kaiser of the entrepreneurial resource site nPost, based in Seattle.

One of the promising ideas from last January’s Seattle Startup Weekend was Skillbit, a company that helped small businesses and organizations create searchable databases of their teams’ skills. It’s an intriguing idea, but Skillbit ran into issues with securities law and shut down earlier this year. Nevertheless, the community-building effect of Startup Weekend has apparently lasted.

Tickets to the Feburary event are $40, and participants with a variety of skills can sign up, like software developers (including architects and system administrators), designers, public relations people, user experience experts, legal, business development people, project managers, and even a cook. (I imagine the last category will be as competitive as any of the others, especially in Seattle.)

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Boston’s Core Security, a provider of automated penetration software and computer security consulting services, published details today of a flaw in some versions of the widely used program Adobe Reader that could leave users’ computers vulnerable to takeover by hackers. Shortly after the company published details of the vulnerability, Adobe announced a software update designed to fix the bug.

The vulnerability, which affects Adobe Reader and Adobe Acrobat version 8.1.2 (but does not affect the more recent Adobe Reader 9 or Adobe Acrobat 9, released this summer), can trigger a common type of software problem called a buffer overflow. Analysts at Core Security discovered back in May that if an Adobe Reader user opens a specially crafted PDF file containing malicious input for a particular JavaScript function in the program, it could allow hackers to overwrite the program’s memory and execute arbitrary code.

The flaw is similar to one that another security company, Secunia Research, discovered last spring in a PDF viewer called Foxit Reader, from Fremont, CA-based Foxit Software. Adobe’s software was initially thought to be immune to the problem, but Damian Frizza, a member of Core’s “exploit writers team,” discovered a second, previously unknown flaw in Adobe Reader and Adobe Acrobat that made the programs vulnerable to the same kind of attack.

The company says it alerted Adobe to the problem on May 27. After several delays over the summer, Adobe finalized a fix for the vulnerability in October, and released it today, in concert with Core Security’s alert about the flaw.

“Generally, what we do when we find vulnerabilities that we consider to be significant and novel is that we notify the vendor first, to give them the chance to produce and publish the fixes,” says Ivan Arce, Core Security’s CTO. “Then we coordinate with the vendor and make a plan to publish the information about the vulnerability and the patches simultaneously.”

While “we would have liked the fix to come out earlier” in the Adobe Reader case, communications between Core Security and Adobe were good throughout the process, which reassured Core’s analysts that a fix was proceeding apace, Arce says.

This isn’t always the rule when security vendors discover flaws in widely distributed commercial software. In an episode we chronicled back in March, Core Security disclosed information about a serious security hole in several programs made by VMware (NYSE: VMW), a subsidiary of Hopkinton, MA-based EMC (NYSE: EMC), before a patch was ready. Core said its disclosure in that case followed months of delays and unfulfilled promises from VMware engineers that a patch was forthcoming.

“We had good visibility into what was going on at Adobe, so we had some certainty that the fix was actually coming out” this time, says Arce. “We also didn’t perceive any public exploitation of the problem, even though the previous exploit was in the public domain. We have to balance that risk constantly. In this case we managed to publish the information in a coordinated fashion, without any exploitation happening before the patch was issued.”

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Apparently it’s a good time to be in the business of data visualization. Wade wrote in July about Visual I|O, a Newton, MA-based business-analytics startup, and Hans Rosling’s splashy Trendalyzer software, which was acquired by Google last year. Not to be outdone, Seattle-based Tableau Software is announcing today it has closed a Series B round of venture financing worth $10 million. The sole investor in the deal is New Enterprise Associates, a leading venture firm based in Menlo Park, CA. Back in 2004, Tableau raised a $5 million first round, also from NEA.

I had a chance to talk with Christian Chabot, Tableau’s CEO and co-founder, and Elissa Fink, vice president of marketing, about the deal, the company, and its plans. For starters, Chabot says that what differentiates Tableau from other data-visualization companies is that, quite simply, it has a viable product that’s easy to download and use. “There’s a lot of excitement right now,” says Chabot. “Business is literally exploding in every area in terms of customer growth.”

Tableau was spun out of Stanford University in 2003, and was funded by the founders for the first year and a half. Its technology, which helps people graphically display and understand information in databases and spreadsheets, originally came out of a Defense Advanced Research Projects Agency-funded effort at Stanford. The project was led by Chris Stolte and graphics researcher Pat Hanrahan, best known for his work on Toy Story with Pixar. Stolte and Hanrahan teamed up with Chabot, who had done his undergrad and M.B.A. studies at Stanford, to found Tableau. (Stanford has an equity stake in the company.)

Chabot explains the significance of his visualization software: “Google has done a fantastic job to allow a human being to sit down with the Web and ask it questions. But the $64 million question is, who’s doing that for data? Databases are baffling…There’s this giant unsolved, planetary-scope problem—how do human beings sit down and have an easy interface to understand data, so they can answer questions?”

Say you want to know where “911″ emergency calls were made in the Seattle area and what they were about, or the amounts of U.S. presidential campaign donations in Manhattan by ZIP code (see screenshot left, and next page). Tableau’s software lets you compile stats from different spreadsheets and databases and quickly graph various slices of the data. The same goes for organizing and displaying things like auto sales trends, population maps, per-capita energy use, and hurricane tracking.

Tableau’s key competitive advantage, according to Chabot, is that its software can be downloaded in two minutes and used without any special training. “The big problems are actually about the user interface,” he says. “It’s easy to install and get started, and easy to get a result from it…What takes unbelievable effort and engineering is to take a complicated problem and make it simple.”

So, coming out of Stanford, how did Tableau end up in Seattle? It was simply a lifestyle decision by its founders—Chabot and Stolte had been in the San Francisco Bay Area for years, and both wanted to live in Seattle. (I can relate to making a move like that.) So in 2004, Tableau moved from Mountain View, CA, to the Fremont neighborhood of Seattle. “It’s a great city,” says Chabot. “It’s clearly no Silicon Valley in terms of sheer volume of technology companies, but …Next Page »

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