It’s been a busy week around here for the big tech companies. At Xconomy, we don’t usually report on things like product releases from Microsoft or sales figures from Amazon—our main focus is on new ideas, models, and companies—but readers need to understand where the big players are heading so they can see the gaps and opportunities for new businesses. So, for each of these pieces of mainstream tech news, I’ll tell you why savvy innovators and business leaders should care.

—Google (NASDAQ: GOOG) demonstrated its Web-based Chrome operating system for the first time in public yesterday. It won’t be available for another year, but the tech community is scrambling to understand all the implications. (Google’s Seattle engineers have contributed technology to the Chrome Web browser, helping to boost security—one potential advantage of a cloud-based operating system).

Sure, a fully cloud-based OS is a direct threat to Microsoft’s business model and the ecosystem of companies that support Windows. But more than that, it could reshape the landscape of online advertising by providing a new platform for launching ads on mobile devices, video channels (YouTube), and Internet TV. Perhaps the only thing that can slow down Google’s dominance on the Web is the federal government. In other words, this could get ugly.

—Microsoft (NASDAQ: MSFT) has teamed up with LinkedIn to provide info about your business contacts within Outlook e-mail. It’s all part of Microsoft’s Outlook Social Connector, an add-in that feeds you data from your social networks. Integrating e-mail with social networks and search is a fast-growing area, with startups like Gist in Seattle (backed by Paul Allen and Foundry Group) helping lead the way. Gist’s CEO T.A. McCann told TechFlash that he’s known about Microsoft’s effort for a while and doesn’t see it as a direct challenge. Gist’s offering is more advanced, he said, and it includes features like integrating with Salesforce.com and the iPhone. But startups and investors beware: if you’re in this crowded space, you better have a product that cuts through the noise and has a way to attract customers fast.

—RealNetworks (NASDAQ: RNWK) is in discussions with Viacom’s MTV Networks to sell off at least some of its stake in the Rhapsody music service, as first reported by PaidContent. In a regulatory filing, prompted by a tender offer to issue new stock, Real said it is in talks to reorganize the management structure and/or corporate governance of the division, which might mean giving up its majority ownership stake (51 percent) in Rhapsody. Back in September, digital-media guru Bill Baxter (now at Seattle-based Cozi) wrote in Xconomy about Rhapsody’s fierce competition with Pandora, iTunes, and piracy. Message to startups: the world of digital music services is probably not where you want to be.

—Amazon (NASDAQ: AMZN) has been busy ramping up operations ahead of the holiday shopping season. Its billion-dollar acquisition of Zappos is helping it expand into shoes and apparel, and its Kindle sales look poised to take off, especially now that Barnes & Noble’s competing e-book reader, the Nook, has sold out until January. Amazon has really become the business and technology model to follow in online retail and product search. While there is still room for e-commerce startups to compete in various niches, they would be wise to study how Amazon built its brand and customer relationships before branching out to the wider world of retail.

Comments | Reprints | Share:        

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 »

Comments (2) | Reprints | Share:        

Seattle-based venture capital firm Maveron has been in the news a lot this month. There have been reports about its latest stealth startup, which is a new type of e-commerce play. Another report from VentureWire said Maveron will be selling its shares in Motley Fool—a deal that will generate cash for Maveron, which led a $26.5 million financing of the online investing website in 1999. And then, just yesterday, I got a press release about Maveron expanding to San Francisco and Silicon Valley.

The VC firm, co-founded by Howard Schultz of Starbucks fame, is used to this sort of attention. But the San Francisco news was a bit confusing to me, because Maveron has been active in the Bay Area for a long time. As usual, the interesting stuff is in the follow-up. I had a chance to connect yesterday with Dan Levitan, a fellow co-founder of Maveron and the mastermind of the firm’s consumer-focused investment strategy. Besides the new San Francisco office, I also asked Levitan about the Seattle e-commerce startup his team is currently building; his outlook and themes in the consumer tech space; and his first fateful meeting with Schultz back in the early 1990s.

First, some basic stats. Maveron was founded in 1998 by Levitan and Schultz, and is best known for its early investments in eBay, drugstore.com, Shutterfly, and Cranium. Its current portfolio companies—there are 22 active around the U.S.—include Potbelly Sandwich Works, Pinkberry, LiveMocha, and Altius Education. The venture firm has about $750 million under management.

Levitan explained that opening Maveron’s San Francisco office has been a two-year process, but it doesn’t signify any shift in the firm’s geographic focus. “I don’t see this announcement as anything more than opening an office where we’ve already done business,” he said. “We’re one firm with two offices.”

The San Francisco office is headed by Amy Errett, a veteran of Olivia.com and E*Trade, who was announced as a Maveron partner last year. She is joined by new principal Ben Choi, who was previously with Storm Ventures, In-Q-Tel, and RRE Ventures. As Levitan puts it, instead of Errett flying up to Seattle four times a month, she’ll fly up three times a month (and the Seattle team will fly down the fourth week).

But Levitan emphasized that he’s looking in his own backyard for new investments as much as ever. “Seattle is an economy and region that’s very rich with groundbreaking, innovative consumer companies,” he said, pointing out obvious examples like Starbucks, Nordstrom, Amazon, and Costco. One less obvious company he mentioned was online real estate broker Redfin, which isn’t in …Next Page »

Comments (1) | Reprints | Share:        

Wade Roush wrote:

One of the great things about doing your computing in the cloud is that you don’t have to worry about which machines your jobs are running on, or whether they have the right software on them, or even what city they’re in. Indeed, that’s the whole point. But one of the less ideal things about doing your computing in the cloud is that the network everyone uses to reach various public clouds—the Internet itself—is so unpredictable.

Cloud providers—who essentially rent out processing and storage resources so that companies can outsource IT infrastructure—can guarantee a certain level of service within their clouds. But there’s almost nothing they can do about traffic delays on the Internet, a problem that falls right back into the laps of users who were trying to increase efficiency in the first place.

Now, companies that rely on big cloud providers like Google, Amazon Web Services, or GoGrid will have a better way to see how the network connections linking them to each provider’s data centers are performing—and make judgments over time about which clouds are easiest to reach. That’s thanks to Apparent Networks, a Wellesley Hills, MA-based network performance software startup that’s introducing a service today called the Cloud Performance Center. It’s a free online tool that visually quantifies network performance for up to five “paths” between a user’s location and any specified cloud provider. (After the first five paths, Apparent charges $5 per path per month for the information.)

Information about network performance is useful because large delays or “latency” can disrupt business and weaken the argument for outsourcing computing jobs to off-premises resources. “Providers like Amazon or Google are building these beautiful data centers with top-notch people that have got these great services that are highly available, and that’s all good, but when I have to connect, I have to do it over the same old Internet,” says Jim Melvin, Apparent Networks’ president and chief marketing officer. “What we’ve done is provision the Internet, in North America to start with, with performance monitors in about a dozen key points like Boston, Miami, San Francisco, Vancouver, and Detroit. Our service will allow customers to see the performance for any of the top-tier cloud providers in those locations, trending back in time.”

So if you have an office in Boston, you can use the Cloud Performance Center to see which cloud provider has a history of the fastest network connections to the Hub. Melvin emphasizes that Apparent is “not trying to poke anyone in the eye” over the latency issue, but rather to raise awareness. Network connection slowdowns are most often a result of logjams within the network itself, he says.

“The vision and the ideal of cloud computing is that you don’t have to worry about where the compute cycles are being generated, but we’ve seen countless times that the reality of the Internet today is that you cannot count on connectivity,” he says. “You do need to care what level of performance you’re getting across the Internet.”

The fact that cloud computing providers can’t or won’t take responsibility for network performance issues once information leaves the data center “is one of the big stumbling blocks for the growth of cloud computing in general,” Melvin says. His company’s so-called “path-based” performance monitoring is one way businesses can get around that problem, he argues—indeed, he says some Apparent clients are already using the service to monitors tens of thousands of paths.

Comments | Reprints | Share:        

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.”

Comments (1) | Reprints | Share:        

I was chatting with a couple of local investors at the TechStars (seed fund and mentorship program) event in Seattle on Wednesday. They thought the VC panel discussion of the startup climate and culture in different cities around the country was boring. If you’re an entrepreneur or investor, they said, that’s just where you are, and you deal with it.

But au contraire, mon frère—as a journalist and outside observer—I view those comparisons across different innovation clusters and their respective histories as a way to generate some good stories and insights. On the panel, there were certainly some constructive (and at times controversial) things said about the entrepreneurial climate in Seattle, Boston, and Boulder.

Here are a few edited highlights from the panelists, several of whom bring an outside perspective to their current cities:

Brad Feld of TechStars and Foundry Group gave a brief history of the startup scene in Boulder, CO—useful for any city with entrepreneurial aspirations. “When I showed up in ’95, what I found was on the software side you had a lot of smart engineering talent but you didn’t have much else. A handful of entrepreneurial companies in storage and cable infrastructure. Not much in the way of entrepreneurial executive leadership other than from these pockets. In the mid-90s, because of the counter-culture community—and the Internet was purpose-built for places like Boulder—you had a lot of people who were independent, very smart, doing their own things suddenly intersecting with a medium that allows you to be anywhere. It’s 100,000 people plus 25,000 college students. A pretty small town, but it has the largest percentage, per capita, in the United States of computer scientists and PhDs. Yet there wasn’t a broad wave of entrepreneurial experience,” Feld said.

“In the mid-to-late 90s, there was huge activity around the Internet. Anybody with a pulse could get a company started. The predictable thing eventually happened, there was a lot of wreckage. But from ‘95-2001, Boulder had imported a lot of executive talent—CEOs, VP sales, engineering leadership. We also had a lot of entrepreneurs who had one or two companies in that cycle. So by 2003, people were starting to come back and get re-engaged in entrepreneurial activity. There were probably 50-plus people that made $10 million or more, so there was enough of an angel community. There was critical mass around this. But what was missing was something that tied the community together. There was the endless cocktail party circuit of entrepreneurs. Eventually people got bored and stopped going.”

That led David Cohen, Feld, and others to form TechStars in Boulder. “It cemented this notion of first-time entrepreneurial activity is the core of the ecosystem. What was needed was fresh meat into the system. We got a lot of new, young people into the community,” Feld said. “The other thing was that one of the hardest things for first-time entrepreneurs is to have an engaged relationship with an experienced entrepreneur. We found we were creating this thing that integrated the whole value chain of entrepreneurs. It really energized the existing entrepreneurial activity around a thing.”

Chris Sheehan of CommonAngels then gave his thoughts on the Boston innovation scene. [Disclosure: Chris is on Xconomy’s board.] “In the IT ecosystem in Boston, there are a number of things going on,” Sheehan said. “It’s a wonderful place for universities and colleges. MIT has been the granddaddy in terms of the entrepreneurial ecosystem. But what I’m seeing is a fresh set of energy coming …Next Page »

Comments (8) | Reprints | Share:        

It was a quiet week for deals in the Northwest, but we dug up some important ones in business software, wireless, and biotech.

—Seattle-based Amazon’s (NASDAQ: AMZN) acquisition of Zappos, the online apparel and shoe seller based in Las Vegas, has closed. The deal, first announced back in July, is valued at $1.2 billion in Amazon stock.

—Bellevue, WA-based Onehub has raised $1.3 million in Series A funding from Ignition Partners and angel investors. The company was founded in 2007 and makes Web-based software for business collaboration and file-sharing.

—We took a close look at small financing deals in the Northwest, worth between $100,000 and $1 million, that have flown under most people’s radar in the past month. According to stats from ChubbyBrain, a New York-based information and data services company tracking the innovation economy, the following companies raised a small amount of equity in September: Acucela, Adometry, BallLogic, InEnTec, Inson Medical Systems, Second Porch, Site 9, SynapticMash, Smilebox, Vantos, and WA 32609.

—Seattle-based Kineta, a biotech firm developing drugs to fight autoimmune diseases, has formed a strategic alliance with MPI Research, based in Michigan, as Luke reported. Financial terms of the deal weren’t given, but Kineta said it will receive support for animal studies that will enable the company to begin clinical trials next year.

—Portland, OR-based RF Arrays raised $6.5 million in equity, options, warrants, and/or other rights to acquire securities, according to a regulatory filing. The investors were not disclosed, but New York-based New Science Ventures has previously backed RF Arrays, which develops wireless communications technology.

Comments | Reprints | Share:        

Seattle-based Amazon (NASDAQ: AMZN) said today its acquisition of online apparel and shoe seller Zappos, based in Las Vegas, has closed. The Zappos management team will remain intact, the company said. In a blog post, Zappos CEO Tony Hsieh said his board of directors has been “switched out,” and that the deal, worth about 10 million shares of Amazon stock, is valued at $1.2 billion, based on Friday’s closing price.

Comments | Reprints | Share:        

If you thought the e-reader market was already confusing—with Sony, Amazon, and Barnes & Noble all offering their own unique versions of e-book devices based on the same underlying electronic paper display technology from Cambridge, MA-based E Ink—get ready for a new level of chaos. Companies like Interead in England and Irex in the Netherlands also make e-book gadgets with E Ink displays, and thanks to a collaboration between E Ink and Santa Clara, CA-based Marvell Semiconductor, the hurdles for other companies experimenting with e-reader technology are about to get a lot lower.

In fact, at least three new e-book devices containing a new chip jointly designed by E Ink and Marvell are expected to come to market this winter: the Que proReader from Mountain View, CA-based Plastic Logic, the enTourage Edge from McLean, VA-based enTourage Systems, and the Alex Reader from Fremont, CA-based Spring Design.

Inside all three devices will be the Armada 166E, a so-called “system-on-a-chip” that combines a display controller designed by E Ink with other key components needed in any portable e-book reader today, such as a microprocessor, memory, wireless modems (Wi-Fi, Bluetooth, and 3G) and power management devices. The existence of the Armada chip was revealed today in a joint announcement from Marvell and E Ink. The companies said they have already begun shipping it to their customers, the e-book device makers.

The fruit of a three-year collaboration, the Armada chip is reportedly smaller, thinner, and—crucially—cheaper than the electronics built into previous generations of e-book devices. A Marvell executive quoted by Dow Jones speculates that Asian manufacturers might eventually be able to use the Marvell chip to build readers for one-fourth the cost of the current generation of products (the Kindle and the Nook both retail for $259, and Sony sells its readers for $199 and $299).

Such massive price reductions are probably needed before e-book reading devices can break past the early adopters willing to pay a premium for new technologies, and reach the general consumer market. But these extreme price drops may still be a ways off: for now, putting the display controller on the same piece of silicon with a microprocessor, memory, and other components will probably yield an equipment cost savings of 15 to 20 percent overall, says Sriram Peruvemba, E Ink’s vice president of marketing.

The Armada chip is also built to rapidly render high-resolution documents such as PDF files, and to speed up operations such as turning a page in an e-book. All current e-book devices that use E Ink’s electronic paper displays, Peruvemba explains, include E Ink’s own controllers, branded Metronome and Apollo. Not only do these controllers use outdated …Next Page »

Comments (1) | Reprints | Share:        

For Mik Kersten, it all started when he saw Maria Klawe speak at the University of British Columbia. It was the mid-1990s, and Klawe, a distinguished mathematician and computer scientist—now the president of Harvey Mudd College and recently appointed to Microsoft’s board of directors—was giving a lecture to students and faculty. “She talked about her hippie days traveling in India, and it convinced me to switch to computer science,” Kersten says.

Kersten was an undergrad at UBC studying anthropology. Today, he is the co-founder and CEO of Tasktop Technologies, a Vancouver, BC-based startup that is working to reinvent user interfaces for software developers and other knowledge workers so they can be much more productive. It is one of those quiet Northwest success stories you probably haven’t heard much about yet, but you will—Tasktop is profitable, and has recently signed a number of important deals with the likes of IBM and Microsoft.

The company’s basic idea is to organize work around tasks, instead of files, folders, or Web pages. Kersten’s “task-focused interface” builds tools and information around the specific task you are trying to accomplish—writing code to import digital media into a library, say, or analyzing trends in a database. Tasktop’s software automatically gathers screenshots, notes, e-mails, and other information related to the task at hand and puts it on your desktop in a single handy spot for reference. If you come back to the task an hour later, or a week later, your desktop is returned to where you left off.

It’s a far cry from the way most people work on tasks today, using tools that are glorified Windows Explorer or Mac Finder applications, or Outlook or Google search tools that make you scroll through tons of results, Kersten says. As a software engineer himself, he had felt quite a bit of personal pain. “I was getting bad RSI [repetitive strain injury] in my forearms,” he says. “I was spending more time looking for the information I needed to write code than actual coding.”

Kersten’s early career path took him to Palo Alto Research Center (formerly Xerox PARC) in Silicon Valley, where he worked on user interfaces until 2003. There, he was exposed to a technology called “degree of interest trees.” This is a type of interface that lets you navigate large, branching structures of information. The amount of detail displayed is based on your level of interest in each item, so you don’t get swamped with lots of information about low-priority matters. As Kersten explains, this “makes it easier for programmers to work with very complex systems”—like having to refer to millions of lines of code, or search through 100,000 files. “Programmers get completely overloaded with information,” he says. “It’s extremely difficult to find what they’re looking for.”

After a six-month stint at Bellevue, WA-based Intentional Software (billionaire Charles Simonyi’s company), Kersten decided to quit industry to do fundamental research on how to improve …Next Page »

Comments | Reprints | Share:        

Well, we can’t all be Amazon. While the Seattle-based e-commerce giant (NASDAQ: AMZN) raked in a $199 million profit for the third quarter of 2009—a 68 percent increase in net income over the same period last year—Microsoft (NASDAQ: MSFT) posted an 18 percent decline in its profits (still $3.57 billion, better than analysts expected).

But beyond these giants of the global tech scene, Seattle has some mid-market public tech companies that we’ve been paying closer attention to lately. That’s because they provide a much more complete picture of what’s going on in the public markets, as well as the mood across different industries like digital media, data storage, and high-performance computing.

Of these local bellwethers, two companies announced modest quarterly profits this week, and two others posted losses but are on the long-term comeback trail. It’s clearly still tough times out there, but here are the highlights:

—RealNetworks (NASDAQ: RNWK), the Seattle digital media and entertainment company, managed to post a surprising profit of $1.5 million for the third quarter of 2009, its first profitable quarter since the first three months of 2008. That’s despite posting quarterly revenue of $140.3 million, a decrease of 8 percent from $152 million in the same period last year (when the company posted a net loss of $4.5 million). RealNetworks reduced its operating costs and formed partnerships with Facebook and Apple over the past few months.

—Cray (NASDAQ: CRAY), the Seattle-based supercomputing company, reported a net loss of $2.1 million for the third quarter. But its revenue was $58.6 million, a 7 percent increase over the same period in 2008. In the second quarter of this year, Cray posted a surprise profit of $3.4 million on the strength of large government contracts and a broader customer base.

—InfoSpace (NASDAQ: INSP), the meta-search company based in Bellevue, WA, posted a profit for the second straight quarter (following three consecutive quarterly losses). Its net income for the third quarter was $1.8 million, based on revenue of $54.4 million, an increase of 38 percent over its revenue from the same period a year ago.

—Isilon Systems (NASDAQ: ISLN), the Seattle-based data storage firm, reported a net loss of $4.9 million for the quarter. The company’s quarterly revenue was $30.5 million, up 1 percent over the same period a year ago, but its net loss increased from $3.7 million in the previous quarter this year. I wrote about nine-year-old Isilon’s efforts to bounce back from some tough times in a profile last week.

On October’s last trading day, the stock market plunged. As Scott E. Marcouiller, a senior equity market strategist at Wells Fargo Advisors in St. Louis, told the New York Times today, “The market is focusing on the glass is half empty…We just needed to let some of the air out of the balloon.”

Comments | Reprints | Share:        

In a presentation at the Boston Book Festival last weekend, Jon Orwant, a Google engineer involved in the company’s Book Search project, made a memorable and, I thought, quite perceptive remark about the e-book business.

“Think about the books you have at home and how you organize them,” Orwant said. “Some of you may not organize them at all. Some of you may organize them based on the person who reads them—Mom’s books, Dad’s books, the kids’ books. Some may organize by subject or genre. I’ll tell you one way you don’t organize them: you don’t say, ‘Here are the books I bought from Barnes & Noble, here are the books I bought from Amazon, and here are the books that were given to me as gifts.’ We need to be very careful to make sure that we don’t create an environment in which digital books end up that way.”

What Orwant was talking about, of course, is the siloing going on in the nascent e-book industry—the fact that if you buy an e-book for your Amazon Kindle, you can’t read it on a competing e-book device such as Barnes & Noble’s new Nook, or vice-versa. That’s because book publishers, who are understandably spooked by the music industry’s implosion, are worried about losing revenue if people can copy, transfer, and share their digital content too easily. It’s also because many of the companies getting into the e-book market aren’t happy just selling you a gadget or a couple of megabytes of digital content—they want you to buy into a whole ecosystem (i.e., the Kindle family of devices and the 360,000 books formatted for them, or the Nook and its claimed one million titles).

And so far that plan is working, at least on early adopters like me. I bought a Kindle 2 in May, and since then I’ve purchased about $120 worth of books for the device, plus subscriptions to The Atlantic and The New Yorker, and multiple Sunday editions of the New York Times. All of this content is protected by digital rights management (DRM) technology that would prevent me from opening it on, say, a Nook or a Sony Reader device—and that quite likely will prevent me from reading my books 10 or 20 years down the road, when my Kindle will be dead or obsolete and reading technologies and content formats will undoubtedly be completely different. But those restrictions haven’t kept me from scarfing up more e-books: since I became a Kindle user I’ve bought about 20 Kindle editions and exactly four physical books (two that weren’t available as Kindle editions, and two that were gifts for other people).

But while I’m not particularly concerned about the fact that my Amazon e-books are tied to my Amazon hardware (hey, I’ve also bought hundreds of songs and videos from Apple’s iTunes Store that only play on my Apple MacBook and my Apple iPhone), a lot of people are more skeptical toward the Amazon model. As e-books gradually catch up to and surpass physical books as the main way many people access book-length content—which they will, mark my words—continued reliance on proprietary formats and DRM could wind up fragmenting our common literary inheritance in exactly the way that Orwant warned about.

But I have a feeling the story isn’t over, and that market pressures may eventually push all of the big players in the still-young e-book business toward a more open future. The day before the Boston Book Festival, I had a long conversation with Steve Haber, president of the Digital Reading Division at Sony, and I got an earful about …Next Page »

Comments (4) | Reprints | Share:        

This morning I checked my e-mail, powered by Google, and then used Google Maps to find my way to the Google Kirkland open house. It reminded me a little bit of the scene in “Being John Malkovich” when Malkovich, the actor, finds a portal into his own brain and sees that everyone looks like him and says nothing but, “Malkovich, Malkovich.” OK, I guess the analogy would fit better if I also worked for Google and uttered “Google, Google” all day—but that might even happen sometime, if Google’s pace of hiring keeps up. (Just kidding.)

Engineering and site director Scott Silver, who’s been on the job since June (succeeding Peter Wilson, who left the company), introduced the new Kirkland facility, which has been officially open since August 31 and employs more than 350 people in a unified campus setting. He gave a little history of Google’s Kirkland operation—the first office was at Carillon Point in 2004, Google’s first major presence in the Northwest—and how it has grown and contributed to the company’s products. Google Talk, which does Internet telephony and instant messaging, was born and raised in Kirkland, for instance.

Other areas of focus for the Kirkland office include:

—Search: Webmaster tools, and instant indexing for real-time news.

—Advertising: AdPlanner (see below), AdWords Opportunities (helping advertisers optimize search ads), Google Analytics, and Campaign Insights (a new service released last week that’s around making brand ads more effective).

—Applications: Google Talk, Google Talk Video (within Gmail), Google Maps (including a new application for directions on mobile phones), the Chrome Web browser, YouTube video clips, and Google Sync (for synchronizing your mobile phone).

—Infrastructure: system and corporate billing software for supporting applications at huge scales.

Silver, a former Amazon and Netscape veteran, said he’s “quite proud of what we’ve done here, and immensely happy to come to this day,” and to be able to say Google is here to “create great products and find great engineers.”

I followed up with Silver afterwards, and he confirmed Google Kirkland is actively hiring software engineers, but he didn’t say how many positions are open at the moment. He said his team is doing hundreds of interviews per month, “and we’d love to do more.” I asked him about the 800-pound gorilla down the road, Microsoft, and whether Google is recruiting much talent from …Next Page »

Comments (2) | Reprints | Share:        

It was a big week for big companies. Amazon’s stock soared, and the e-commerce giant made a deal with Microsoft that should make Kindle e-books even more popular. There was also interesting deals news from Bing and a few Northwest venture firms and startups.

—Kennewick, WA-based Infinia has raised $3.25 million in debt and options out of a total financing round worth as much as $10.5 million, as Luke reported. The investors were not disclosed. Infinia, which (before this latest round) has raised $84 million from a syndicate that includes Paul Allen’s Vulcan Capital and Vinod Khosla, is developing novel solar power systems.

—Seattle-based Bezos Expeditions, the venture firm run by Amazon’s Jeff Bezos, re-upped with an investment in Aviary, a design software startup based in Long Island, NY. The $7 million Series B round was led by Boston-based Spark Capital. Aviary makes cloud-based software for graphic design, audio editing, and other creative digital services.

—Amazon (NASDAQ: AMZN) is teaming up with Microsoft (NASDAQ: MSFT) to release Kindle for PC, a software application that will let people read Kindle electronic books on Windows personal computers. No financial terms were announced. The free application will be released next month.

—Revolution Computing, which has offices in Seattle and New Haven, CT, raised $9 million from North Bridge Venture Partners of Waltham, MA, and Intel Capital, based in Santa Clara, CA, as Wade reported. The startup, which provides software and support for the statistical programming language known as “R,” also announced that Norman Nie, a veteran of the data mining software firm SPSS, is its new CEO.

—Kirkland, WA-based OVP Venture Partners led a $12 million investment in RedSeal Systems, a security software firm in San Mateo, CA. Existing investors Venrock Associates, Jafco Ventures, Sutter Hill Ventures, and Leapfrog Ventures also participated in the deal, which brings RedSeal’s total funding to more than $43 million. OVP managing director Mark Ashida has joined the company’s board.

—Bellevue, WA-based AudienceScience confirmed it has raised $20 million from Silicon Valley investors Mohr Davidow Ventures, Mayfield Fund, Meritech Capital Partners, and Integral Capital Partners. The online advertising firm said it will use the funding to hire new staff, do R&D in targeted advertising, and expand internationally. Luke previously reported that AudienceScience (formerly called Revenue Science) had closed a $15.1 million funding round involving equity, debt, and preferred stock, which had the potential to go up to $20 million, based on an SEC filing.

—Microsoft is integrating real-time status updates from Twitter and Facebook into its Bing search engine, as Thea Chard reported in her first freelance story for Xconomy. The Redmond, WA, software company has formed non-exclusive partnerships with the two social media networks, as part of Microsoft’s plan to fuse the “real-time Web” with its search engine to create a new kind of social-media focused reader. Bing’s access to tweets is now in beta form, while the Facebook deal, which will grant the search engine access to all publicly shared information from the social network’s users, will be effective at a later date, according to Microsoft senior vice president Yusuf Mehdi.

Comments | Reprints | Share:        

Boston-based Spark Capital has led a $7 million Series B investment in Aviary, a creative design software startup based in Long Island, NY. Bezos Expeditions, the Seattle-based investment firm of Jeff Bezos from Amazon, participated in the round as an existing investor. Aviary makes cloud-based software for graphic design, audio editing, and other digital creation services. As part of the deal, Mo Koyfman of Spark Capital is joining Aviary’s board.

Comments | Reprints | Share:        

Seattle-based Amazon (NASDAQ: AMZN) announced today a new “Kindle for PC” application that will let people read Kindle electronic books on Windows personal computers. Microsoft (NASDAQ: MSFT) demoed the free app at its Windows 7 release event in New York. It will be available worldwide next month.

Comments (1) | Reprints | Share:        

Brendan Boyd, a San Diego Internet entrepreneur, gave me an update today on the venture we discussed last April, when Boyd and his partners were developing ideas for a website that enables users to sell merchandise through multiple online venders.

The website that Boyd had created with partners Jan Anton and Eric Jacobson was in beta development at the time, and they also had decided to rename the business. They had started the business as iSelfStore.com, which only reflected half of their business model—an online hub that helps users to keep an inventory of their belongings.

So they changed the name of their San Diego-based startup to Onemarketplace, which better reflects the higher-value part of their online business, which enables users to put their items up for sale on multiple e-commerce sites at the same time. Their Web-based application enables someone to fill out a single form at Onemarketplace.com, and sell items simultaneously on eBay, Amazon, Craigslist, Oodle, OLX, and Vast. Users also can sell merchandise through online classifieds at AOL, Facebook, and MySpace, and promote their listings on social networks like Twitter and Facebook.

Boyd says they launched Onemarketplace.com on Sept. 14, and Web traffic has been rising steadily since then. “We re-branded the business and re-did the whole look and feel of the website,” Boyd says.

The partners have continued to put their own money into the venture, Boyd says. While he told me in April that they were seeking between $250,000 and $500,000 in angel funding, Boyd now says they have stopped actively seeking investors.

Comments | Reprints | Share:        

For 15 years now, we’ve all thought of the World Wide Web as a near-literal web of connections between millions of servers in different locations, with each machine hosting just a tiny slice of the Web’s overall content. But that’s not the new shape of the Web, according to Arbor Networks of Chelmsford, MA. Today, a startling amount of Web content and traffic is controlled by just a handful of large Internet companies.

“As of 2009, 60 percent of all Internet content comes from, or terminates within, just 100 to 150 companies,” says Craig Labovitz, Arbor’s chief scientist. “That’s a very dramatic change in where the data is coming from.”

What that means in practical terms is that if you surf to the website for, say, the Pretty Good Car Company, more than likely the data is no longer stored on servers at Pretty Good itself, but on machines owned by a centralized infrastructure provider that Pretty Good has hired to handle its site, such as Akamai, Limelight, Rackspace, Amazon, Equinix, GoDaddy, or Verizon.

Arbor released data on this and other trends yesterday at the North American Network Operators Group conference in Dearborn, MI. The company makes software that helps companies detect and prevent denial-of-service attacks against their Internet servers.That software is installed on the Internet routers of 70 to 80 percent of the top content providers and Internet service providers in North America, which allows Arbor to collect vast amounts of information about Internet traffic.

Indeed, Arbor’s view of network traffic rivals and in some ways surpasses that of Cambridge, MA-based Akamai, whose “State of the Internet” reports we’ve covered frequently here[link]. Only about 20 percent of global Internet traffic passes through Akamai’s content distribution network.

In a trend that Arbor calls the “rise of the hyper giants,” most Web content and traffic is moving to a small number of very large hosting providers and cloud services companies. The world’s Internet addresses are controlled by about 35,000 network operators, and as recently as 2007, the majority of Internet traffic was smoothly distributed across these operators. But today, 60 percent of all Internet traffic is generated by just 100 companies, according to Arbor, which conducted its study in collaboration with the University of Michigan and the non-profit Merit Network in Ann Arbor, MI.

There is concentration at the very top: 30 percent of all traffic comes from just 30 companies. And Google alone generates about 6 percent of all Internet traffic, Arbor found. Akamai, Microsoft, Limelight, Yahoo, and GigaNews (which hosts Usenet newsgroups) are also on the list of “hyper giants.”

“Basically, 150 to 200 companies are now generating the majority of Internet content, at least as measured by traffic,” says Labovitz. It’s an inevitable and, in some ways, unsurprising trend, given the rising popularity of cloud-based hosting models for both content and software, and in view of the huge investment required to build data centers with the processing and communications capacity to handle today’s most popular forms of content, especially bandwidth-hogging video. But one implication, of course, is that outages and other snafus in a single location can affect many more Internet users all at once.

“Ensuring availability used to mean backing up your mail server or your laptop,” says Labovitz. “Nowadays, what does it mean if all your e-mail is on Google and Google is down for the day? If it wasn’t true before, it is very quickly becoming true: the network is the computer.”

Comments (1) | Reprints | Share:        

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.”

Comments | Reprints | Share:        

The deals rained down on the Northwest this past week. We saw some strong activity in biotech, gaming, and software.

—Integrated Diagnostics, the new biotech company founded by Lee Hood, has secured $30 million in venture funding from Menlo Park, CA-based InterWest Partners, the U.K.-based Wellcome Trust, and Germany-based dievini Hopp Biotech holding, as Luke reported. The startup aims to detect cancer and neurodegenerative diseases like Alzheimer’s in their earliest (and most treatable) stages.

—Washington state’s venture funding numbers for the third quarter of 2009 fell to $144 million, down from $275 million in the previous quarter, as Bruce reported. And one deal in September, the $50 million investment in Calypso Medical, a Seattle-based developer of technology that pinpoints radiation therapy for cancer to minimize side effects, dominated the state’s third-quarter figures.

—Decho, the Seattle-based subsidiary of EMC (NYSE: EMC), formed a partnership with British mobile network operator Vodafone to develop new data backup services for European markets. Financial terms weren’t given. The products will be built using Mozy, the online backup service operated by Decho.

—Redmond, WA-based Bionavitas formed a partnership with Seattle-based Blue Marble Energy to make biochemicals from algae, as Luke reported. Financial terms of the deal weren’t announced, and the companies didn’t say exactly what they plan to make under this alliance.

—Seattle-based Evri formed a partnership with media giant Hearst to power its new website and news aggregator, LMK (which stands for Let Me Know). Evri, a Paul Allen-backed startup that uses semantic analysis and natural language processing to find connections between entities on the Web, is providing the content-filtering software for LMK.

—Omeros, the Seattle biotech company developing a treatment to improve recovery from knee surgery, completed its initial public offering last week, raising $68.2 million, as Luke reported. The state’s first IPO in more than two years was underwritten by Deutsche Bank and Wedbush PacGrow Life Sciences. Omeros (NASDAQ: OMER) opened trading at $10 a share and closed its first day at $8.73, giving it a market valuation of about $186 million.

—Seattle-based Amazon (NASDAQ: AMZN) participated in a $19 million Series C investment in Engine Yard, a cloud computing and software automation company based in San Francisco. Amazon was a previous investor in Engine Yard, along with Benchmark Capital and New Enterprise Associates. The latest deal also included new investors DAG Ventures, Bay Partners, and Presidio Ventures.

—Seattle-based PopCap Games raised $22.5 million in its first outside funding round since its founding in 2000. The investment was led by Meritech Capital Partners, based in Palo Alto, CA, and also included participation from investors Larry Bowman and John McCaw. The money will be used to help accelerate PopCap’s global expansion and distribution of its games.

Comments | Reprints | Share: