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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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.

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Where is “the cloud”? It’s everywhere and nowhere; it’s the power of algorithms distributed across entire networks but concentrated down to the screen of your wireless laptop; it’s the sum of all the world’s on-demand computing jobs, churning away in big data centers in secure, undisclosed locations, flinging their inputs and outputs across the electronic ether. But for one day, at least, the nucleus of the cloud will be in a definite place: Microsoft’s New England Research and Development Center in Cambridge, the venue for Xconomy’s December 10 Cloud³ Forum and its companion event, CloudCamp Boston.

That 3 in the title of our event is an exponent, as in “Cloud Cubed.” The first time Xconomy organized a cloud computing seminar, back in June 2008, the urgent questions in cloud computing still centered around the basics—was the cloud secure? private? reliable? Today, vendors are on their way to solving most these fundamental technological challenges. But in their place, there’s a new welter of implementation-related questions.

Which cloud service model would your company be best off using—Software as a Service, Platform as a Service, Infrastructure as a Service? Should you build a private cloud, tap a public one, or think about hybrid models? How much money can you really save by turning to the cloud—and how much will you have to spend? Which cloud services are startups and big enterprises really using today, and which are still hype? Which cloud players do entrepreneurs need to know about beyond the Big Seven (Amazon, Google, IBM, Microsoft, Salesforce, Sun, and VMware)? And where is the cloud heading—what new services and opportunities are being opened up for entrepreneurs?

When we sat down to design the agenda for this year’s cloud forum, we realized that there are so many of these important questions on the table that we couldn’t just call the event Cloud²—so we jumped straight to Cloud³.

We’re assembling a crack crew of industry experts for Cloud³, including representatives of big cloud infrastructure providers such as Akamai, Microsoft, and Iron Mountain; startups making the cloud more useful to other companies, such as Cloudswitch; and companies leveraging the cloud to provide services to their own customers, such as Allurent, Litl, Pixily, and Sonian. The half-day session (from 8:30 a.m. to 12:30 p.m.) is designed especially for entrepreneurs, investors, and technologists, and our goal is to make sure that every attendee has a chance to learn from (and network with) the practitioners who are building and exploiting real cloud services.

We’ll release the detailed agenda for the event soon, but here’s the general picture:

• Keynote talks by Tom Leighteon, chief scientist at Akamai, and Yousef Khalidi, of the Windows Azure team at Microsoft.

• “Cloudbursts”—a series of presentations by six local startups offering innovative cloud services and/or making creative use of the cloud.

• An interactive “unpanel” exploring the nuts and bolts of how companies can best tap cloud services led by Sim Simeonov, a former partner at Polaris Venture Partners who now heads executive advisory service FastIgnite.

• A progress report from Eric Nakajima from the Commonwealth of Massachusetts on the Holyoke High Performance Computing Center in western Massachusetts.

You can see the full speaker list for Cloud³ here, and you can register for the event here. Early bird registration is available for $95—but we urge you to reserve your place now, because after November 23, the price goes up to $150. (We’ve also got a limited number of student tickets available for $30, and students can apply for event scholarships through the Stay in MA Program.)

We’re pleased to announce that we’re partnering with the CloudCamp organization to turn December 10 into a full day of cloud computing discussion and learning. CloudCamp Boston, an unconference for early adopters of cloud computing, will take place in the same space at Microsoft from 2:00 p.m. to 7:00 p.m. People who sign up for CloudCamp (registration is free) not only get discounted admission to Cloud3, but are welcome at a joint networking lunch from 12:30 to 2:00 p.m., which is hosted by Xconomy and Microsoft.

If you have questions about the event, please feel free to contact me at wroush@xconomy.com.

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Craig Mundie is a geek, and I mean that in the best possible way. Microsoft’s chief research and strategy officer, the 17-year veteran of Redmond, WA, still talks like an engineer, throwing out terms like “heterogeneous machine architectures,” “GUIs” (graphical user interfaces), and “clouds and clients” like there’s no tomorrow. It’s kind of refreshing, given that he is in charge of setting the long-term agenda for one of the most powerful companies on the planet.

Mundie is in the midst of a weeklong tour of some top universities around the country. He called me yesterday from Cambridge, MA, where he had just finished a presentation to Harvard University students, faculty, and guests. He visits the University of Illinois at Urbana-Champaign (my alma mater) today, and comes to Kane Hall at the University of Washington tomorrow afternoon. It’s similar to the college tours Bill Gates used to do.

From what I can tell, the goal is to stir up interest in computer science, give audiences a glimpse of future computing systems as Microsoft sees them, and stimulate discussions about how these technologies can help solve some pressing global problems. (You can read more about Mundie’s tour and demos in this Seattle Times story.)

Besides hearing Mundie’s thoughts on computer science education and the future of computing, I wanted to drill down and ask him about the challenge of taking on Microsoft’s strategy development (after Gates stepped down last year) in the most difficult economic times in recent memory. I also wanted to ask him about the deeper culture of Microsoft, the renewed role of research in the company’s future, and the importance of nurturing relationships around the world—and his secret ally in that quest.

Here are some edited highlights from our conversation:

Xconomy: What are you trying to get across to university audiences on this tour?

Craig Mundie: In these presentations, I’m trying to get them to think not only about how computing evolves, but with that evolution, what kinds of problems will become approachable, and what are the new methods? Several things are evolving in parallel [and leading to more heterogeneous and complex machines]. That begets the requirement of how to do programming around parallel computing. With very high-scale computing facilities, the cloud and the client come together to form one system that people will program. They will use those things together with new display and sensing technologies.

Just as the GUI revolutionized computing, we could see a similar revolution with more natural interactions with machines, rather than just “type and point and click.” That will expand the number of people who can interact with computers. With the diversity, rooms can become computers [for instance]. You won’t think of them so much as a computer.

X: What are some of the global problems you think advanced computing will help solve?

CM: Beyond the computer science realm, I’ve talked about energy and the environment. I show one piece of research work we’re doing to compose computational models, a simplified climate model, at Princeton and Microsoft Research. It shows linkages between deforestation in the Amazon and atmospheric temperatures around the rest of the world. If you were a policy person, these kinds of things would give you tools to support your decision making.

In energy, we’re doing computer modeling and direct visualizations. I showed a model, loaned to us from TerraPower [the nuclear power firm spun off from Nathan Myhrvold’s Intellectual Ventures …Next Page »

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[This post also appears on OVP's blog---Eds.] The University of Washington’s Computer Science and Engineering (CSE) department’s Affiliates day is one of the most fun and rewarding days of the year for me as venture investor and geek. It involves a showcase of projects and research areas by professors and students and is a festival of creativity, new ideas, and engaged smart people. It is a day my colleagues and I look forward to every year.

Last Thursday’s meeting ended with a panel on “The Changing Face of Venture Capital” moderated by UW’s Ed Lazowska, who prompted us with a series of provocative questions. On the panel with me were Greg Gottesman of Madrona Venture Group, Ron Howell of WRF Capital, Bill McAleer of Voyager Capital, and Cam Myhrvold of Ignition Partners.

One of the first topics was the impact of the recession on startups and venture capital. Most VCs expressed the opinion that money was harder to find but that if you could get funded, it was a great time to start a company because skilled people were available, cloud computing providers such as Amazon have made it possible to do with less capital, and there were fewer competitors being funded. There was recognition that it has to be done with less, given the exit markets. But if anything, Greg Gottesman said Madrona is sticking to its model and not changing given a one-year blip.

Cam Myhrvold made the point that there were a lot of entrepreneurs using Amazon Web Services and open source to quickly bootstrap companies with much less capital than prior years. My comment was that if you play at the application layer using open source and AWS, you better think hard about marketing and customer knowledge since there are few technical barriers to entry.

One topic that was raised was why should entrepreneurs go for VCs over angels, money aside. I disagreed that money could be ignored and said that the quality of money was critical in these times. The recession has meant that almost all companies have needed more cash and, given that outside funding is tough, insiders had to step up. Many investors have not stepped up, which has made all VCs more conscious of the quality of their co-investors.

Ed asked what areas were particularly attractive for Seattle, and we got a consistent set of answers. Digital media, gaming, software, and the emerging areas of IT applied to green tech and IT applied to biology are core areas of interest. Each firm had its own areas of interest—for instance, Bill McAleer liked mobile apps and the application of social networks to the enterprise as one of his areas. Bill related a story from a recent trip to NYC where the cab driver was touting his favorite iPhone app—a map of all the public bathrooms. When asked about really innovative new ideas, Greg Gottesman mentioned 3-D printers and how his son was willing to empty his bank account to get one.

At OVP, we like the investment thesis that green tech and biology are becoming more compute-intensive, and that companies that can bring a view of IT applied to these areas are particularly attractive.

My conclusion from the evening is that Seattle is a great place for innovation and has a set of dedicated VCs who want to see a vibrant, risk-taking community. Each firm had its own areas of focus, some overlapping, but all were focused on creating great companies and skilled entrepreneurs here in Seattle. I left feeling that we were lucky to have UW CSE, a great research department generating innovative ideas, and a VC community very committed to fostering growth.

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Bellevue, WA-based Onehub announced it has raised $1.3 million in Series A financing from Bellevue-based Ignition Partners and angel investors. Onehub makes cloud-based software for collaboration and file-sharing, and was founded in 2007. Back in April, we reported that Onehub had raised $600,000 from undisclosed investors, and in September we mentioned the company was part of Ignition’s portfolio.

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Axeda, the Waltham, MA-based startup that makes a cloud-based system for wireless tracking of company assets, announced today that it has completed a $5 million Series B funding round led by JMI Equity of San Diego and Baltimore. At the same time, the company raised $4 million in venture debt from MMV Financial of Toronto.

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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.

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The first meeting of the Boston Big Data Summit was held yesterday. Since the announcement on October 2, the event has had a great reception. Just over a hundred people attended, with an almost even split between “end users” and “vendors.” By a significant margin, the vendors were entrepreneurs or self described “startup types.” Many established players were also represented in the audience.

The program featured a keynote speech by Curt Monash, a leading analyst and strategic advisor to the software industry. This was followed by a lively panel discussion with Ellen Rubin, founder and vice president of products at Cloudswitch; David Cohen, chief architect for the Cloud Infrastructure Group at EMC Corporation; and Larry Dennison, president and founder of Lightwolf Technologies.

The Boston area has long had a tradition of nurturing entrepreneurship in “big iron” and enterprise class products, and the audience yesterday reflected that tradition. Late in September, Bob Zurek and I met to discuss the possibility of setting up this forum. We recognized that there were no technical forums that were geared towards Database Management Systems (DBMS) and Information Management (IM) professionals in the Boston area, and felt that there was an acute need for one.

In setting up the Boston Big Data Summit, we had a simple mission: to create a technical forum for DBMS and IM professionals, and foster innovation and entrepreneurship in these areas, through networking, debate and the sharing of experience. The forums would necessarily be somewhat geeky (that’s what you get when you have two geeks running the show).

The goal was to make them accessible to everyone at no cost. Our sponsors Foley Hoag, Infobright, Expressor Software, and Kalido made the event possible, and we intend to continue to fund this venture through corporate sponsorships.

Yesterday’s event is, hopefully, the first of a regular series of events that we will be organizing. The next event is scheduled for sometime in January, and we would like the one after that, in the spring, to be a day long event with multiple speakers, panelists and discussion areas. The excellent reception to yesterday’s event is a clear indication of the need in this area.

The keynote speech reflected Curt’s extensive experience and depth of knowledge in the field of Big Data, analytics, and the companies and technologies in the space. Curt described the market and provided three different ways of segmenting the market for these products, a segmentation that was the subject of much discussion after …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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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.

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It’s one of the great mysteries of the modern Internet. How can Web publishers make more money from their content? For everything from blogs and journalism to games and entertainment, publishers and software companies alike have been trying to solve this problem for many years.

Now BigDoor Media, a six-person startup in Bellevue, WA, thinks it has found the right approach, at least for a certain market. Its basic idea is to provide a revenue stream for entertainment publishers that bridges the gap between traditional advertising and subscription models. BigDoor, which is emerging from stealth mode today with a beta version of its software, provides an “offer platform” that acts as a gateway to a website’s premium content. Instead of paying for a game by credit card, say, a consumer can opt to fill out a survey, sign up for a newsletter, or buy an advertiser’s product (like Fiji Water, for instance).

This is not an entirely new idea. And in fact, BigDoor operates in a similar space as many other Seattle-area startups we’ve reported on, including AppBank (for social entertainment applications), DevHub (for creating and hosting websites), Mpire (for online-ad optimization), Wetpaint (for social publishing), and Others Online (for behavioral profiling of audiences), which was acquired this summer by the Rubicon Project. These companies have different customers and revenue models, but they are all fundamentally trying to help Web publishers make more money from their content.

What seems to set BigDoor apart is the experience of its founders. Keith Smith and Jeff Malek spent about 10 years in the online advertising world with Bellevue-based Zango, the controversial “adware” company that closed down earlier this year. Smith was CEO and co-founder of Zango, while Malek was vice president of engineering and products. Zango had success but eventually ran into problems, in part because adware in general—software that tracks which sites you visit and delivers targeted ads—became widely reviled by people who felt it violated their privacy or was just plain annoying.

The key is that Smith and Malek seem to have learned from their mistakes as well as …Next Page »

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Seattle-based Decho announced today it has formed a strategic partnership with Vodafone, a British mobile network operator, to develop cloud-based data backup services for personal computers. Financial terms of the deal were not released. The new products for European markets will be built using Mozy, the online backup service operated by Decho, which is a subsidiary of Hopkinton, MA-based EMC (NYSE: EMC).

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Seattle-based Amazon (NASDAQ: AMZN) has participated in a $19 million Series C financing for Engine Yard, a cloud computing and software automation company in San Francisco. Amazon was a previous investor, along with Benchmark Capital and New Enterprise Associates, both of whom participated in the latest round, which also included new investors DAG Ventures, Bay Partners, and Presidio Ventures. Engine Yard, which has raised more than $37 million to date, makes automation and management technologies for Ruby on Rails developers.

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The Northwest deal flow in the past week tended toward small partnerships and acquisitions. But there was still some significant activity in software, Internet, and entertainment.

—As ghostbuster Bill Murray once said, “Dogs and cats living together…mass hysteria!” Seattle-based Pet Holdings, operators of I Can Has Cheezburger (Lolcats) and other humor websites, formed an advertising partnership with San Francisco-based social network Dogster. Dogster will sell ads for the Cheezburger network in exchange for the greater traffic on Pet Holdings’ popular sites (which will hit 1 billion page views this week). Details of the revenue split were not given.

—The Washington Technology Industry Association (WTIA) joined forces with advocacy organization TechAmerica in Washington state, thereby broadening its membership to include more companies in hardware, electronics, and devices. WTIA has now become TechAmerica’s exclusive management and marketing partner in the state.

—Seattle-based Appature is getting close to securing its first round of venture funding. No deal has closed yet, but the bootstrapped and profitable healthcare marketing startup has generated a lot of interest in the VC community. Appature was founded in early 2007 and develops software that helps companies in healthcare, pharmaceuticals, and medical devices understand their customers better and do more effective marketing.

—Kirkland, WA-based Digeo, the home entertainment company backed by Paul Allen, was bought by Arris, a Georgia-based broadband communications firm, for $20 million in cash. Arris will acquire Digeo’s high-definition digital video recorder, called Moxi, along with about 75 Digeo employees and their expertise in video networking and multimedia services. About 10 Digeo staff members will lose their jobs in the transition, however.

—Seattle-based Maveron and Boston-based Spark Capital co-led an $8 million Series A investment in Altius Education, a San Francisco company deveoping online higher education programs through partnerships with nonprofit universities. The Noah Fund also participated in the funding. Maveron was founded in 1998 by Howard Schultz and Dan Levitan, and focuses on investments in consumer and tech companies.

—Microsoft (NASDAQ: MSFT) acquired the technology assets of Interactive Supercomputing (ISC), a parallel computing software firm in Waltham, MA, as Ryan reported. Financial terms of the deal weren’t given. ISC’s chief executive, Bill Blake, and the firm’s technical experts are moving into Microsoft’s New England Research & Development Center in Cambridge, MA.

—This was not a new deal, but I took a closer look at Bellevue, WA-based Ignition Partners’ investments in cloud computing and virtualization. The VC firm’s biggest win to date is XenSource, the Palo Alto, CA-based virtualization company that was bought by Citrix (NASDAQ: CTXS) for $500 million in 2007. Three other Ignition investments in the space—Skytap, InstallFree, and Xeround—are still in pretty early days, but are off to promising starts.

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Now that the media craze around cloud computing seems to have died down just a bit, I thought it would be a good time to take a considered look at what one of the Northwest’s most prominent venture capital firms is working on in this space, which is having increasing influence in every area of software and information technology (IT).

Over the past couple of months, I’ve had a chance to talk with a number of VCs at Bellevue, WA-based Ignition Partners, and they’ve shared a great deal of knowledge and insight into how they think about cloud computing and virtualization. What follows is not a comprehensive look at the firm’s strategy, but rather a few thematic highlights that struck me as important to those interested in cloud-based technologies and business models. To an outside observer at least, what Ignition does in this area will go a long way towards determining its long-term success—and to some extent, it already has.

First, a couple of definitions. Cloud computing, as most see it, is about using remote servers run by vendors like Amazon or Google to store and process data over the Internet, instead of buying and maintaining your own local machines. In fact, Amazon’s chief technology officer, Werner Vogels, has a more industry-focused definition, one that Ignition Partners agrees with: cloud computing is “IT as a service,” delivered in a scalable way to multiple customers via the Web.

Virtualization is a related but different animal; it can be thought of as enabling cloud computing, among other things. Ignition defines virtualization as separating software from hardware—and applications from operating systems—so it lets you run multiple operating systems on a single server, for example, or multiple applications on your desktop, all with minimal setup and security hassles. Big companies like Microsoft, VMware, IBM, and Citrix compete heavily in this space.

But back to Ignition. The firm was founded in early 2000 by ex-Microsoft and McCaw Cellular executives, and now has more than $2 billion under management. It invests in both early-stage and growth-stage companies in the U.S. and China, focusing on consumer tech, communications and wireless, and business software and infrastructure. Ignition has received its fair share of criticism in the press, stemming from incidents like the closure of Sotto Wireless earlier this year, and last fall’s accounting scandal at Entellium—both companies it backed.

Yet Ignition is strong enough in cloud computing and virtualization that, given how central these issues have become to most aspects of IT, it seems like a key differentiator for the company. Especially at a time when most if not all venture firms are going back to basics and thinking about where their most valuable expertise lies. Indeed, Ignition’s biggest win to date was in virtualization: XenSource’s $500 million …Next Page »

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Seattle-based Decho, which is an EMC (NASDAQ: EMC) company, and China Telecom announced today a partnership to deliver cloud-based data services to Chinese Internet users. The companies’ first offering is called eYun, and is based on Decho’s Mozy online backup service. Financial terms of the partnership weren’t given. Decho was formed in November 2008 by Hopkinton, MA-based EMC, in a merger between Utah-based Mozy and Seattle-based Pi.

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The DEMOfall 09 conference, billed as “the launchpad for emerging technology,” kicks off today in San Diego, with company presentations and new product launches officially starting tomorrow morning. The Seattle and Portland, OR, metro areas are well-represented in the mix, with three Seattle-area startups and one Portland company scheduled to present their stuff. That’s all according to VentureBeat, which co-produces the conference.

It’s a big deal in the tech industry, and a great opportunity for a select group of startups. Here’s a little bit about each Northwest company that will take the stage:

—Intelius, based in Bellevue, WA, provides background checks and identity theft protection for consumers and businesses. Back in May, we reported that the company acquired Spock, the Silicon Valley-based people search engine, for an undisclosed amount. Intelius was founded in 2003 and is led by CEO Naveen Jain, the founder of InfoSpace.

—Point of Wealth Systems, based in Portland, OR, has developed a method that allows employees who make their money in cash and tips (waitstaff at restaurants, for example) to deposit their earnings into a secure register for savings, retirement, or investment purposes. Point of Wealth was formed in March 2008 to bring financial services to this new market.

—Symform, based in Seattle, has been honing its cloud data-storage product in beta trials (and a pre-launch version) since the spring. We first profiled the company back in February, and in April, Symform announced it had raised a $1.5 million Series A round from OVP Venture Partners. Its basic idea is to offer cheap, efficient, and secure data storage and backup services to small and medium-sized businesses.

—Enroute, based in Bellevue, WA, is giving a sneak preview of its product—a unified system to help businesses find the most efficient way of shipping packages from A to B. Enroute is one of the finalists from the Zino Society investment forum, which took place last Thursday in Seattle. It is in the running for a $50,000 Zino investment prize, to be announced within the next few weeks.

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EMC (NYSE: EMC), the Hopkinton, MA-based information infrastructure company that anchors Boston’s infotech industry, today unveiled a series of executive-level changes intended to better integrate its disparate businesses, which range from storage, content management and archiving, security, and IT management to cloud computing services.

Most significantly, the company said it has hired veteran Intel executive Pat Gelsinger away from the giant chipmaker, where he ran its largest business group, and has given him the newly created title of President and Chief Operating Officer, EMC Information Infrastructure Products.

Gelsinger will report to EMC chairman and CEO Joe Tucci, and will oversee EMC’s entire information infrastructure business—meaning all of EMC’s product divisions except VMware (NYSE: VMW). (EMC owns an 84 percent stake in the Palo Alto, CA, virtualization software maker, but treats it largely as a separate company; VMware president and chief operating officer Paul Maritz reports directly to Tucci.)

Gelsinger will also join the newly expanded “executive office of the chairman” at EMC, as will Howard Elias, who has been promoted to President and Chief Operating Officer, EMC Information Infrastructure and Cloud Services. Elias was formerly president of EMC’s Global Services division and its Ionix IT management group.

David Goulden, EMC’s executive vice president and chief financial officer, will also join the expanded executive office, which previously included only Tucci and EMC Vice Chairman Bill Teuber.

The existing presidents of EMC’s divisions–for example, Mark Lewis in the content management and archiving division, and Art Coviello in the RSA Security division—all remain in place. In essence, Gelsinger, 48, has been brought in to provide unified leadership for EMC’s entire line of software and hardware products businesses, while Elias, 52, will do the same thing on the services side. But they’ll both do it from within a tight-knit, cross-cutting executive office whose role, in part, will be to look for ways that EMC’s product innovation can benefit its services operations, and vice-versa.

“It’s a reorganization of the structure of how we bring our products and services together,” says Michael Gallant, an EMC analyst and media relations manager. “This is a signal that we will be continuing to deliver more joint solutions and developing long-term road maps with a lot of the different technologies from the different divisions together.”

Such a reorganization may be particularly important for EMC in an age of blending and interoperability, when technologies such as virtualization allow different software and operating systems to run on common hardware, and when large companies have technology from a wide range of vendors under the same roof.

Indeed, EMC may be counting on Gelsinger—who oversaw a panoply of enterprise products at Intel, including PCs, servers, and communications and storage products, not to mention its next-generation Nehalem microprocessor architecture—to …Next Page »

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It was another quiet week for deals in the Northwest, as the holiday weekend brought summer to its unofficial close. We saw a little activity in software, mobile, and semiconductors, and heard from an old Seattle-area dealmaker (see below).

—Kai-Fu Lee, the former Microsoft vice president and founding director of Microsoft Research Asia, has quit as head of Google China and has raised $115 million to create an incubator for high-tech startups in China, as Bob reported. The new organization, Innovation Works, is based in Beijing and is backed by investors including WI Harper Group, Foxconn Technology Group, the Legend Group, the New Oriental Education & Technology Group, and YouTube co-founder Steve Chen. Lee’s incubator will focus on building startups in the Internet, mobile, e-commerce, and cloud computing spaces.

—Bellevue, WA-based VoiceBox Technologies said it has raised $13 million from corporate investors in Asia, including AutoNavi, Inventec, MiTAC, and the Morningside investment fund, since 2008, bringing the company’s total funding to about $21 million. VoiceBox, which makes speech recognition technologies for voice-based search in automotive and mobile applications, is looking to raise an additional $15 million from institutional investors.

—Hillsboro, OR-based TriQuint Semiconductor has acquired TriAccess Technologies, a maker of integrated-circuit amplifiers for multimedia applications, based in Santa Rosa, CA. Terms of the deal were not announced. TriQuint (NASDAQ: TQNT) develops wireless communication technologies for mobile, cellular, aerospace, and defense projects.

—Seattle-based Dashwire, a maker of synchronization software for Web and mobile devices, raised about $1.1 million in new equity financing. Bellevue, WA-based Trilogy Equity Partners is a new investor in the startup, which previously raised $1.6 million from Best Buy Capital and Seattle-area investor Geoff Entress in May.

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