Andover, MA-based envIO Networks has spent several years developing a recommendation technology called “Social Genome” that helps mobile phone owners find applications they’ll like based on the preferences of their friends and acquaintances. Today envIO introduced software called Chorus that applies the Social Genome technology to the 100,000-plus apps in the Apple iTunes App Store. Chorus, which is itself an iPhone app, lets users see which other apps their friends are using and how they’re rated. “iPhone users already ask friends and colleagues about cool, new apps. Chorus makes it simple,” Linda Barrabee, a former Yankee Media and Jupiter mobile analyst who is an advisor to envIO, said in a statement.

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Last time I checked, there were 85,000 iPhone applications in Apple’s iTunes App Store, a number that seems to grow by thousands every week. But most of those apps were dreamed up by developers, not by average users. Now there’s a way for anyone with a bright idea for an iPhone app to submit it—and, if other people like the idea enough, to see it get made.

It’s called Appswell, and it launched yesterday. The idea behind the Cambridge, MA-based startup, the brainchild of a young serial Web entrepreneur named Dan Sullivan, is to take advantage of the collective creativity of iPhone users to come up with the next great money-making app, and give everyone a chance to share in the proceeds.

Anyone with an iPhone can submit an idea to Appswell or vote on other users’ ideas. Each month, the company will turn the most popular idea into an app, and reward the creator with a $1,000 cash prize and a stake in future sales.

“Rather than a bunch of developers putting 20 things on a whiteboard, we think we have a method of engaging thousands of people,” says Sullivan. “For the consumer who has a great idea in his head but isn’t a developer and will never build it, we are narrowing the gap for getting that idea tested and vetted and turning it into reality.”

Appropriately, there’s just one way to submit an idea for an app: through Appswell’s own free iPhone app. (The app, and the company itself, were ready to launch back in mid-September, when I first met Sullivan. But like so many other companies, Appswell had to wait for weeks while the still-mysterious iTunes App Store approval process inched forward. Sullivan finally got the okay last night.)

The app itself couldn’t be simpler. To submit an idea, users simply create an account, click “Add your idea,” and enter a name, a category, and a short text description. Users can also browse ideas submitted by others by category, popularity, or recentness. If you see an app idea you like, you can vote for it, comment on it, or share it via e-mail or Twitter.

At the end of each month, Sullivan says, the company will hold a week-long, American Idol-style showdown between the five most popular app ideas. The winning idea will be turned into an actual app by Appswell’s developers—assuming that it’s pitched at general consumers, can be sold for $1 to $2, and meets Apple’s standards. The winner gets the cash prize plus 10 percent of future proceeds from the app.

The Appswell app is so new that users have submitted only a couple dozen ideas so far, some of which were seeded by beta testers, according to Sullivan. The most popular idea, as of this morning, was for a “sound board maker” that would let users make short sound recordings and edit them into comical audio clips.

Sullivan says he believes Appswell is the first company to try the crowdsourcing model in the iPhone app arena. But he thinks the experiences of companies in other markets—he points to Threadless’s T-shirts and Local Motors‘ car design competitions—bode well for his startup. The beauty of Appswell’s model, he says, is that …Next Page »

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I didn’t think it was possible for a popular website like Urbanspoon to fly below the radar. But it has—at least for the past week. The two-year old Seattle startup, which provides local restaurant reviews and has more than a million users of its iPhone application every month, quietly unveiled new sites in every city across the country on Thanksgiving Day.

Over a choux pastry and latte at Le Fournil on Lake Union, Urbanspoon co-founder Ethan Lowry (who opted for a savory filled croissant) told me about the strategy. The launch was supposed to be low-key, so as to get feedback on the sites and improve them for greater consumption. The sites went live at midnight on Thankgiving morning, when things would be quiet. “We thought we’d kick the tires, and things would be calmer. Traffic always falls off on holidays, especially Thanksgiving,” Lowry says. “That turns out to be true on PCs, but not on iPhones. Thanksgiving was a huge day on the iPhone.”

At the same time, Urbanspoon added a feature whereby iPhone users can send in corrections to restaurant info like addresses, phone numbers, and dollar amounts. “Typically, we get a few hundred suggestions a day [on PCs],” Lowry says. “We come back from the long weekend, and there were 6,000 corrections.” The Urbanspoon team—all three of them, plus a few contractors—are still digging out.

It’s all part of a major expansion I wanted to ask Lowry about—how to manage the company’s growth, how to scale up, and so forth. But let me back up for a minute. Urbanspoon was in 71 major cities before—including food meccas like San Francisco, New York, and of course Seattle—and now it’s effectively everywhere in the U.S. (There’s even a site for my hometown of Urbana, IL, which convinced me it’s everywhere—Lowry suggested it should be called “Urbanaspoon” there.) The local sites give a combination of professional reviews and user-generated content, as well as restaurant information and an aggregate score, the percentage of people who like a given joint.

For the first 71 cities, Lowry says, “Our concept was to tap into existing content providers—critics, bloggers, users—and give them a reason to want to play in our world, but ourselves not have to establish field offices in every city. We’ve managed to keep the tools ahead of the need.” Those tools include a sophisticated software “indexer” that pulls in reviews from different sources and creates a rich database for each city.

But a different approach was needed for the latest expansion, because of the sheer …Next Page »

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Bellevue, WA-based Bsquare (NASDAQ: BSQR) announced today it has acquired the assets of TestQuest, a mobile test automation and management company based in Minneapolis, MN. The purchase price is about $2.2 million. The acquisition helps Bsquare, which makes software for smart devices, add new customers in the U.S., Asia, and Europe.

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Last month, Xconomy reported on a visit to China by five Seattle-area tech companies as part of a mobile-telecom mission organized by the Washington Technology Industry Association (WTIA). The goal of the trip was to open up business opportunities for the companies by setting up meetings with potential partners, investors, and customers. On Friday, I sat down for a one-on-one with Ken Myer, the president and CEO of the WTIA (and an Xconomist), to talk about the trip and what he learned about the Chinese mobile market.

Myer led the delegation, together with the Washington State Community, Trade and Economic Development office, and representatives from the local tech companies Formotus, McObject, Mobile Semiconductor, RealNetworks, and Zoodango. The trip included stops in Beijing, Shanghai, and Shenzhen, extensive meetings with dozens of companies and local government officials, and an excursion to the Great Wall—Myer’s first trip there, though he’s been to China several times.

Their experience struck me as useful stuff for anyone thinking globally about the impact of their company or organization, particularly in the mobile sector. So, here are Myer’s top five take-aways after observing the China mobile market up close:

1. It’s even bigger than you think. With more than 700 million handsets out there (100 million were sold in the first half of this year alone), the Chinese market size is truly impressive. “Embedded software around improving performance or cost of a device is an early adopter opportunity,” Myer says.

2. Mobile behaviors of consumers are very different compared with the U.S. Hardly anyone leaves a voice message, there’s lots of texting, and much less use of data applications—the mobile market is something like 90 percent voice and 10 percent data (versus 69 percent voice and 31 percent data in the U.S.), according to Myer.

3. Think regionally. Domestic growth is key to the Chinese mobile industry. And a lot of that growth is in rural areas, where there are cheap “mountain plans” for wireless service. “There’s no single application for all of the country,” says Myer. “Pick a province, and focus on one arm of a carrier that’s amenable to working with you.”

4. Mobile business applications are in early days. “It’s a good time to get in,” says Myer, though there are long sales cycles and adoption times at this point. And mobile gaming is even further behind.

5. As for intellectual property, go in with your eyes wide open. Keep in mind Web services are probably easier to protect than a technology that involves a disk or file that can be copied.

Myer also stressed the importance of building personal and business relationships. Each day on the trip was filled with formal business meetings, followed by a lavish banquet. (Myer cited steamed fish, seafood, and duck as his favorite dishes.) “Meals are really where the relationship is established. You talk to people one-on-one, and you cement the personal relationship…It’s important to think of these efforts as long-term,” he says. At the same time, “we want to get business and revenues flowing for our members.” To that end, Myer says he plans to return to China early next year, in part to visit more companies and formalize a trade cooperation agreement with Chinese officials.

Lastly, Myer had an unrelated (and much more Washington-centric) public service announcement: Get your applications in this week for the annual Industry Achievement Awards, which will be given out at the WTIA’s 25th anniversary bash on the evening of March 25, 2009, at the Paramount Theater in downtown Seattle. The deadline for all entries is this Friday, November 21. The award categories include technology innovator of the year, consumer product or service of the year, and a new one, breakthrough startup of the year.

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It’s one of the bigger tech funding rounds as of late. And, not too surprisingly, it’s in the mobile sector. Bothell, WA-based Dexterra, a maker of software that helps businesses manage mobile workflow, has announced it has closed a $21.5 million investment round led by New Enterprise Associates, with previous investors Canaan Partners, Intel Capital, Mesirow Financial, Motorola Ventures, and Sigma Partners also participating. The startup was not specific about how the financing will be used, saying only that it will advance “Dexterra’s mobile business platform and applications” as well as “future opportunity in one of the fastest-expanding segments in the enterprise software market.”

Dexterra, which was founded in 2002, makes software that allows a company’s laptops and mobile devices to connect to corporate servers and access information such as billing records and inventory lists. The software runs on both Microsoft and Linux operating systems, and is designed to make mobile communication and data retrieval more efficient—which is increasingly important as businesses expand their mobile operations. Dexterra has benefited from partnerships with big companies like AT&T, IBM, Motorola, Verizon, and RIM.

The funding round seems to indicate the market for mobile business software is strong, and still growing. “Today’s challenging economic environment makes deciding which companies to invest in more difficult than ever,” said Scott Sandell, general partner at New Enterprise Associates, in a statement. “We are impressed by Dexterra’s revenue traction in both enterprise and carrier markets, strong suite of products targeted at growing markets and unwavering dedication to product excellence and customer success.”

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Updated Sep. 24 (see below): OK, this is getting good. Yesterday’s announcement that Amazon’s MP3 music store will be pre-loaded onto the G1—the first mobile phone to be powered by Google’s Android operating system—makes the future of music and other mobile services you can get on your phone delectably messy. The deal also drives home the impact that Seattle-area companies are having, and will continue to have, on what promises to be a very global product.

After all, Bellevue, WA-based T-Mobile is the carrier putting out the G1 phone. And, oh yeah, the handset maker for the G1 is HTC, a Taiwanese manufacturer whose North American headquarters happens to be in Bellevue as well. “The T-Mobile G1 is our opportunity in the U.S. to accelerate the mass adoption of the mobile Web,” said Cole Brodman, chief technology and innovation officer of T-Mobile USA, in a statement.

But Amazon’s involvement in the deal is what’s really interesting here. Its music store, currently a distant #2 to Apple’s iTunes, offers some 6 million songs from the four major labels plus thousands of independent labels. The G1 partnership could push Amazon over the hump and position it squarely as Apple’s chief music competitor. It certainly “will put Amazon MP3’s vast selection of low-priced DRM [digital rights management] -free music at the fingertips of even more customers in more places,” said Bill Carr, Amazon’s vice president for digital music and video, in his statement.

Although iTunes still owns the majority of market share in downloaded music, the major labels are clearly backing Apple’s competitors—not just Amazon, but also Napster, MySpace Music, Microsoft’s Zune Marketplace, Rhapsody (another store with local roots, in RealNetworks), and others. What’s more, as VentureBeat points out, much of iTunes is not DRM-free yet, and its songs are slightly pricier than Amazon’s (by 10 cents per track).

It all adds up to a serious push by Google and Amazon to dethrone Apple and quickly grab some mobile market share. But what do local experts think of the strategy? I pinged Bill Baxter, chief technology officer of Seattle-based software firm Cozi and previously the founder of online-music startup SnapTune, to get his take on the deal.

“I have been tracking G1,” Baxter wrote back. “The basic strategy is to suck all the oxygen (licensing revenue) from Microsoft and Apple, leaving only oxygen for Google (ad revenue) which they alone could dominate. Clearly, giving away the software stack, allowing Amazon to do their MP3 thing, probably without collecting a single dime of the download revenues, is an aim to take out Windows Mobile, iPhone, and iTunes all in one fell swoop. It’s an interesting strategy and we’ll see just how effective it will be.”

Baxter is skeptical on that front, though. “I really don’t think Google is very good at complex software stacks for consumers,” he continued. “Further, by relinquishing control over hardware to ODMs [original design manufacturers] like HTC will only undermine the customer user experience. This is the problem Microsoft faces. I would not be surprised to see an iPhone killer (if you’d call it that) come from Microsoft where they control the entire experience (think Xbox-like strategy). We’ll see if Google can pull this off.”

Update: I also heard from Enrique Godreau, co-founder and managing director at Seattle-based Voyager Capital. “With respect to the G1, I would say that this is not a technical innovation, but rather a market innovation,” Godreau says. “That is, I expect the greatest impact of this product to be in the way that carriers, consumers, and coders interact with each other from now on. Like Berlin, carriers need to embrace the reality that for them to continue growing in this information age, they must tear down that wall.”

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Tom Huseby has a fairly normal-looking BlackBerry phone. No fancy software on it, he says—not even from Ontela, SnapIn, or Zumobi, local mobile-tech companies for which he serves as chairman of the board. It rang two or three times during our meeting at his downtown Seattle office, and he dealt with the calls right then and there. It’s the only way he ever gets things done, he says.

I’d expect nothing less from one of Seattle’s foremost VC authorities in wireless and mobile technology, though he would disagree with that label (OK, maybe I’d expect a fancier phone). And what with all the local wireless deals in the past few weeks—SnapIn Software’s $180 million acquisition by Nuance, Medio Systems’ contract with Google and Verizon to do mobile search, and RadioFrame Networks’ latest $28 million funding round—I thought it would be a good idea to sit down with Huseby. He is the co-founder of SeaPoint Ventures, as well as a venture/strategic partner at Oak Investment Partners, Hunt Ventures, and Seattle-based Voyager Capital. I wanted to get his take on the history of wireless in the Seattle area, his strategy in doing wireless deals, and where it all comes from.

Huseby began by establishing that the Seattle area has “the highest concentration of wireless technology in the world. There are more cool [mobile] applications within a 10-mile radius than anywhere else.” (Next would probably be London, he says.)

Next, he gave a fascinating modern history of wireless, starting with the original AT&T Bell Labs technologies and moving into spectrum allocation by local towns and territories. Those territories got put together into the first nationwide network by Craig McCaw in the 1980s, when he started McCaw Cellular in Seattle. In 1994, AT&T acquired McCaw Cellular for $12 billion-plus. One of McCaw’s veterans, John Stanton, went on to start VoiceStream Wireless and Western Wireless in the area, which were bought by T-Mobile and Alltel in 2001 and 2005, respectively. “Every time someone was bought, they actually didn’t move people out of Seattle. People would move here, and it just kept growing,” Huseby says. “We have more concentration of carrier presence here than anywhere else in the country. It’s unbelievable. There are no wireless carriers headquartered in the Bay Area.”

The stage was set for a local explosion of mobile software and services companies. “The big famous shift in it all was, this also was ground zero of a lot of Internet technology,” says Huseby. “So when you combine Internet with the fact that we know mobile here, all of a sudden we started generating some of the first mobile data applications.” (These applications are distinct from things like networking equipment, fundamental radio-frequency technologies, and handsets, which are centered in other locales like Texas, Southern California, and Massachusetts.)

Pretty soon big software companies like Microsoft, Google, and RealNetworks were into mobile tech. On Microsoft, Huseby notes, “They should be buying software companies to get stuff on mobile phones, one after the other.” He adds: “So all of a sudden, little Seattle became the place to go if you wanted to build wireless applications.”

Which is where he enters the picture. Born in New York and brought up in São Paulo, Brazil, Huseby started his career in the 1970s with materials science company Raychem. Through the process of selling products to telecommunications companies, he got to know them very well. “It’s just as hard as selling to a wireless carrier. You had to work …Next Page »

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A team from Paris, France-based Voxmobili, which has operations in Bellevue, WA, has won $100,000 in Google’s Android Developer Challenge. The Paris-based team developed PhoneBook 2.0, a mobile-software package that combines instant messaging, social networking (showing contacts and locations), and live streaming in a secure way.

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The big-time acquisition train keeps on rolling through town. The latest Seattle-area company to get bought for big bucks is SnapIn Software, based in Bellevue, WA, which announced earlier this week that it is closing a deal with Burlington, MA-based Nuance Communications worth an estimated $180 million in Nuance stock.

On the surface, it’s not the most obvious pairing. Nuance is a speech-recognition giant. SnapIn makes mobile software for, among other things, automating customer support by providing a menu on the screen of your cell phone. But where they connect is in the market potential for providing customer service without a real live person on the other end of the phone—and in their combined access to the big wireless carriers, provided the two companies’ technologies can be integrated successfully. (I hate automated phone trees as much as the next guy, but if they can solve my T-Mobile problems faster than waiting 15 minutes for a representative, I’m all for it.)

To get some perspective on the deal, I caught up with Tom Huseby, who is chairman of SnapIn’s board— as well as the founder of SeaPoint Ventures and a venture/strategic partner at Oak Investment Partners, Hunt Ventures, and Voyager Capital. Huseby’s expertise is in the wireless sector. He couldn’t give too many specifics yet, because Nuance is driving the deal and it won’t close until October. But he seemed pretty impressed with how things were done. “Nuance was pretty damn smart to find us when they did. They looked at this market very early on and identified SnapIn as having a key position,” says Huseby. “They had a single-minded focus on what this means to them… and how to integrate [SnapIn] with their technology.”

Over the past few years, SnapIn has secured more than $30 million in capital from area firms Frazier Technology Ventures and Trilogy Equity Partners, as well as Hunt Ventures and Oak Investment Partners. Given the size of the Nuance deal, it seems like a solid exit for the startup and its investors. “I think SnapIn was worth more to a big company than it could grow to be on its own,” says Huseby. “As we checked out the deal, the price was something we found acceptable.”

Huseby says he will stay involved with SnapIn for the next year and a half, and the management team has agreed to sign on as well. Looking ahead, he says, “It’s a natural extension of the mobile market—1.2 billion phones are sold each year, and they’re all getting smarter and smarter. I’m just glad we started working on this when we did, five or six years ago…Nuance said, why not take advantage of this huge capability to solve a lot of problems?” Huseby mentions a lot of positive feedback from customers and end users in field tests of SnapIn’s software. “It’s a very positive product to have if you’re a carrier,” he says.

Which only reinforces the sentiment from SnapIn CEO Robert Lewis, who earlier this week pointed to “deeper relationships with carriers and every major handset vendor” as a key selling point of the Nuance deal—and a crucial step towards the widespread adoption of his company’s mobile software.

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