Interview: How Microsoft plans to juggle its three Internet brands

Microsoft's revamp of its search engine under the name Bing gives the company a third online brand -- adding to the original MSN and the relative newcomer Windows Live in its stable of Internet properties. It might seem like a lot, but each has a distinct and important role in Microsoft's online strategy, said the general manager of the company's search team in an interview this afternoon.

That was one of several topics addressed by Microsoft search GM Mike Nichols in the phone conversation from California, where Microsoft CEO Steve Ballmer unveiled the revamped search engine this morning. Read on for excerpts from the interview.

Q: Do you aspire to have Bing become a verb, in the same way Google is?

Nichols: I don't think that we necessarily aspire to that. That's something Steve talked a bit about at the conference today -- something that a product has to earn over a period of time that it is the definitive service for that particular category. We had several different requirements for the name of the product. No. 1 is, we wanted something that was short, that we could get worldwide, that you could spell, and when people would first hear that word, that the things in their mind would be around precision, and cutting through the clutter. The quote inside the team is, "The sound of found." That's the idea behind the brand name.

Q: You now have three online brands: MSN, Windows Live and Bing. Does Windows Live fade into the background and go away at this point?

Nichols: No, no. The idea is to really focus the brands. It's clear MSN is a portal, that's where you go to get great content, great trusted content. Windows Live is about connecting people with other people and information that they're looking for through email, Messenger, etc., as a logical extension of the core Windows experience. What we really want to do with our search brand, Bing, is to be clear about the fact that there is this experience that is 100 percent geared toward search. So it's really just a matter of focusing, it's not really a prioritization of any of the three, or necessarily setting one in the background.

Q: In terms of the technology, is Bing really all that different from what you've had in the past?

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Ballmer shows off Zune HD

On-stage demos are nice, but the best way to get the attention of geeky reporters at a tech conference is to pull out an early version of your next shiny gadget for a quick sneak preview in the hallway. That, at least, was Steve Ballmer's approach yesterday, as the Microsoft CEO gave Engadget an early look at the Zune HD at the D: All Things Digital Conference in California.

Also see this photo gallery of Ballmer showing off the device. Engadget seemed impressed with what it saw, calling the hardware "surprisingly thin" and the interface "very colorful and pretty snappy."

Ina Fried of CNet News.com separately got a brief demo of the device at the conference, reporting that the "most striking feature" was the organic light-emitting diode (OLED) display.

Microsoft confirmed the Zune HD earlier this week. It's the company's attempt to rival the iPod touch. Despite a comment Ballmer reportedly made to Engadget about the device shipping in a month, the company says the Zune HD will be out in the fall.

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Microsoft puts Bing on a truck

Microsoft hasn't gone into much detail yet about how it will advertise its new Bing search engine -- but apparently the company's new strategy for challenging Google includes a big black truck.

We started receiving reports yesterday afternoon about a promotional Bing vehicle being spotted in Redmond. Pictures posted to Flickr show a truck with what appears to be a gigantic screen displaying a live Bing traffic map, to help people decide whether to take I-90 or the 520 Bridge home from work.

The truck uses the phrase "Bing & Decide," the same phrase used in the title on the Discover Bing promotional page. Will that be the tag line on the broader Bing advertising campaign?

Trucks aside, the stakes are high for the company, with AdAge reporting that Microsoft will spend $80 million to $100 million on the campaign. Without confirming the number, Microsoft CEO Steve Ballmer told Walt Mossberg yesterday that the budget was "big enough that I had to gulp when I approved it," according to this BusinessWeek report.

Presumably the roving truck is only a slice of that budget. We've asked Microsoft for more details on the vehicle, and whether it plans to roll out similar trucks in other cities. Stay tuned.

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Will Google Wave crash on Gist?

It's always a little nerve-wracking to learn that your startup company is suddenly in competition with Google. We've seen this before with AdReady, which last fall got word that the search titan was rolling out a new product for self-service display advertising. And so it was yesterday with Google Wave, the new communications organizer which at first glance looked a bit like Gist.

Just as a refresher, Seattle-based Gist -- which raised $6.75 million from Vulcan Ventures and Foundry Group earlier this month --  is trying to re-invent how people organize information by consoldiating messages that arrive from various channels: email, LinkedIn, Facebook and Twitter.

In a blog post yesterday, Google's Lars Rasmussen explained the problem that the company was trying to tackle by asking: "Why do we have to live with divides between different types of communication — email versus chat, or conversations versus documents?"

Given the potential crossover, I asked Gist's T.A. McCann what he thought of Google Wave.

While McCann called it "truly impressive engineering," he said it is more of a competitor to Microsoft Outlook/Exchange than it is to Gist. In his view, Gist is more focused on organizing content while Google Wave is a way to streamline how people communicate with one another.

"I can see even building some cool extensions for Gist using Wave for 1-1 communications and/or small teams collaborating on an account, all using Gist data," he said.

In fact, McCann -- who previously worked in Microsoft's Exchange Server group -- said that Google Wave is set up to compete with Microsoft's Communications Server product line or even offerings from Cisco. (Cisco is an investor in Gist rival Xobni.) 

The Microsoft and Cisco products, McCann said, blend information from instant messages, email and phone calls in a way that appears to be similar to where Google Wave is headed.

"This is very good news for everyone working in/around the email/communications space and most importantly end-users who have been struggling with the lack of innovation for quite some time," McCann said.  "IM email Wiki type solutions will be very important in the future and the blend of real-time, historical and 'playback' messages will be extremely important."

It is still early days, and Google is looking at ways to develop the offering further so it could expand deeper into the content management side of the business where Gist resides. After all, one could imagine Google developing a way for people to organize all of the communications in a centralized, easy to manage contact list.

That's in Gist's sweet spot. Still, McCann welcomes the opportunity to either partner or compete with Google.

"My general perspective is it is really good in a sense that yet another player is trying to innovate around email and communications technologies as a whole," he said. "...It is always good to have more players in the space, especially smart guys like Google."

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Obama reforming online security

President Obama today announced plans to name a new U.S. "cyber czar" to oversee the nation's online security efforts. The news accompanies a new report highlighting problems in the way the government handles online security initiatives.

The government report (PDF) cites Microsoft repeatedly, but not in a bad way. Instead, it refers to testimony and research from the Redmond company to back up its contention that sweeping changes are needed in government coordination.

It's a big change from 2005, when people such as former White House adviser Richard Clarke were taking the company to task for Windows security problems. Microsoft has been steadily improving its security practices since the early part of the decade.

Here's an excerpt from today's report.

The Federal government is not organized to address this growing problem effectively now or in the future. Responsibilities for cybersecurity are distributed across a wide array of federal departments and agencies, many with overlapping authorities, and none with sufficient decision authority to direct actions that deal with often conflicting issues in a consistent way. The government needs to integrate competing interests to derive a holistic vision and plan to address the cybersecurity related issues confronting the United States. The Nation needs to develop the policies, processes, people, and technology required to mitigate cybersecurity-related risks.

Obama is expected to name the new cybersecurity czar soon.

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Amazon expands trade-in program to include DVDs, Blu-ray

It wasn't too long ago that Amazon.com launched a trade-in program for used video games, giving people a way to swap used games for Amazon.com gift-card credit. Now the online retailer is expanding the program to include used DVDs, HD DVDs and Blu-ray discs -- a sign that it sees trade-ins as a possible growth area in the recession.

Amazon's Movie & TV Trade-in site currently lists more than 4,000 DVD titles, nearly 6,00 Blu-ray titles, and just 10 HD DVD titles. Discs must be in good condition and valued at $10 or more. People can print a free shipping label and get Amazon gift-card credit deposited in their account.

Will Amazon include other items in the trade-in program? It's an interesting experiment, given that many consumers are reining in their spending and looking for deals. 

Follow my updates on Twitter.

 

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Setbacks threaten Seattle’s biotech industry dreams

It’s been a tough few months for Seattle’s life sciences industry.

The granddaddy of Seattle biotech, ZymoGenetics, slashed 161 people — a third of its work force — and disbanded its oncology research team. That followed cuts at Amgen, Cell Therapeutics, Rosetta Inpharmatics, Trubion Pharmaceuticals, and others.

Investing withered in the first quarter of the year. Even the state’s once high-profile Life Sciences Discovery Fund took a hit in the state budget.

The capper came last week, when a major think tank demoted Seattle from its national list of top 10 life-sciences clusters.

For the Seattle area, which just a few years ago was pinning its hopes on biotech as an economic engine, there is fear that progress has stalled and the sector is rolling backward.

The region’s lack of a major “anchor tenant” headquartered in the area may make Seattle especially vulnerable to the recession-driven cutbacks afflicting the industry worldwide.

Today many biotech companies are gutting their research and development efforts in order to keep existing drug and device candidates going in the clinic, said Stewart Lyman, a Seattle biotech consultant.

“They’re hunkering down because the trials are so expensive,” Lyman said.

To be sure, the Seattle area still has strong research infrastructure in place through the University of Washington, Fred Hutchinson Cancer Research Center, and Bill & Melinda Gates Foundation. And not every biotech company is in distress, with Dendreon Corp. recently gaining national attention after positive results for its prostate cancer drug Provenge. Dendreon is actually in hiring mode, with 83 positions listed on its website.

But the biotech sector’s reputation as a high-risk, high-reward type of asset class, requiring years of expensive development and clinical work, is taking a toll. Many traditional biotech investors are pulling back or altering their strategy.

Venture capital investments in the state’s biotechnology sector held up fairly well last year, with $156 million invested in 20 deals, according to the MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association. That was down from the 2007 levels, but ahead of historical norms.

More troubling for those in the biotech industry were the first quarter 2009 numbers, which showed that just three deals attracted a total of $6.8 million. If that slow pace continues, biotech investing could drop to levels not seen in more than a decade.

Vulcan Capital, the investment arm of billionaire Paul Allen, recently said that it has “dialed back” its investing in the sector. The reason? Managing Director Steve Hall said Vulcan “found it difficult to strike the right capital efficiency balance.”

In other words, it’s too expensive with too little potential payoff.

The Life Sciences Discovery Fund, a showpiece of Washington state’s commitment to scientific research, has fallen victim to the state’s budgetary woes. The fund, which was set up to channel $350 million in bonus tobacco settlement money into health and science research, is facing a 41 percent cut to its funding for the 2009-2011 biennium.

One thing that’s been lacking in the Seattle area is a powerhouse biotech or pharmaceutical company on the scale of Microsoft in software, Amazon.com in online retail and Boeing in aerospace. Seattle’s top prospects over the years in biotech have been acquired and absorbed into larger companies, namely Icos (acquired by Eli Lilly) and Immunex (acquired by Amgen).

Some industry watchers lament that the region lacks a breakout company that attracts talent, attention and money.

“Let’s try to make an effort to get Big Pharma in here and create a more stable job environment,” said Lyman, a scientist and 14-year veteran of Immunex.

Some of Lyman’s colleagues have found work in Seattle’s growing nonprofit research sector, which includes such organizations as the Seattle Biomedical Research Institute, PATH, and the Institute for Systems Biology. But so far the migration is modest.

“I don’t know if there’s a huge movement,” he said.

Seattle recently ranked 11th place among the nation’s life sciences clusters, down from 10th place in 2005, according to a report from the Milken Institute, an economic think tank based in Santa Monica, Calif. The institute ranks cities based on biotech employment, research and development capacity, investment and other measures.

In the latest ranking, Boston, Philadelphia and San Francisco continued to dominate the top positions, while Seattle was overtaken by Washington, D.C., which didn’t even make the list in 2005.

[Flickr photo via kaibara87]

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Seattle-area Google exec Wilson leaving to launch mystery startup

Peter Wilson, who helped oversee Google's rapid growth in the Seattle region, is leaving the company next week -- aiming to launch his own venture toward the end of the year.

Wilson, engineering and site director for Google's Kirkland operations, confirmed the move today but declined to go into detail about his plans. His focus has been on cloud computing, social media and online advertising, and he acknowledged that his new company could involve one or more of those areas.

A native of the U.K., he's planning to remain in the Seattle region and base the new company here.

"There's a very good series of opportunities coming as we make the shift from client-server to cloud computing," Wilson said. "Given the talent and the research and funding in this particular area, I think there's a lot of people here who are well-placed to take advantage of that."

He said he plans to take a break and spend time pulling together a team, with the goal of being up and running in the September-October timeframe. 

Wilson joined Google from Microsoft in 2005, one of a series of engineers who left the Redmond software company for the Mountain View, Calif.-based search company as it ramped up its operations in Microsoft's backyard. Monday will be his last day at Google.

His decision to leave wasn't a reflection on Google, Wilson said. In his resignation email, he told others at the company that there's nowhere else he'd rather work if he weren't striking out on his own.

Wilson wouldn't say whether he plans to partner with anyone else in the new business, or specifically how he plans to fund it. He acknowledged that the economy is tough but said he wants the new company be in a position to take advantage of the recovery.

"There are some areas of the economy -- if you project out nine, 12 or 18 months and you see things turning around -- where there are going to be opportunities that the turnaround will create that people who start building products now might be able to capitalize on," Wilson said.

We're waiting to hear back from Google about the company's plans to replace Wilson in the Kirkland office. Brian Bershad, a former University of Washington professor, is the director of the company's engineering office in Seattle's Fremont neighborhood.

(Post updated at 2:45 p.m. with more details)

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Modumetal scores new funding

Modumetal, a Seattle startup that is developing new metals and metal coatings designed to be stronger, lighter and more corrosion-resistant than steel, has raised more than $1.5 million in new funding from Second Avenue Partners, the Alliance of Angels, and other investors. The company is preparing to bring its first products to market this year.

Modumetal was founded in late 2006, and raised about $2 million the following year. Second Avenue and the Alliance of Angels were behind that earlier round as well.

The 15-person company uses nanotechnology to develop the new metals. It's currently working on corrosion-resistant coatings for the oil and gas industry (for refinery and power plant equipment and pipelines) as well as cars, airplanes and military vehicles, said CEO Christina Lomasney. Lomasney, a University of Washington grad, is a veteran of Boeing and previously co-founded Isotron, a composite metals company.

"We're really excited about some of the new markets this is opening up," said Dan Rosen of the Alliance of Angels, who serves on Modumetal's board. "Anything that uses metal in the future could use Modumetal."

Rosen said the new funding for Modumetal is between $1.5 million and $2 million.

Modumetal has a two-year, $750,000 contract with the U.S. Defense Logistics Agency to develop metals for a lightweight suspension system for military land vehicles. Earlier this month, the Washington Technology Center awarded a $5,000 grant to the University of Washington to support a research collaboration wtih Modumetal. Lomasney said Modumetal has several other commercial contracts, but declined to give details.

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Microsoft relaxes Starter Edition; Motricity taps Ryan; and more

Windows 7 Starter Edition, the edition of the upcoming operating system targeted to small "netbook" computers, will be able to run more than just three applications at a time, Microsoft said today. Previous versions of Starter Edition have imposed a limit.

Bellevue's Motricity has named Jim Ryan -- a former Sprint PCS and AT&T Mobility exec -- to the post of chief strategy and marketing officer.

Scientists from the University of Washington, the Nature Conservancy and the University of Southern Mississippi are introducing a tool called ClimateWizard that lets people track temperature and precipitation changes in their local area, the Seattle Times reports.

Rivals to Microsoft's Internet Explorer are pushing the European Commission to require the company to offer alternative browsers as part of Windows, and to distribute them to existing Windows users via an automatic update, the Wall Street Journal reports.

An interesting report from the Directions on Microsoft research firm explains how Microsoft phases out products.

The Susan G. Komen foundation recently got a boost from Seattle-based Varolli Corp., which donated software to help the cancer research organization drive sign ups for its Race for the Cure on June 7. Using the Varolli technology, race organizers sent personalized voice messages from Mona Locke to more than 10,000 past participants of the race.

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Google wants users to 'Wave'

The search giant offers programmers a sneak peek at a new service that combines e-mail and instant messaging., more 

Facebook quietly settles trademark dispute

A dispute over Facebook's trademark that harkens to a rivalry between Harvard schoolmates Mark Zuckerberg and Aaron Greenspan has been quietly resolved — just one business day before Facebook trumpeted its $200 million investment from a Russian firm that valued all of Facebook at $10 billion., more 

Facebook quietly settles trademark dispute

A dispute over Facebook's trademark that harkens to a rivalry between Harvard schoolmates Mark Zuckerberg and Aaron Greenspan has been quietly resolved — just one business day before Facebook trumpeted its $200 million investment from a Russian firm that valued all of Facebook at $10 billion., more 

Friday Memos

- More small business owners are opting to take a less expensive vacation and are feeling less guilty about taking time off compared to last year, according to this week’s release of results from an American Express survey of business owners. But four out of 10 business owners don’t plan to take any vacation at all; they can’t afford it. [American Express Open Small Business Monitor]

- Laid-off workers are becoming street-food entrepreneurs in the streets of San Francisco, selling everything from Thai curry, barbecue pork sandwiches, crème brulee, pho and escargot-on-a-stick. To alert customers to their locations, these food sellers are connecting with them via Facebook and Twitter. (Here’s a list of these Twittering vendors from around the country.) But many of them are unlicensed, running afoul of street vending rules. The vendors say the laws are confusing. [San Francisco Chronicle]

- Don’t know which banks in your state are most likely to make loans to small businesses? Download the new annual study of lending to small firms by the Small Business Administration’s Office of Advocacy. The 2008 report offers a state-by-state ranking of lenders’ overall small business lending, not just SBA-approved loans. A caveat: the data is from 2007 to mid-2008, so it probably won’t take into account the shakeup in the lending industry as a result of the credit crisis and the full impact of the recession. [SBA Office of Advocacy]

- Rep. Hank Johnson, D-Ga., introduced legislation in the House this week that would prohibit publicly traded companies, or their subsidiaries, to qualify as a small business in order to receive government contracts. It would also give individuals the right to file a complaint if they have evidence of a small-business contract being awarded improperly. More than 15 investigations have unearthed widespread abuses in federal contracting to those small businesses that did not meet basic requirements. [Web CPA]

- About half of about 750 small-business owners surveyed said temporary cash-flow problems over the past three months have caused them to stop paying bills, according to findings released this week by credit card issuer Discover Financial Services. [USA Today]

- Small businesses in search of loans may have better luck at local and regional banks than at big national banks. They’re three times as likely to get credit at small lending institutions as those who applied to large banks, according to a May survey by Barlow Research Associates. [New York Times ]

Any interesting or relevant small-business items we missed this week?

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In search of young tech titans

One of the Puget Sound Business Journal's most interesting features and events each year is 40 Under 40, in which the paper identifies some of the most accomplished and promising young business leaders in the Seattle region. The roster always includes a good representation from the tech industry, and now is the time for this year's nominations and applications.

If you consider someone worthy of the 40 Under 40 designation, submit a nomination here by the June 3 deadline. Nominees will receive a notification to submit an application by June 12. If the worthy person you're thinking about is yourself, it's also OK to submit an application without being nominated by someone else.

Applicants will be notified by July 27 if chosen as one of this year's honorees.

The program is in its 11th year. Past 40 Under 40 honorees from the tech industry include Ben Elowitz of Wetpaint; Matt Hulett (now of WidgetBucks); Todd Humphrey (now of Amazon); David Hsiao (then of Junxion); Peter Han of Microsoft; Jason Goldberg (then of Jobster); entrepreneur Andy Sack; Andy Liu (now BuddyTV); David Niu (also now BuddyTV); Sujal Patel of Isilon Systems; and many others.

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More from Ballmer and Mulally

Ford CEO Alan Mulally's personal delivery of a new car to Microsoft CEO Steve Ballmer yesterday was a pretty unique event, albeit carefully orchestrated. As a bonus, here's an extended version of our video of Ballmer and Mulally speaking to the media afterward.

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Video: VC Tim Draper pays homage to entrepreneurs in song

It's not every day that you see a successful venture capitalist break out in song during a keynote speech. But not every VC is Tim Draper of the venerable Silicon Valley firm Draper Fisher Jurvetson. At the WTIA Fast Pitch Forum today, Draper discussed innovation, the economy and politics. Then, he broke out "The Riskmaster" -- a song about entrepreneurship. Brian Westbrook captured some video of the spectacle.

This isn't the first time that Draper has busted out "The Riskmaster" at tech events as can be seen with these various clips from across the globe.

Here's the chrorus:

He is the Riskmaster

Lives fast drives faster

Skates on the edge of disaster

He is the Riskmaster

Can you imagine a Seattle VC trying to pull this off? More to come on Draper's keynote and my interview with the venture capitalist later today.

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Could Microsoft cut your TV bill?

Microsoft is rolling out virtualization technologies for telecom operators that use its Mediaroom Internet Protocol TV service -- helping them cut costs by running multiple Mediaroom "virtual servers" on a single piece of hardware. Microsoft says the move, a first for the IPTV industry, could create as much as a sixfold reduction in the amount of server hardware required to run the Mediaroom service.

That's all well and good for the operators -- and for Microsoft, if it causes more of them to adopt its offering. The company says it now has the lowest server requirements in the industry. But the big question is, will those cost savings get passed on to IPTV users?

"That's obviously not a direct decision that Mediaroom or Microsoft makes, but it could definitely play out like that, just because it would cost less for an operator to run a comparable service now," said Ben Huang, Mediaroom director of product management.

But don't call your IPTV provider looking for a price reduction just yet. Microsoft isn't saying which of the companies will adopt the approach, leaving it up to them to announce their plans if they want to. Major IPTV services currently using the Microsoft Mediaroom technology include BT Vision in the U.K. and AT&T Uverse in the United States.

Microsoft says it expects operators to start rolling out the virtualized solution later this year. Smaller to mid-sized operators are likely to be the first to try it, Huang said, because the cost savings will be more evident.

IPTV uses standard phone lines to deliver high-quality television signals and related features. It works by transmitting only the channels and data that a user wants to access at any given moment, switching quickly between them and requiring less bandwidth than traditional cable, which sends out many channels at once so that viewers can tune from one to another.

Microsoft says there are now more than 3 million subscribers globally using Mediaroom-powered IPTV services. Huang said there won't be any degradation in the end user's experience or features when operators switch to the virtualization technology.

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Tim Draper on Twitter, the economy and the state of VC

Venture capitalist Tim Draper started his keynote talk today at the WTIA Fast Pitch Forum with a photo of a nuclear blast, noting that an "economic nuke" leveled things last October.

But Draper tempered that image with an optimistic talk saying that entrepreneurs are the true "heroes" who have the ability to solve big problems.  In an interview with TechFlash prior to the talk, Draper said that the current economic climate is actually creating a "cleansing" effect of sorts.

"It allows the old historic monuments to fall so great new structures can grow," said Draper. That cleansing can benefit startup companies who Draper said can build things "cheaper, better, faster."

"That's why they are startups, and that's why they left their big companies," he said. Because things are changing so dramatically, Draper said that it is the best time ever to create a new startup company.

But isn't the venture capital business itself one of those historic monuments that's getting blown up? 

Draper prefers to use the term: "re-invented."

"We benefit from Moore's Law and all of those other laws where technology moves exponentially, and that benefit just keeps rocking forward whether you have a good economy or a bad economy, the science just keeps changing and improving," he said. "We venture capitalists benefit from the rate of change, and that rate of change is accelerating."

Still, Draper conceded that some startup ventures don't need venture capital at all, though he said investors can help by making connections.

Draper also offered his thoughts on Twitter, social media and the new private company marketplace he's creating called XChange.

"I don't know what is going to happen with (Twitter), but something is going to happen," said Draper, whose firm passed on an opportunity to invest. "I didn't really get it until I started using it, then I realized that this is pretty interesting." 

In terms of social media, Draper said there are opportunities to bring some of the technologies that have resonated with consumers to businesses.

"I think there is something there. It feels a little bit like what CRM was," said Draper, an early investor in Hotmail, Glam, Meebo, Skype and others.

And while Draper said that the IPO market may be creeping back to life, he also explained his rationale for creating the new marketplace XChange. That will create an alternative to Nasdaq -- a "stepping stone" of sorts -- where entrepreneurs who have built significant private companies can cash out without trying to go for a $1 billion market value.

"XChange will be the market that is the launchpad to the public markets, so it is an opportunity for the entrepreneur who is not quite ready to spend all of that money on (Sarbannes-Oxley)," he said. "It is better technology, and the entrepreneurs may want to hang out in that marketplace for a longer time."

Based on the recommendation of a reader, I also asked Draper about his thoughts on the Kindle. Here's what he had to say:

"It is great. I am kind of bummed because I have a Sony Reader, and now that the Kindle came out, my Sony Reader has 70 books on it. So I have to get through those ... before I get up and buy a Kindle," he said. "By the way, Amazon, that guy is so great. Think of what he has done, created an incredible bookstore. Then, he realized he had excess capacity, so he sold his capacity."

Related content: "VC Tim Draper pays homage to entrepreneurs in song."

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Pelago cuts staff

Pelago has reduced its headcount as the maker of the mobile social networking product Whrrl attempts to adjust to the lingering effects of the bad economy. The layoff comes exactly one year after the Seattle startup announced a $15 million venture round from notable investors such as T-Mobile, Kleiner Perkins Caufield & Byers, Bezos Expeditions and others.

Pelago issued a statement to TechFlash about the cuts, saying that it made a "modest staff reduction" in order to "provide the multiple years of runway this economic situation will likely require."

The company didn't say how many people were let go, though we've heard it was in the 20 percent range. At the time of funding last year, Pelago employed 40 people and had planned to double that number.

But the economic meltdown changed things for the company, which is led by former Amazon.com executive Jeff Holden.

"We believe this decision is best for the company’s long-term growth as we continue to build momentum from the recent launch of Whrrl v2.0," the company said. "We're also very thankful that we raised money when we did, as we have a very solid cash position. We're feeling great about our business and we have the time to grow and nurture it to its full potential."

Whrrl, which competes against Loopt and others, creates a mobile experience that allows friends to track the locations of one another and share experiences as they happen in real time. It was founded in 2006.

 

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Blist is now Socrata

At the WTIA Fast Pitch Forum today, blist CEO Kevin Merritt unveiled the new name and direction for his online database service. The company is now called Socrata, a combination of the words "social" and "data." The name also has ties to Greek philosopher Socrates.

"We are still democratizing data. We are still building an Internet scale data service, and we are still focusing on user experience as a means to drive usability in working with data," he said. 

Merritt said that data is locked in so many formats, kind of like what happened with various formats for songs several years ago.  Socrata is like a music player, making it easier for a consumer to interact and unlock data. Merritt calls this new category "social data discovery," with Socrata going after the government sector as its core market.

That's an area where Socrata has some experience with the blist tool being used by the Barack Obama administration shortly after his election. Merritt says there is a "new enthusiasm" to implement Web 2.0 technologies where they can save government agencies tens of millions of dollars.

"We are Socrata. We are making data social," Merritt said in his remarks today. He also noted that the new site, which went live today, is "no longer slow and ugly."

Socrata raised $6.5 million last year from Morgenthaler and Frazier Technology Ventures.

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Kindle rival Plastic Logic demos reader, but doesn't set price

Amazon's Kindle has dominated the early market for electronic readers, but others are preparing to enter the fray. One of the most anticipated competitors is Plastic Logic, a Silcon Valley startup that will roll out its own reader next year. Plastic Logic CEO Richard Archuleta showed off his company's device at the Wall Street Journal's D7 Tech Demo -- but was coy on pricing.

The touch-screen Plastic Logic reader has a similar look to the new Kindle DX but has no keyboard. Like the Kindle, it will have its own ecommerce platform for books, newspapers and magazines, and will be equipped with 3G wireless and Wi-Fi, according to the Journal's writeup of the event. One interesting point: Archuleta said tests showed that users were "a little nervous" about a flexible device, so the company made it firmer.

The Kindle 2 sells for $359 and the large screen Kindle DX is $489. Archuleta, however, declined to name a price for his device.

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Greenpeace gives Microsoft's Ballmer score of 7 -- out of 100

We knew from our previous reporting that Greenpeace wasn't exactly a fan of Steve Ballmer, but today the environmental group quantified its option, giving him seven out of a possible 100.

That's the score received by the Microsoft CEO in a new Greenpeace report card ranking the top technology executives on their environmental records. The report dings Ballmer for not speaking out on the environment. It also takes the company to task over its emissions reduction targets and political advocacy.

As noted by Joe Tartakoff of PaidContent.org, the timing of the Greenpeace report card is ironic, given Ballmer's high-profile purchase of a Ford Fusion Hybrid yesterday. He previously had been spotted driving a Range Rover, so it's too bad for him that Greenpeace doesn't take into account any improvement in personal driving habits.

Microsoft does get a top score for renewable energy usage, but that didn't weigh heavily in the score.

The Redmond company has been taking a series of steps to improve its environmental standing under the leadership of chief environmental strategist Rob Bernard. Ballmer also sent out a companywide memo in March stressing the importance of the environment, but he didn't address environmental issues during his high-profile Consumer Electronics Show keynote earlier this year.

Sightline Daily cast a critical eye on Microsoft last week, saying the company has yet to "stand up for climate policy at the state or national level."

To be sure, the entire technology industry has lots of room for improvement, according to the Greenpeace report. The top exec on the list, IBM's Samuel Palmisano, gets only a 29 out of 100. Those below Ballmer on the list are Sony's Howard Stringer, Sharp's Katsuhiko Machida and Toshiba's Atsutoshi Nishida.

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Will Microsoft's 'Bing' ring true?

Talking with analysts and others today about Microsoft's plans to rebrand its Internet search engine, I finally heard a plausible theory about why the company might choose "Bing" as the name. The site could emit a sound effect -- "BING!" -- whenever anyone presses the search button -- thereby solidifying the brand in the minds of consumers and finally putting Microsoft in a position to trump Google.

It's brilliant!

OK, all joking aside, we're keeping an open mind, despite all the grief we've given Microsoft about its search branding. Microsoft CEO Steve Ballmer is widely expected to unveil the revamped Microsoft Live Search -- including a new name -- at the Wall Street Journal's D: All Things Digital conference Thursday in California. We'll be monitoring events from Seattle and reporting on whatever Microsoft announces.

The other big question continues to be whether Microsoft can pull of some sort of Yahoo search deal. Carol Bartz, Yahoo's CEO, had her turn in the red dentist's chair today, telling Kara Swisher that Yahoo and Microsoft are talking "a little bit" but that it would take "boatloads of money" to make something happen. CNet News.com's Ina Fried was there and has more on Bartz's comments.

Before Bartz's comments, Mary Jo Foley theorized that the new name of Microsoft's search engine would be Yahoo, as a result of a deal.

For now, however, it's looking like Bing is the thing. Kip Kniskern at LiveSide.net has a good roundup of the clues, including the announcement by mobile IM company Bing -- whose existence foiled Microsoft's attempt to register the Bing trademark -- that it's soon changing its name to "Blinko." (Hopefully for Microsoft, that company doesn't adhere to Bartz's "boatloads of money" mantra.)

TechCrunch's MG Siegler also spotted what appears to be a Microsoft Bing logo in a favicon next to the bing.com url.

But for all the discussion of the name, Joe Wilcox points out that it doesn't really matter.

"Microsoft could rebrand search Bill Gates, Steve Ballmer, Bozo the Clown or the Muffin Man," he writes. "Right now, the name shouldn’t matter to anyone, nor will it make much difference against Google’s dominance. Microsoft must fundamentally change how search works."

Meanwhile, people on Twitter are having fun guessing what Bing might stand for if it's an acronym. One favorite: "Bing Is Not Google."

Seems about as likely as that sound effect. But you never know. Check back Thursday to find out what happens.

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A Comeback in the IPO Market

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How Facebook Will Upend Advertising

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TicketMaster's Azoff on 'Anxious' Music Industry

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Want to Friend the Feds?

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The GPS Revolution: Location, Location, Location

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and How the Government Can Do Good with Less  , more 
and Kia Motors' Cheap Chic  , more 

NASA embraces Microsoft format -- but adds an open-source twist

NASA is processing immense sets of images and data from Mars and the moon into a special Microsoft format for viewing in the Redmond company's WorldWide Telescope online program. But the U.S. space agency also plans to publicly release, as open-source software, the tools it's developing to make the conversion.

That technological balancing act is among the details revealed in a federal Space Act Agreement establishing the terms of a collaboration announced by NASA and Microsoft earlier this year. The text of the agreement wasn't disclosed at the time, but NASA has now released the documents in response to a request made by TechFlash under the federal Freedom of Information Act.

The text will get a close look, at least, from people worried about governments tethering themselves too tightly to Microsoft's technologies. The agreement is non-exclusive, leaving the door open for NASA to make similar conversions to formats used by alternative space-viewing programs. But data formats have historically been a source of conflict between Microsoft and open-source advocates concerned about government agencies leaning too heavily on proprietary approaches, making them de facto standards.

Google CEO Eric Schmidt -- whose company uses NASA images in Google Earth, Google Sky and other programs -- last year called on the agency to focus on open, collaborative technologies.

NASA seems to be seeking a middle ground in its Microsoft agreement, based on the newly disclosed contract language. The details are laid out in an "umbrella" agreement (PDF, 24 pages); and a related contract, known as an "annex" (PDF, 6 pages).

The documents focus on WorldWide Telescope, an online program launched publicly by Microsoft last year. The program pulls together images from across space, letting people zoom around the universe on their computer screens. The Microsoft-NASA collaboration, announced in March, promises to add 100 terabytes of data to the program -- equal to 20,000 DVDs, the company said at the time.

WorldWide Telescope was initially available only as a Windows program, but the company has since released a preview of a WorldWide Telescope Web client for Intel-based Macs, using Microsoft's Silverlight technology. 

Microsoft Research offers WorldWide Telescope as a free educational and scientific resource, but Microsoft's business groups compete commercially with Google and other companies to provide images, maps and digital models of the natural environment.

The technology at the center of Microsoft's NASA agreement is called TOAST, which is short for Tessellated Octahedral Adaptive Subdivision Transform -- a technique and format developed by Microsoft to display flat images (such as those from telescopes) on representations of spherical objects (such as planets and moons) on a computer screen. It's one of the key technological underpinnings of the WorldWide Telescope's well-regarded on-screen interface.

Here are excerpts from NASA's Microsoft agreements:

"NASA has experience in working with planetary data and is uniquely qualified to adjust and format the data while maintaining its accuracy and integrity. Microsoft has requested that NASA make such planetary data available in a format such that it can be used in WWT. NASA (Ames Research Center) has begun to develop the hardware and software infrastructure (and partnerships) with relevant teams of scientists that enable a focused data reprocessing and curation effort aimed at making NASA planetary data widely accessible and useful. NASA plans to design. develop, and test the technology and infrastructure necessary to make certain NASA planetary data sets available to web-based applications entities engaged in web-based astronomy education, such as Microsoft. ...

"During this pilot project phase, the Parties will focus on the two planetary data sets that are of the greatest current interest to both the general public and the scientific community: HiRISE, High Resolution Imaging Science Experiment, Mars imagery (available today. and being collected on an ongoing basis) and LROC. Lunar Reconnaissance Orbital Camera, Moon imagery (available in the second quarter of 2009). NASA will develop and deploy a simple, flexible architecture and infrastructure for geospatial data reprocessing, initially supporting the TOAST output format native to WorldWide Telescope and the two input data sets described above, with an architectural eye towards supporting other viewing technologies such as Microsoft Virtual Earth and other data sets in a scalable manner in the future."

It later adds, "NASA plans to release software tools developed under this Annex as open source software."

One Microsoft page describes TOAST as a "proprietary" technology, but Microsoft blogger Jon Udell has said it isn't. We've asked Microsoft for clarification, and we'll update this post depending on the response.

The answer could help determine how much leeway other software developers will have to implement and use the TOAST techniques and format in their own programs. Our initial search of U.S. patent applications didn't turn up any filings from the Redmond company that appear related to TOAST.

Update: A Microsoft spokesman says the company "makes the TOAST technology freely available for anyone to use." I've asked for further details on how that technology is made available for use, and any licensing terms Microsoft might apply.

Some portions of the Microsoft-NASA documents were redacted under Freedom of Information Act provisions that protect companies from the disclosure of confidential business or financial information. Specific monetary terms weren't disclosed, but one clause says NASA will not transfer any U.S. government funds to Microsoft as part of the arrangement.

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Facebook, Allen and the ways 'accidental' billionaires are made?

What is it with authors describing the accumulation of wealth by tech pioneers as some sort of unintended fluke?

First, there was Laura Rich's unflattering portrait of Microsoft co-founder Paul Allen in the 2002 biography "The Accidental Zillionaire." Now, author Ben Mezrich is on the same track with his upcoming portrayal of Facebook founders Eduardo Saverin and Mark Zuckerberg. Amazingly, the book -- set to be released July 14 --is called "The Accidental Billionaires."

CNET reports that Facebook is not too happy with the book, just as Allen's folks still flinch at any mention of the "Accidental Zillionaire" moniker.

Still, it seems strange to us that two books about technology executives would have such closely connected titles.

What will readers get in the new book about Facebook? The subtitle -- "The Founding of Facebook: A Tale of Sex, Money, Genius and Betrayal" -- gives a bit of a clue.

And if that wasn't enough, you can get actor Kevin Spacey's advanced review of the book on Amazon.com.

The star of the "Usual Suspects" and "American Beauty" -- as well as the film adaptation of Mezrich's best seller "Bringing Down the House," -- calls Mezrich's portrayal of the world's "youngest billionaire" a high-energy read "of betrayal, vast amounts of cash, and two friends who revolutionized the way humans connect to one another—only to have an enormous falling out and never speak again."

Spacey writes:

"It's pure summer fun—a juicy, fast-paced, unputdownable Mezrich tale that adds to his canon of lad lit. And Hollywood has come calling again: I'm currently working with Dana Brunetti, Scott Rudin, Mike Deluca, and Aaron Sorkin on the movie adaptation of The Accidental Billionaires. If the book is any indication, the film is going to be a must see."

What's a billionaire supposed to do when confronted with a portrayal that he or she don't necessarily like? Well, one can follow the path of Allen who is reportedly shopping his memoirs to publishing houses.

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Amazon patents design for what looks like mini-storefront

Is e-commerce giant Amazon.com getting into the brick-and-mortar retail business? The online retailer was granted a patent today for a building design that looks a lot like a mini-store location.

The patent, number D593,208 is for the "ornamental design for a building structure" that is a box-like with some kind of awnings. The patent application was originally filed Oct. 31, 2007, and lists Michael Ausich, Peter Stocker, and Stephenie Landry of Seattle as inventors.

What's Amazon's strategy here? Amazon briefly experimented with pickup locations for its Amazon Fresh grocery delivery service in the Seattle area, and the black and white images submitted with the patent application look at lot like those pickup stations.

Amazon quietly dropped the pickup service in February 2008, but will the ecommerce giant ever get into the traditional retail game?

Here are more of the patent images:

Here's one of the Amazon Fresh pickup stations, circa Dec. 2007:

[Flickr photo via cheukiecfu]

Thanks for the tip to patent-watcher theodp.

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Facebook's new $10 billion value is well below what Microsoft paid

Over the holiday weekend, reports surfaced that the Russian investment firm Digital Sky Technologies was positioning to invest $200 million in Facebook at a $10 billion valuation.

Well, the companies made it official today as Facebook announced that Digital Sky was purchasing 1.96 percent of the company as well as buying as much as $100 million worth of employee stock. The $10 billion value is well below what Microsoft paid in 2007 when it invested $240 million for a 1.7 percent stake.

Still, reports had circulated over the past few weeks that Facebook was worth anywhere from $2 billion to $8 billion, so the latest cash infusion at least gets the company into the double digit billions where Microsoft invested.

TechCrunch is live blogging the Facebook conference call this morning for those interested in following along. And here's the full press release:

PALO ALTO, Calif. — May 26, 2009 — Facebook today announced that Digital Sky Technologies (DST), one of the leading internet investment groups globally with significant stakes in Eastern European and Russian internet businesses, has made a $200 million investment in Facebook in exchange for preferred stock, representing a 1.96 percent equity stake at a $10 billion valuation.

In addition, DST has indicated that it is planning to offer to purchase at least $100 million of Facebook common stock from existing common stockholders that would facilitate liquidity for current and former employees’ vested shares in the company. The details of the plan are expected to be announced to eligible participants during the summer. Consistent with Facebook’s practice with other recent investors, DST will not be represented on the Facebook board or hold special observer rights.

“This investment demonstrates Facebook’s ongoing success at creating a global network for people to share and connect,” said Facebook CEO Mark Zuckerberg. “We’ve worked hard to bring more than 200 million people – 70 percent outside of the U.S. – onto Facebook to share with friends, family and co-workers. A number of firms approached us, but DST stood out because of the global perspective they bring – backed up by the impressive growth and financial achievements of their internet investments. We’re looking forward to working with the DST team.”

“Our investment experience in other regions reveals the tremendous value social networking companies create as they redefine how people communicate and interact,” said Yuri Milner, chief executive of DST. “By every important metric – user growth and engagement, technological innovation and financial performance – Facebook is on a similar trajectory, though on a much more global scale. We’re delighted to invest in Facebook, Mark and his management team as they make the world more open and connected.”

Based in London and Moscow, DST is a well-respected investor in a number of successful internet companies, holding significant interests in Russia and Eastern Europe, such as Mail.ru, Forticom and vKontakte. DST’s main assets account for over 70 percent of all page views in the Russian-speaking internet and its social networks are the market leaders in more than 13 countries, addressing a combined population of more than 350 million.

DST is run by its three partners who have complementary backgrounds in operations, investments and finance: Yuri Milner, previously CEO of Mail.ru, the #1 Russian language website; Gregory Finger, previously head of the Moscow office of NCH, a multi-billion dollar hedge fund; and Alexander Tamas, previously co-head of internet and software coverage in EMEA for the Investment Banking Division of Goldman Sachs. With its advanced understanding of opportunities in technology and social media, DST is a good fit for Facebook and an insightful partner that can help unlock additional growth opportunities.

Facebook is holding a teleconference for the media today at 9:45 a.m. Pacific Daylight Time. From the U.S., participants should dial (877) 809-9539. Participants outside the U.S. should dial (706) 679-8713. Please reference conference identification number 11871648 to join the call. A replay of the teleconference will be available for one week. To access the replay, U.S. participants should dial (800) 642-1687 and participants outside the U.S. should dial (706) 645-9291. Please reference conference identification number 11871648.

About Facebook

Founded in February 2004, Facebook’s mission is to give people the power to share and make the world more open and connected. Anyone can sign up for Facebook and interact with the people they know in a trusted environment. Facebook is a privately held company and is headquartered in Palo Alto, Calif.

About Digital Sky Technologies

DST was founded in 2005 and is the largest internet investor in the Russian-speaking and Eastern European markets and one of the leading investment groups globally to exclusively focus on internet and internet-related companies. DST is a privately held holding company backed by leading Russian and Western financial institutions. DST has offices in Moscow and London. For more information please visit http://www.dst-global.com.

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Novell lawyers take Bill Gates on painful stroll down memory lane

Groklaw over the weekend posted all the juicy details on a recent legal battle between Microsoft and Novell over a deposition of Bill Gates in a lingering antitrust suit. Novell's lawyers argued that they deserved more time to quiz Gates about his involvement in decisions alleged to have squelched WordPerfect in the mid-1990s. Microsoft's lawyers saidNovell wasted the initial four hours they got with him.

In the end, Novell was granted more time, but not before their back-and-forth resulted in the disclosure of a transcript (PDF) of their first session with the Microsoft chairman, conducted on March 4 of this year. It will be an entertaining read for anyone who has followed the company over the years.

"Can you tell me what Cairo was?" the Novell lawyer asks at one point, referring to one of Microsoft's most legendary stumbles, an attempt at big operating system advances in the early 1990s. After years of work, it never came to fruition as envisioned.

"They are still writing books trying to figure that out," Gates replied, saying Cairo was about "putting some new capabilities in the operating system." Gates noted that some of the work for Cairo ended up in Windows NT-based products, but he acknowledged that "many of those features ... still haven't been realized today."

In their letter to the judge in the case, Microsoft's lawyers argued that Gates "should be protected from harassing and time-wasting depositions by those who seek to distract him from his important charitable work." But with flashbacks like Cairo, it's no wonder Gates wasn't exactly keen on sitting down for another few hours. A transcript of the subsequent session hasn't been made public.

The ongoing WordPerfect case is what remains following a 2004 settlement between the companies. Microsoft and Novell nowadays might be best characterized as frenemies, still fighting it out in court and in the market but collaborating on Windows and Linux interoperability and a controversial set of patent protections.

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Microsoft's Ballmer whoops it up as Ford CEO delivers his new car

Too bad Ford doesn't have more customers as loyal and enthusiastic as Steve Ballmer. Then again, the Microsoft CEO is an easy sell, as a Detroit native whose father worked for the automaker. And not every car buyer gets a personal delivery from Ford's top executive.

"Hehehe! Hahaha! Beautiful, man!" crowed Ballmer as he bounded across the cement to greet Ford CEO Alan Mulally. The former Boeing Commercial Airplanes CEO drove up in the Microsoft chief's new 2010 Ford Fusion Hybrid at an event staged for the media today on the software company's Redmond campus.

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WiMax in Portland; OVP's solar bet; Tim Draper; and more

Clearwire has begun offering a new pricing plan for its WiMax service in Portland and Atlanta, including an unlimited home and mobile bundled offering for $55 per month, reports MuniWireless.

Venture capitalist Tim Draper and others are creating a new stock exchange called Xchange where investors can buy and sell stakes in private, startup companies.

President Barack Obama is set to announce a new cybersecurity czar later this week with the The Washington Post reporting that the yet-to-be-named government official will have "broad authority to develop strategy to protect the nation's government-run and private computer networks."

The PSBJ's Kirsten Grind takes a tour of Sharebuilder's new Pioneer Square headquarters in the old Seattle Hardware Company Building, which it moved into over the weekend.

Amazon.com is giving Kindle users a way to read the notes and highlights they make on the device online, TechCrunch reports. For now, it's a read-only function, and people can't share or edit their Kindle notes on the web.

OVP Venture Partners is among the investors in the $10 million round for Tigo Energy, a Los Gatos, Calif.-based company  that is developing monitoring software for solar power installations.

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Inside Nathan Myhrvold's shiny new invention lab

Intellectual Ventures founder Nathan Myhrvold took U.S. Senator Maria Cantwell and other bigwigs on a tour of his new invention lab in Bellevue today. Housed in a former Harley Davidson service center, the nondescript warehouse boasts an an eclectic array of industrial and scientific equipment, a closet full of mosquitoes, even a tricked-out restaurant-style kitchen.

Despite concerns that Intellectual Ventures is using its vast patent pile -- 27,000 and counting -- to make tech companies pay hefty license fees, Myhrvold talked up the economic benefits of his firm's in-house invention efforts. "We're going to try to bring this region to the cutting edge" and "stimulate the economy here and elsewhere," he said.

Cantwell agreed. "It's incredible to have this lab in Washington state," she said, after touring the facility with Myhrvold followed by a gaggle of media. "We're going to continue to innovate and that means jobs."

Intellectual Ventures does appear to be in growth mode. The firm, which last year opened five offices in Asia, says it now employs some 550 people and is closing in on the 600 mark. In addition to the 27,000-square foot invention lab in Bellevue, the company has secured an 8,000-square-foot space nearby in what used to be a furniture store, to house a computing cluster.

Intellectual Ventures acquires the vast majority of its patents from companies, universities and individual inventors, though Myhrvold is trying to put more focus on the firm's self-generated inventions coming out of the lab and from high-powered brainstorming sessions involving the likes of Bill Gates and other titans of technology and science.

"We're trying to expand our activities while the rest of the world is retrenching," Myhrvold told Cantwell, after pointing out that the lab's conference room -- site of those brainstorming sessions -- got its table and chairs from a bankruptcy auction.

Gates -- who was once Myhrvold's boss at Microsoft -- is a personal investor in the Invention Science Fund managed by Intellectual Ventures (Note: Gates' role clarified since last post). The Intellectual Ventures lab is working on a variety of malaria-related projects that could benefit the Gates Foundation's efforts to combat disease, including a Star Wars-style project to shoot down mosquitoes with laser beams.

Myhrvold also talked up his firm's project, called TerraPower, to develop a new type of nuclear reactor that runs primarily on unenriched uranium or depleted uranium. He also showed Cantwell the restaurant-style kitchen in the lab, staffed by chefs who are helping him write a science-oriented cookbook. Cantwell sampled a "liquid nitrogen poached" meringue on a stick.

Is the lab simply Myhrvold's play space to dabble with science, and a public relations showpiece? Intellectual Ventures' business model has stirred ire in the tech industry, with some claiming it's a giant patent troll that extracts license payments from companies. Myhrvold has in the past said litigation isn't part of his plan, though he hasn't entirely ruled it out.

It's not clear yet if Intellectual Ventures' invention efforts will generate spinout companies, but judging by the collection of venture capitalists at the lab event today, there's at least some interest in that possibility. The guest list included Bob Nelson from Arch Venture Partners, Steve Arnold and Brian Chee of Polaris, Bill McAleer and Geoff Entress of Voyager Capital, and Chuck Hirsch of Madrona Venture Group, as well as Linden Rhoads and Janis Machala of University of Washington TechTransfer.

Here are some images of the lab and tour:

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