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July 31, 2007

Abu Dhabi oil money flows into HaloSource

Posted by Angel Gonzalez at 5:30 PM

Money from an oil-rich emirate has ended up in a Puget Sound venture that seeks to produce cleaner water.

An Abu Dhabi government-backed clean technology fund is investing $15 million in Bothell-based HaloSource, a company that specializes in anti-microbial water purification. The new relationship will help strengthen HaloSource's presence in Middle Eastern markets.

The deal underscores how some Persian Gulf countries - flush with cash in the wake of an unprecedented energy boom - are spreading investment dollars not only across the region, but all over the world. They also seek to capitalize on the growing global interest in clean technologies and sustainable development.


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CBS Sports exec on for video game broadcasts

Posted by Benjamin J. Romano at 1:31 PM

I got a chance to speak with Rob Correa, senior vice president of programming for CBS Sports, this afternoon about the broadcast debut of competitive video-gaming last weekend. CBS Sports filled an hour of its Sunday broadcast with the World Series of Video Games' Louisville, Ky,, tour stop.

Correa didn't give out any audience data, but noted that summer afternoons are not exactly prime time.

"Sunday at 12 noon in late July is not the easiest time period to get people to watch, but all in all we're satisfied," he said.

He acknowledged that the video game broadcast was a departure from the network's usual sports programming -- highlighted by March Madness and the Masters -- but he still expected some audience overlap.

"Every audience overlaps some ... particularly in sports," Correa said. "We don't have [demographics] yet, but clearly we figured it would be potentially a younger audience than a lot of our core sports programming."

Correa said it's too early to tell whether video games will become a regular part of CBS Sports line up. Two more WSVG broadcasts are planned this fall; a third episode scheduled for August was postponed, he said.

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Google's role in telecom

Posted by Tricia Duryee at 10:02 AM

An obvious question to ask recently is whether Google is a friend or foe of the telecom industry.

On one hand, Google is very interested in building and developing applications for the wireless industry. Last week it signed a partnership with Sprint Nextel to build a portal for its emerging high-speed wireless WiMax network.

On the other hand, it has rocked the industry by proposing to the FCC that the winning bidder in the next auction for wireless broadband airwaves be required to provide an open network allowing any application or handset to run on it -- a far cry from the closed wireless networks available in the U.S. today.

CNET speculated in an article today what all this means for the telecom industry.

The story asks: "Will it build its own wireless network using spectrum from the upcoming auction? Or will it strike more deals like the one it signed with Sprint Nextel? Will it come out with its own Google phone that will take on the likes of the Apple iPhone and other manufacturers like Motorola and Nokia?"

The answer for now, CNET reported, is Google's intentions are all about providing Internet access, whether it's in competition or in partnership with telecom operators.

"Mobile is the fastest and cheapest way to reach the largest number of people," said Chris Sacca, head of special initiatives at Google. "There are billions of people on this planet who still don't have access to the Internet. And we think mobile presents the biggest opportunity to get them on the Internet."

The story didn't get much more information out of the tight-lipped Google.

To be sure, wireless operators have been wary of the Internet giant. Google packs such a strong brand and typically the carrier wants its name to be the stand out. That attitude has led companies such as Bellevue-based InfoSpace and Seattle-based Medio Systems to create white-label, or non-branded, search applications for the phone.

But now that Sprint Nextel has choosen Google as a partner, perhaps more will follow?

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July 30, 2007

Windows Mobile marketing head resigns

Posted by Benjamin J. Romano at 1:53 PM

Suzan DelBene, a longtime Microsoft employee, is resigning from her job as corporate vice president in charge of the Mobile Communications Marketing Group to "pursue other opportunities," according to a spokesman with Microsoft's outside PR firm.

The announcement was made internally this morning. Her responsibilities included global marketing strategy for Windows Mobile. She reported to Pieter Knook, senior vice president of Microsoft's mobile communications business.

DelBene joined Microsoft in 1989, left in 1998 to work at drugstore.com, later led Seattle-based Nimble Technology, and returned to Redmond in 2004 to take on Windows Mobile position. She and her husband, Kurt DelBene, Microsoft's corporate vice president of the Office Business Platform Group, made up the only husband-and-wife team serving in Microsoft's executive ranks.

The spokesman said Suzan DelBene did not indicate what other opportunities she may pursue. A replacement has not been named.

Update: Her last day will be Sept. 1.

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Why play video games when you can watch them on TV?

Posted by Benjamin J. Romano at 11:27 AM

Did anyone tune in to CBS on Sunday to watch the World Series of Video Games' Louisville, Ky., tour stop? Yeah, that's right. Video games were broadcast on network TV on a Sunday afternoon in the middle of summer.

There were plenty of articles previewing this apparent first, but I've yet to see anyone report on the broadcast, prompting the question: Did any one watch it?

CBS' schedule lists another WSVG broadcast coming up Aug. 19, and the WSVG itself had a blog item back in May crowing about the four-episode deal it linked with the network.

I've put a call in to the folks at CBS Sports to ask whether they were satisfied with the initial broadcast and whether this might join the Masters and March Madness as regular events on the broadcaster's calendar.

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July 27, 2007

Phone Sherpa, Jamglue sing with Blue Scholars

Posted by Tricia Duryee at 4:45 PM

Two local startups and the popular Seattle hip-hop group Blue Scholars have teamed up to promote a contest at tonight's Capitol Hill Block party.

The two companies are Phone Sherpa, which handles the Blue Scholars's ringtone sales on the Jamglue site, and Jamglue, which allows users to create their own song by chopping up bits and pieces and adding new vocals.

Together, Phone Sherpa and Jamglue created an MC and DJ contest for making your own mix to the Blue Scholars' song "Fire for the People." Blue Scholars will pick out the best of the mixes made on Jamglue and add them to their ringtone store.

Also, the first thousand Block Party-ers to show up at a special Jamglue Web page where the contest is taking place will get a free Blue Scholars ringtone when they sign up for a Jamglue account.

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InfoSpace finds the iPhone

Posted by Tricia Duryee at 12:34 PM

Bellevue-based InfoSpace said today it has launched a version of its local mobile search application -- called Find It! -- for the Apple iPhone.

InfoSpace Find It!'s application is available on the Sprint network for a subscription and on BlackBerries for free.

The application for the iPhone was tweaked to look like the phone's homepage, displaying a number of colorful icon boxes. The boxes link to six categories: Dine Out, Go Out, Shop, Travel, Health and Services.


InfoSpace

InfoSpace's FindIt! application was launched today for the iPhone.

Because the iPhone does not have GPS, the user will have to enter a Zip code or city and state to find services near them. On the BlackBerry, GPS is integrated so the listings are automatically loaded based on the person's location.

iPhone users in the U.S. can find Find It! by visiting http://fiweb.infospace.com/iphone/ on their iPhone Safari Browser. If you don't have an iPhone, you can check it out from your PC here.

The iPhone is a closed system, which means third-party applications are built to work through the browser rather than the phone itself. The downside is that the application may not be super speedy. It must connect to a new page to get new information, but still in the brief session I tested on the iPhone, the pages loaded fairly quickly.

The bigger downside is the lack of GPS integration -- narrowing down restaurants by Zip code won't get you to the closest one that quickly.

"As consumers increasingly seek locally relevant information on their mobile phones, InfoSpace Find It! for iPhone helps users quickly and easily discover what's nearby -- anytime, anyplace," said Jeff Torgerson, senior product manager at InfoSpace.

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July 26, 2007

FAM: Bach reiterates profitability in fiscal 2008

Posted by Benjamin J. Romano at 1:55 PM

Robbie Bach is breaking down the Microsoft Entertainment and Devices Division to kick off the afternoon session here. He reassured investors who have watched the division lose billions of dollars over the last several years.

"We said last year we are going to drive this business to profitability in fiscal 08," Bach said. "We are right on track to do that. ... And we believe we can have sustained profitability going forward."

He gave no indication of how much profit the division might deliver.

Like CEO Steve Ballmer did this morning, Bach lamented the $1 billion charge the company took in the fourth quarter related to the quality problems with the Xbox 360. He reiterated that it was something the company had to do to stand behind its product.

"Certainly a key focus for us right now is quality," Bach said. He said there's no specific component to blame for the rate of Xbox 360 hardware failures, but rather it was a Microsoft design problem with multiple components involved.

Despite the charge, he sees the business reducing its manufacturing costs.

"We are right on track with where we expected to be with cost reduction. That is a key driver in this business," Bach said, offering no detail about when that cost saving would translate to a price reduction.

"We have a very specific plan with what we're going to do with pricing. We're just not going to talk about it today," he said. (The company today announced a lower price for its HD DVD player, sold as an accessory to the Xbox 360.)

Bach quickly reviewed other areas:

Music: He said the Zune music player has sold more than 1 million units since launch and has about 10 to 12 percent of the hard-drive based player market.

"You are going to see us continue to invest in this business," Bach said, adding that it will likely be a three- to four-year effort.

This year, the company, as it has said, will release new Zune software, devices and features. He also plans to invest in expanding the Zune brand out of the "hardcore niche music space" where it is now.

Video: Bach said the company will expand its Xbox Live video download service -- currently the largest provider of on-demand video content -- to Europe and Canada in the coming year.

Communications: Bach said Microsoft aims to grow Windows Mobile's lead over Research In Motion during the 2008 fiscal year. He said the company expects more than 20 million Windows Mobile phones to be sold this year. Noting the high turnover in mobile phones, Bach said Microsoft wants to make more end-users aware that they are using a phone running Windows Mobile.

"We want them to go in and ask for another Windows Mobile phone," he said.

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Clearwire's Nick Kauser retires

Posted by Tricia Duryee at 1:22 PM

Clearwire, the Kirkland company that is building a nationwide wireless broadband network, said today that Chief Technology Officer Nick Kauser is retiring effective Aug. 1.


Clearwire

Nick Kauser

John Saw, the company's vice president of engineering, will step into the CTO position.

Kauser helped Craig McCaw start Clearwire and, in many ways, could be considered one of the earliest pioneers of wireless broadband technology.

Kauser held several positions at McCaw Cellular Communications, which later became AT&T Wireless. As chief technology officer there, he oversaw engineering and technology projects, network operations, long-range planning and evolution of the network, and support for network technologies.

While at AT&T Wireless, Kauser headed the company's fixed wireless initiative, called Project Angel. That could be considered the roots of what Clearwire has become today.

Said Clearwire CEO Ben Wolff:

"We're extremely grateful for the leadership and guidance Nick has provided over the years and are fortunate to be able to keep drawing from his wisdom as a member of our board. Clearwire has and will continue to benefit from his foresight in realizing the potential impact of a personal broadband network that is always on and always with the person."

Kauser, 67, will remain a member of Clearwire's board and will continue to advise the company on its international operations. He will also remain a principal of Eagle River, the investment arm of McCaw's operations.


Clearwire

John Saw

Saw, who will replace Kauser, has been with the company since it was founded in 2003, and was the chief architect in laying the foundation for Clearwire's network.

He has almost 20 years of experience in developing wireless networks and architectures, including stints at Netro (now SR Telecom) and at AT&T Wireless, where he worked under Kauser.

"John is truly a visionary when it comes to wireless broadband networks," Wolff said. "His innovative spirit and wealth of knowledge of wireless broadband networks will be invaluable as Clearwire continues to evolve and innovate in wireless broadband."

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Bucking the trend

Posted by Kristi Heim at 12:26 PM

What do Chinese stocks and Apple have in common? They're part of a parallel universe. While Wall Street suffered one of the biggest plunges of the year today, the Shanghai Composite Index hit an all-time record high. The market's rebound has driven the Industrial and Commercial Bank of China past Citigroup and into the top spot as the world's largest bank by market capitalization.

Meanwhile, Apple's shares jumped 7 percent today after Wednesday's earnings report showed a 74 percent rise in profit.

I'd grab my iPhone and move to Shanghai, but apparently I can already get one there for $150.

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LinkedIn on U.S. tour

Posted by Tricia Duryee at 12:25 PM

Mountain View, Calif.-based LinkedIn visited our offices Wednesday, where spokeswoman Jane Corrigan told us Seattle is one of the fastest growing markets.

The site has 12 million users worldwide, and is seeing double-digit growth, she said. In a matter of weeks (between Corrigan setting up an appointment with me and arriving in Seattle), the number of users here jumped from 179,000 to about 181,000.

She said that many of the people on LinkedIn are venture capitalists and investment bankers, but that it covers all industries. In Seattle, some of the corporate customers include Expedia, T-Mobile USA, Amazon.com and Microsoft. A corporate customer pays a fee so that it can list job openings on the site.

Corrigan stressed that LinkedIn is a site where professionals can meet and "brand" themselves online, whereas other networking sites are for a user's personal life.

So the question is, do you really want your photos from you vacation on the site where you are also linked to work colleagues or associates?

I wonder if LinkedIn is spreading this message because Facebook, which is increasingly being used for business networking, has started to eat away at its user base?

She did, however, show me a few neat tricks on LinkedIn:

-- You can brand your LinkedIn site, for instance: www.linkedin.com/janedoe

-- There's a new Questions and Answers feature, where members can ask and answer whatever question is on their mind. A recent example is Robert Syputa, a Seattle-based senior analyst at Maravedis, asked: "How do incumbent mobile operators plan to confront the growing 'open access' of wireless networks?" He had received four answers in the last six days.

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FAM: Microsoft buying advertising exchange network

Posted by Benjamin J. Romano at 12:23 PM

Microsoft Platforms and Services Division President Kevin Johnson just announced another advertising-related acquisition. The company is buying a network of digital advertising networks that Johnson likened to the Nasdaq stock exchange -- a place for buyers and sellers of advertising inventory to do business in a neutral marketplace.

The company is called AdECN. Johnson did not disclose the financial terms of the acquisition.

The acquisition raises some of the same issues around neutrality and conflict of interest that came up when Microsoft announced its purchase of aQuantive, which, Johnson disclosed was a very competitive bid process with two other bidders vying for the prize.

I talked to Andrew Frank, an analyst with Gartner, about the issue of consolidation in the industry at the time of the aQuantive acquisition:

This advertising consolidation raises the specter of conflicts of interest for companies that sell advertising across many Web sites but also own major sites of their own, Frank said.

Advertisers might find a better deal in a less-consolidated system in which they could do business with the best company in each segment of the business, "rather than having to choose 'Do you want the Microsoft solution or the Google solution,' " Frank said. "I think that's a danger not just for Microsoft but for the whole industry."

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Third Screen gives update on mobile advertising

Posted by Tricia Duryee at 11:55 AM

In May, AOL bought Third Screen Media, a mobile advertising company, which today gave an update on the merger.

Boston-based Third Screen Media sells ads for mobile sites for such organizations as MSNBC and The Weather Channel. A publisher can either use the company's software to sell its own mobile ads, or Third Screen Media will also act as a sales force.

Since the merger, the company has been able to gain mobile sites, including all of AOL's mobile properties, such as Mapquest. In doing so, Third Screen Media claims to reach half of the mobile Internet users in the U.S. The company also gained AOL's sales force.

Even though the company is making a lot of progress, Third Screen Chief Marketing Officer Jeff Janer said there's a lot to be done to ensure that mobile advertising market is big.

He cited at least three things:

1. A third-party needs to step in to help validate and measure the market. To help with that, Third Screen partnered with mobile measurement firm Telephia, which was recently purchased by Nielsen.

2. The advertising inventory needs to cover more ground. Eventually, in order to capture a big market, it needs to include both sites that are on the mobile Web, but also sites that subscribers discover through the carrier's portal, or "deck."

3. Ads should be more targeted. On the Internet, Web sites know a user's behavior through cookies, which track what a person does online. But cookies don't exist in mobile. The carriers do have that information, but it's not readily available.

"It's scattered all over in databases, and it's a big effort to build a targeting database that's anonymous," Janer said. "For instance, you should be able to say: 'I want to reach men between 18 and 25 in the Pacific Northwest who are sports enthusiasts and are looking to buy a car.' But that's not possible today."

Seattle-based Medio Systems is also creating a mobile advertising network.

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Thank-you notes pay the bills at Craigslist

Posted by Tricia Duryee at 11:42 AM

Check out this short Q&A with Craigslist CEO Jim Buckmaster in Fortune.

The Web site, which uses simple text links, has been grown tremendously and now reaches 50 countries through 450 sites.

The questions in the article came from readers rather than the reporter.

Here's a good one for entrepreneurs to ponder:

Q: At some point, doesn't Craigslist have to be more aggressive about scaling revenues? I understand you're small, nimble and profitable, but your business is pretty easily duplicated. Or do you think you can sustain your business based on user loyalty?
--Aaron Letscher, New York City

A: Financial metrics aren't something we focus on; they're a pleasant side effect if we manage to do a good job by our users. We track page views to measure the usage of the site. We also look at the number of thank-you notes from users who have found their entire lives on our site -- from spouse to house, job, furnishings, cat, dog, friends and a social life.

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Sprint partners with Google

Posted by Tricia Duryee at 11:14 AM

Sprint Nextel said today that it will develop a mobile Internet portal for its high-speed wireless WiMax network with Google, according to a Reuters story in The Washington Post.

The portal will offer Web services such as search, e-mail, chat and social networking.

In a press release, Barry West, Sprint's president of mobile broadband said:

Google and Sprint will optimize the Internet experience for the digital lifestyle. This collaboration brings what will be the best mobile Internet network together with the leading Internet search company. It allows us to capitalize on the powerful mobility and Internet trends, and create wireless services and applications that take advantage of each company's history of product development innovation.

Last week, Sprint Nextel and Kirkland-based Clearwire said they would combine their efforts to build one nationwide network instead of two competing ones.

The partnership with Google is interesting because the search giant recently has been causing quite a stir in the telecom world by pushing the FCC to require the next block of spectrum to be auctioned off to be an open network.

Today, telecom operators are the ones that approve handsets and applications to be used on the phone. In the proposal by Google, and so far somewhat supported by the FCC, a user would be able to use any device and any application.

The WiMax network that Sprint and Clearwire are building is more similar to an open network model than a telecom model.

In the press release, Sprint gives a little more detail on how the WiMax network would look.

Sprint said it will provide open standard coding, or APIs, to partners and the developer community to create new products for devices, including modem cards, stand-alone modems, laptops and personal media players, mobile Internet devices, gaming devices and phones.

Eventually, Sprint said WiMax will be available for cars to use for navigation, news and entertainment.

Commercial service is expected to be available in a number of markets starting in April 2008 and cover 100 million people by the end of 2008 through the Clearwire partnership.

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FAM: New Internet research effort; 60 million Vista licenses

Posted by Benjamin J. Romano at 10:56 AM

In addition to the Financial Analyst Meeting items posted here and on Brier Dudley's blog, there were a couple of other news items that came out of the first three presentations today:

Microsoft is creating a new research arm to focus on Internet search and advertising. Harry Shum, who was heading the Asian arm of Microsoft Research. See the company press release here. The Internet Services Research Center will have researchers in Redmond, Silicon Valley and Beijing and will be part of the broader Microsoft Research organization.

Shum told me the ISRC will have about 50 researchers to start and "will continue to recruit great people to the organization." To put that in perspective, Microsoft Research has about 800 people total.

This move was forecast a bit in March when Microsoft created a new group to focus on the search and advertising businesses. At that time, Shum was named chief scientist of the Search and Ad Platform Group.

I asked Shum whether there was any concern that ISRC would duplicate the work on Internet services being done in Gary Flake's Live Labs organization.

"In Microsoft, innovation is everyone's responsibility," Shum said. "We have Microsoft Research. We have Live Labs. We have other labs as well. ISRC is our latest investment in this very important space."

In another development, Microsoft told several reporters that it has sold 60 million licenses for Windows Vista, it's newest operating system. That was supposed to be part of CEO Steve Ballmer's presentation, but if he said something about it, I didn't hear it.

See coverage from Reuters and Bloomberg.

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FAM: Web-based productivity aps coming soon?

Posted by Benjamin J. Romano at 10:37 AM

Microsoft Business Division President Jeff Raikes described several ways in which the company plans to get more people using and paying for its Office 2007 productivity software.

Toward the end of his presentation, Raikes gave one of the strongest indications from the company recently about its plans to expand into Web-based productivity software, an area where competitors have made early inroads. It's already setting the stage for this effort with small businesses through Office Live, a suite of online services that now has more than 400,000 users signed up.

"With our software plus services approach, we're going to use Office Live as a foundation to broaden our scope to all information workers, all people who would use Office. And we are investing substantially in Web productivity as a complement to what we do in our traditional Office productivity. We've got some exciting things coming out this year. That's where I'll leave that," Raikes said.

The strategies he outlined for increasing Office 2007 sales include working with OEMs to get trial versions of Office installed on new PCs, which can then become full, paid versions.

Microsoft is also fighting Office piracy with a carrot rather than the stick used with Windows. Users of the genuine software get access to additional capabilities through Office Online.

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FAM: Microsoft total employment 78,280

Posted by Benjamin J. Romano at 9:56 AM

Microsoft CEO Steve Ballmer is running through the five things the company has to do very well to continue its success.

First and foremost, he said, "We've got to get the right people, the best and the brightest, that is absolutely essential."

Ballmer said Microsoft is hiring 90 percent of the people it tries to hire. That equated to 12,800 new hires globally in the fiscal year ended June 30. He also said the company experienced total attrition of 8 percent.

So, with some quick calculations, we get a look at Microsoft's headcount at the end of fiscal 2007:

71,172 (headcount on June 30, 2006) - 5,693 (8 percent attrition) + 12,800 new hires = 78,279

That translates to the 10 percent growth that CFO Chris Liddell talked about last week.

Ballmer provided some new detail on good vs. bad attrition. Four percent is what he called bad attrition: people retiring, relocating or "sometimes we'll lose to another company although that's quite rare."

Good attrition equals about 3 percent. He said that's a must-have and it means holding people who are not performing accountable and moving them out of the company.

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FAM: Almost 1 billion served

Posted by Benjamin J. Romano at 9:39 AM

Like McDonald's, Microsoft will soon be able to boast "more than 1 billion served."

CEO Steve Ballmer told the financial analysts and reporters gathered at the company's Redmond headquarters this morning that total Windows installed base will exceed 1 billion sometime during the 2008 fiscal year.

"By the end of our fiscal year 08 there will be more PCs running Windows in the world than there are automobiles, which to me is kind of a mind-numbing concept," Ballmer said.

(A company spokesman clarified earlier that the 1 billion figure includes all versions of Windows shipped by the company, as well as pirated copies.)

In tracking other metrics of the company's performance during the last five years, Ballmer noted that the company has doubled its profits and nearly doubled its revenues and that it boasts the highest operating income of any company outside of the financial services and energy sectors.


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FAM: Bill's big picture

Posted by Benjamin J. Romano at 9:23 AM

Bill Gates, Microsoft chairman, opened his company's Financial Analyst Meeting with an outline of the big trends he sees driving technology forward.

He said Moore's Law -- the idea that computer processing power, measured as the number of transistors on a single chip, will double approximately every two years, is still intact -- but that it's manifesting in a different way. Before, individual microprocessors got progressively faster. But the "clock speed" of the chips is reaching its limits

Gates said he expects to see clock speeds "not much higher" than 10 gigahertz in the next five years. Processing power will continue to grow through parallel microprocessor architectures -- so-called multi-core chips.

The most important trend, Gates said, is the ubiquity of broadband access. More than just getting video on the Internet, broadband access changes computing itself. The early PC was a self-contained device, Gates said. "As you get broadband to be widely available you can change that paradigm."

Storage doesn't have to be in one location; you can move easily back and forth between multiple devices; if you're near a bigger display, you can make use of it; likewise with more powerful computing resources available on a network.

The most under-appreciated trend, he said, is the emergence of more natural user interfaces such as speech recognition, touch and vision. He complemented two competitors products -- the Apple iPhone and Nintendo Wii -- for taking advantage of touch and motion-sensing interfaces.

Microsoft has been investing in natural user interface for a long time, Gates said. He went on to demonstrate Microsoft Surface, the table-top, touch-recognizing PC the company rolled out earlier this year. He said people have responded more dramatically to this demonstration than any other he's given in his career.

Unfortunately, his first attempt to demonstrate the Surface here went boink and there were some akward moments as the tech guys came up on stage and fiddled with the unit for a few minutes.

"It's more exciting when it actually does something," Gates said.

Tech support eventually got it going and Gates moved back to the demonstration. Right now, Surface is being rolled out in Harrah's casinos, Starwood Hotels and T-Mobile retail stores. Gates confirmed the company's bigger plan for the computer.

"We want to take this and put it into homes and businesses," Gates said.

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Microsoft lowers price on Xbox 360 ... DVD player

Posted by Benjamin J. Romano at 8:17 AM

Speculation about when or if Microsoft would drop prices on its Xbox 360 game console was rampant earlier this month, after Sony lowered its prices on the competing PlayStation 3.

Starting Aug. 1, Microsoft will drop the price of an Xbox 360 accessory: The HD DVD player will now cost $179, down $20, and come packaged with five free HD DVD movies during the month of August.

The announcement was made at the Comic-Con International convention in San Diego.

I'm in Redmond for Microsoft's Financial Analyst Meeting, which will feature presentations from Chairman Bill Gates, CEO Steve Ballmer, CFO Chris Liddell, COO Kevin Turner, division presidents Jeff Raikes, Robbie Bach and Kevin Johnson and other top executives.

Check back here throughout the day for updates from the event.

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July 25, 2007

A smattering of conversations

Posted by Tricia Duryee at 4:35 PM

At The Naked Truth event last night, I was able to catch up with a lot of people. And today the emails continue to pour in.

Here are a few tidbits and details to gnaw on:

-- Hardi Partovi, a founder of iLike, said the darnedest things happen when you have a social networking site -- like the time an iLike user invited Hadi to his wedding, even though it was on the East Coast and Hadi had never met the guy. And Hadi said he loves customer feedback, but there's one user who e-mails almost everyday. Now he's dying for another customer's feedback. He's also an avid iPhone fan, but not enough to stop carrying around his BlackBerry.

-- Speaking of iPhones, there were too many in the crowd to count. However, there was only one Ooma, and TechCrunch's Michael Arrington was giving it away. As he said, it's really cool, but if you don't know what it is, don't worry about it. Now I'm wondering who won it?

-- Co-founder Galen Ward of Estately.com introduced himself, and today he sent me a press release that said Estately was launching "True Area Search," a tool that lets anyone find homes within a half mile, mile, two miles, five miles or 10 miles of any neighborhood, city, Zip code or address.

-- I also chatted with Marcelo Calbucci, the founder and CTO (not CEO as I previously wrote), of Sampa, which helps individuals and small business build Web sites. A lot of the talk last night focused on creating a more cohesive community among entrepreneurs and tech startups. Calbucci blogged about the Naked Truth , and regularly maintains a blog focused on tech startups called Seattle 2.0.

-- A venture capitalist and a startup adviser were talking to Josh Hug, the CEO of Shelfari, which recently launched a Facebook application. They were obviously really excited about the launch, so I promised Hug that I would upload the application today to take it for a spin. So I did (and while I was at it, also uploaded iLike's Facebook application). Shelfari becomes a shelf that sits on my Facebook profile page. I can load it up with books I can recommend to friends. Unfortunately, when I searched for "The World according to Garp," the book I'm currently reading, I encountered an error. For now, my shelf is empty.

I talked to many other companies, too, including WetPaint, WildTangent, BlueDot, OthersOnline, Mobile Research, Alliance of Angels and Shiftboard.

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Two bits on last night's Naked Truth

Posted by Tricia Duryee at 3:50 PM

You may have already read a blog post or two today on last night's panel discussion, BBQ and party called "The Naked Truth," but I thought I'd elaborate on the night's events.

The panel, consisting of reporters and bloggers, was intended to enlighten the technology startup crowd on the unwritten rules of dealing with the media. It was sponsored by Redfin and Madrona Venture Group.

The event, held at Havana Social Club, a hip, cavernous bar on Capitol Hill, went fairly well. The panel was outside in the parking lot, where a massive BBQ pit was cooking up ribs. (I heard the ribs were OK, but the sides were great). Afterwards, people went inside the bar to mingle.

The panel members consisted of myself, Becky Buckman of The Wall Street Journal, Michael Arrington of TechCrunch, Fred Vogelstein of Wired and John Cook of the P-I. Greg Gottesman, a VC from Madrona, moderated.

We had a fairly lively discussion and people in the crowd asked a lot of good questions.

You can see Redfin's summary of the night's events here. CEO Glenn Kelman also vows to post the video there soon, so I won't bore you with a back-and-forth on how the questions went down.

But I thought I'd share a little on how the event came together.

Glenn called me a few weeks ago to see if I would participate. He said the idea was hatched when he told his investor, Madrona, that startups shouldn't waste money hiring PR firms and should handle all the calls to reporters themselves. He said Madrona didn't agree -- that you could make some major mistakes this way.

So they figured the best way to settle the debate was to have the media tell it like it is to the hundreds of entrepreneurs willing to listen.

I think part of the problem, though, comes in trying to generalize. All of our answers were different. What works for local media doesn't work for The Wall Street Journal, and what works for a magazine doesn't necessarily jive with a blog.

An Expedia PR employee brought up an interesting point afterwards that should help everyone in dealing with reporters.

Do your research. Read the reporter's articles from the past year and tailor your pitch to what he or she seems to be interested in -- that will reap major rewards.

And, finally, my two-cent contribution: Be honest. If you've never talked to a reporter before, it's OK. Admit it and ask the person how to approach, how to proceed and what we are looking for. If you have a good story, you'll get the time.

Any other questions?

Don't hesitate to ask.

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Microsoft to handle ads for Digg

Posted by Benjamin J. Romano at 11:56 AM

In the second significant advertising deal Microsoft has announced today, the company will "sell and serve the ads on Digg," according to this blog post by Digg founder Kevin Rose and a Microsoft press release.

Rose compared the deal to a similar one Microsoft inked with Facebook in August 2006.

The announcement says Digg, which allows users to vote on the Web's best content, has 17 million unique visitors a month.

Other details: The deal is for three years. Microsoft is the "exclusive provider of display and contextual advertising on Digg." Microsoft will work with Digg's current advertising provider, Federated Media Publishing. Financial terms were not disclosed.

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Targeted Genetics shares tumble on stopped clinical trial

Posted by Angel Gonzalez at 11:35 AM

Targeted Genetics stock fell more than 20 percent today after the company interrupted clinical testing of its lead arthritis drug because of a patient's illness.

As of 2:24 pm Eastern time, the Seattle-based company's shares traded at $2.07, down 56 cents or 21.29 percent.

The company said late Tuesday that it had stopped trials of its tgAAC94 therapy after a patient became seriously ill. It's unclear whether the adverse effects are related to the drug.

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EA Sports, Microsoft make in-game advertising deal

Posted by Benjamin J. Romano at 9:46 AM

Microsoft and EA Sports announced today that five of the video-game publisher's biggest titles will be incorporated into the Microsoft's in-game advertising network.

The titles are: "Madden NFL 08," "NASCAR 08," "NHL 08," "Tiger Woods PGA Tour 08," and "Skate."

Advertisements will be placed in the games via the Massive Network, which Microsoft acquired last year.

It's doubtful that Peter Moore, the Microsoft video games executive who is leaving to head EA Sports, had much to do with negotiating the deal, terms of which were kept private. I'm asking about that and will post a response here.

(Because in-game advertising is handled by Massive, which sits within Microsoft's Online Services Division, Moore, who is part of the Entertainment and Devices Division, had nothing to do with the deal, according to an e-mailed statement from a Microsoft PR firm.)

During the E3 Media and Business Summit earlier this month in Santa Monica, I had a chance to talk about in-game advertising with Jeff Bell, corporative vice president of global marketing in Microsoft's video games business.

Bell brings an interesting perspective to the discussion because before coming to Microsoft, he was with DaimlerChrysler, where he worked on the Jeep brand. He tried several game-related advertising strategies including in-game ads (his team helped get Jeep as the vehicle featured in Microsoft's "Zoo Tycoon" game) and adver-gaming. He was also named Interactive Marketer of the Year by Advertising Age in 2005.

From our conversation, this EA deal sounds like just what Microsoft is looking for.

I asked him what role the company sees for in-game ads, and how much advertising is appropriate.

Bell: "I think there we do know and the data is overwhelming, that if you're in a reality based game, people don't want to see Acme. They don't want to see Blogo Shoes. They want to see 7-Eleven and they want to see Adidas. And so, from that standpoint, both from a product realism, as well as an advertising realism, they would like to have the real thing.

"I think where you cross over is you're not going to be seeing Massive or advertisements in 'Mass Effect.' So science fiction doesn't make as much sense.

"For us, I think we tend to focus more on the sports franchises, the reality based driving franchises, Tony Hawk, obviously has been a pioneer in that particular realm of being able to present things in the real world, real advertisements that can attract that audience."

He said EA is leading the way with advertising in sports games, but because of the slow and complex process of negotiating advertising agreements with sports leagues, franchises and stadiums, the area is just now building momentum.

I also asked Bell if he thinks game buyers should get a price break on games that carry a lot of advertising, the reason being that now publishers have a new revenue stream to tap.

Bell: "It's an interesting question, but it's so theoretical at this point, meaning that the business is still driven by the revenue from the sales of the games themselves that, there, I think we're all interested in the growth of the advertising model, but it is at present only a very small part of our overall revenue."

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July 24, 2007

State awards $500,000 to tech companies

Posted by Angel Gonzalez at 5:06 PM

What do wheelchair manufacturing, cancer research, chemical sensors, air pumps and materials for electron microscopes have in common?

They're all done in team with University of Washington researchers, and get grant money from the state. The Washington Technology Center gave half a million dollars to five companies engaged in these diverse realms, at the rate of about $100,000 each.

The funding is expected to generate some 200 jobs in Washington, the center said in a statement Tuesday.

The grant winners are:

- Artemisia BioMedical Inc, of Newcastle, which seeks to develop therapies for cancer and other diseases
- dTEC Systems, a developer of environmental monitoring systems, to create low-cost chemical sensor technology
- Kronos Air Technologies, with operations in Redmond, to make an energy-efficient electrostatic air pump.
- Hummingbird Scientific, of Lacey, to make a high-temperature heating element for use in the transmission electron microscope.
- MagicWheels Inc., of Seattle, to test a wheel manufacturing process for its wheelchairs.

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Saving Man's best friend from blindness

Posted by Angel Gonzalez at 4:12 PM

Healionics, a Redmond medical materials start-up, wants to put its technology at the service of canines prone to glaucoma.

Through a partnership with a veterinary biomaterials maker from Scottsdale, Ariz., Healionics will focus on creating devices that can be implanted in dogs' eyes, the company said Tuesday. Healionics specializes in implant materials that are not rejected by the body.

The announcement comes as Americans spend more than ever in care for their pets. The New York Times said Sunday:

Nationally, spending on veterinary care is expected to reach $9.8 billion in 2007, up from $7.2 billion five years ago, according to the American Pet Products Manufacturers Association. A survey released by the group last month found that 47 percent of dog owners say their pet sleeps in a family member's bed.

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Microvision projects itself into Motorola phones

Posted by Kristi Heim at 1:52 PM

Microvision stock got a lift today after the company announced a deal with Motorola to integrate its miniature projector into Motorola handsets. Microvision's PicoP projector has been a key product to test whether the company can successfully commercialize its technology and ensure its own survival.

The tiny laser projector works inside mobile devices to project content from the screen onto a larger surface, enabling big screen viewing of movies, videos and the like.

The companies announced a joint development agreement to integrate PicoP into a Motorola handset "for demonstration purposes." That sounded pretty tentative to me, so I asked Microvision spokesman Matt Nichols to clarify what the agreement means.

Until now, prototypes of the PicoP were not designed within functioning handsets, he said. This agreement takes it further by putting it into a real Motorola mobile device, validating the potential of Microvision's technology. As to what's ahead, "for competitive reasons" Motorola doesn't want to say what is beyond the initial test, he said.

However, Microvision is aiming to partner with a number of hardware makers to bring the projector to market, so it's no secret the company hopes its deal with the world's second largest handset maker will go a lot further than a demo.

The company's shares were up 12 percent today on the news, to $5.45.

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Weather and sports No. 1 on phones

Posted by Tricia Duryee at 1:23 PM

A report released today found that mobile phone users in the U.S. use their phones to access weather information the most; in Europe, subscribers prefer sports information, according to Seattle-based M:Metrics.

M:Metrics said it found some similarities in behavior between Europe and the U.S. Below are the top 10 news and information sites accessed by 23 million people in the U.S. and 19 million Europeans in the three months ended May 31.

U.S.
1. Weather
2. News
3. Sports
4. Entertainment news
5. Maps and directions
6. Movie and entertainment info
7. Finance news
8. Business directories
9. Financial account access
10. Travel

Europe
1. Sports
2. News
3. Entertainment news
4. Weather
5. Maps and directions
6. Movie and entertainment info
7. Financial account access
8. Finance news
9. Business directories
10. Travel

The company said this information has become important because advertisers are wanting to know more and more what people are visiting on their mobile phones.

"Increasingly, consumers are looking to the mobile Web to find a wide variety of information, and marketers are keen to learn about this new audience," said Paul Goode, M:Metrics' senior vice president and senior analyst.

When broken down by gender instead of geography, the survey found men in the U.S. were most interested in sports news, while women were most interested in weather. In Europe, men were most interested in sports, while women were most interested in general news.

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Software piracy gangs busted in China

Posted by Kristi Heim at 1:11 PM

Microsoft is applauding a joint campaign by the FBI and Chinese police that broke up two software piracy gangs and seized software worth, well, somewhere in the millions, mostly bound for the United States.

The two-year effort resulted in arrests of 25 people, allegedly part of a ring operating from Shanghai and Shenzhen.

Chinese authorities and the FBI placed a different dollar value on the goods, according to this story. The Chinese Ministry of Public Security said it seized 360,000 programs and property valued at $7.9 million, while the FBI's Los Angeles office estimated the seized software's retail value to be $500 million. That would make each program worth almost $1,400.

Microsoft General Counsel Brad Smith hailed the get-tough stance toward counterfeiters.
"Customers around the world are turning you in, governments and law enforcement have had enough, and private companies will act decisively to protect intellectual property," he said.

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Amp'd Mobile shutting down

Posted by Tricia Duryee at 12:18 PM

Amp'd Mobile -- the youth-oriented mobile operator that runs on the Verizon Wireless network -- is shutting down.

The primary reason seems to be that the service, which had filed for bankruptcy protection, had a hard time collecting money from its youthful client base, and that's painfully obvious from the company's Web site at get.amp'd.com.

Among the ads -- amazingly still trying to sell its services, flashing the coolest new phones it is offering from fiery red Razrs to the Motorola Q -- there's almost an equal number of advs relaying to the user how to pay their bill. It says: Now paying your bill is even ea$ier. It says you can pay on your mobile phone -- without ever listening to hold music.

Not sure what the incentive is at this point. If customers, or potential customers, bothered to click on the "Customer Q&A," they'd find out a host of interesting things:

Q: Is Amp'd going out of business?
A: Amp'd is potentially suspending U.S. operations July 31.

Q: How long will customer service be provided?
A: It will not be available after July 23.

Wait a sec. They'll shut off the operators before the service? Yikes.

Q: Do I need to pay my outstanding bill?
A: Yes, failure to pay may result in reporting to a credit agency.

Darn.

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Nokia acquires Twango, Part 2

Posted by Tricia Duryee at 10:34 AM

I wrote a story in today's story about Nokia's acquisition of a Redmond startup, Twango, which allows people to store their digital content online.

Here's a few more details that didn't fit in today's print edition:

First off, I wrote about the company in June last year before the public launch of its product.

What's interesting to note is that Twango, founded in 2004, has spent a lot of time building a platform and doing its homework on what a service requires on the backend in order for customers to have a good experience.

That may have justified the acquisition price. Although the specific price was not disclosed, The Wall Street Journal quoted a person familiar to the deal saying that Nokia paid less than €70 million, or $96.8 million.

That's a lot when you compare it with Loudeye, a publicly held company Nokia acquired in August last year for $60 million (which itself was a far cry from the $1.4 billion Loudeye was valued at after its public offering in 2000).

Anyway, let's go back to the platform that Twango is building. It's considered an open platform, meaning it will allow other developers to take the code and build applications around it. It also uses open features, such as RSS, podcasting and maps.

Serena Glover, one of Twango's co-founders, said that could mean that even though Nokia has bought the company, a developer could still create an application for a Motorola phone using Twango's work.

The open platform allows consumers to link multiple devices, services and networks. In theory that means if those consumers use their mobile phone to upload content to the Web, they'll continue to be able to do so if they change carriers. That differs from other services on the market, such as Apple's, which requires you to use an iPod or iPhone if you buy your music on iTunes. Or applications found on one carrier aren't always available on another.

I asked Nokia's Gerard Wiener what he thought about this, and he said that follows the handset maker's vision -- it's are going after a bigger market encompassing all phones instead of just Nokia ones.

"We are big believers in open source, as well. That is the way of the Internet," he said. "Far be it for us to fight that trend. In our services strategy, open source is a critical part of that, and we are pushing for it.... If we look at even Motorola and other companies, and we look at markets, the imaging services market is where we see a significant opportunity.

"Ultimately, the consumer is our master and we want to put ourselves in the situation that involves acquiring great teams and talent like the Twango guys," he said.

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Wii sales in June continue to lead the pack

Posted by Benjamin J. Romano at 10:34 AM

NPD has released its June U.S. video game sales report and the Nintendo Wii continues to outpace Microsoft's Xbox 360 and Sony's PlayStation 3 in U.S. unit sales:

Wii: 381,800 units
Xbox 360: 198,400 units
PS3: 98,500 units

Sony's PR firm sent out a note last night citing preliminary data that shows the impact of its recent console price cut:

"PS3 sales have increased by more than 135 percent at the company's top five retailers since the new $499 price was announced two weeks ago on July 9. During this same two-week period, total PlayStation hardware sales have increased by 161 percent, software by 15 percent and peripherals by 60 percent."

In addition to strong console sales, games for Nintendo's systems are topping the chart. The company had six of the 10 best-selling software SKUs in June (four for the Wii and two for the hand-held Nintendo DS). Microsoft had three titles in the top 10 and Sony had one, but it was a title for the PlayStation 2.

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AT&T gives iPhone update

Posted by Tricia Duryee at 10:17 AM

AT&T released second-quarter earnings today, disclosing that it activated 146,000 iPhones during the first two days of sale (which coincided with the last two days of the quarter).

The number appears a little lower than what analysts had expected, but that could be because it's reporting activations and not sales, and in the first two days the iPhone was available, AT&T had a hard time getting all the phones up and running.

But if the initial numbers provide any idea of how sales are going, and if the activations are close at all, then the numbers could be slightly disappointing.

Following the opening weekend of iPhone sales June 29, CNNMoney.com reported that they might sell as many as 500,000, according to an estimate by Piper Jaffray's Gene Munster.

The analyst had previously forecasted that the first weekend's sales would total 200,000, which appears closer to the mark. But even though numbers may not have hit half a million, sales have been good to AT&T, the exclusive seller.

Of the 146,000 iPhone subscribers, AT&T said 40 percent of them were new customers. In all, the wireless carrier said that it gained 1.5 million subscribers during the second quarter to reach 63.7 million -- allowing it to maintain its lead over the second-place carrier Verizon Wireless.

The company also noted that sales continued to be strong in July with store traffic above historical levels.

We might get a better picture Wednesday on real sales vs. activations when Apple reports its second-quarter earnings.

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July 20, 2007

More RFID resources and more debate

Posted by Kristi Heim at 1:35 PM

Today's story on RFID in new Washington state driver licenses and ID cards is only part of a much larger story about the growing use of RFID technology in all kinds of applications. More public discussion about the impact of these technologies seems warranted.

A few readers called or e-mailed me with questions about the story, which I'll try to answer.

Q: Why wasn't there a way for the public to find out about this and weigh in before the decision to go with the new driver licenses was made?

A: I'm not sure, but not all the technical details are finalized, so there may be room for change. Here is what we know so far. The U.S. Department of Homeland Security wants the system to be compatible with its Nexus program, so states essentially accept whatever strengths or weaknesses come with that program.

Q: What can the "average citizen" do to fight against these tracking devices? Sure, they have "good intentions," however, I for one am very concerned about the intrusiveness of the government into our lives. It seems we have less and less rights all in the name of security."

A: The ability to opt in or out is key. At least for now, the Washington state system is voluntary.

RFID is also being used for electronic tolls on the Tacoma Narrows Bridge and for the new ORCA regional transportation system pass.

Rene Martinez, a veteran of IBM's research labs, helped invent the new generation of long-range RFID technology. Controlling technology is difficult because it's always changing, he said. It should be behavior that any new laws attempt to control.
Martinez proposed the idea of an "electronic anti-stalking law," which would protect citizens or their property from being tracked by a government, company or person without permission.

Nicky Ozer of the Northern California chapter of the ACLU said that doesn't go far enough. Since RFID can be used surreptitiously, individuals don't know they are being tracked. She pointed to the case of seat belts.
"The combination of modifying the technology to make it safer and combining it with regulating behavior" is the right approach, she said.

Here is a list of current RFID-related bills in California. Here is some information on the Washington bill, which the WSA and a number of business groups opposed, saying it would create onerous new legal liabilities.

While most experts agreed that RFID is inherently insecure technology, there are ways to deploy it that capture its effectiveness and still protect privacy. One example is the Seattle Public Library, which uses an RFID system to check books in and out. The system does not store personal identification on the RFID tag, and it erases data in its system about who borrowed what book as soon as the book is checked in.

Update: Here's a tool that might come in handy someday.

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July 19, 2007

Boeing jets running on algae fuel?

Posted by Angel Gonzalez at 3:04 PM

Algae -- humble, static plants used to lurking in the depths of lakes and oceans -- could soar to new heights on the back of the current biofuels craze.

According to this New Zealand newspaper story, local aerospace giant Boeing is working with Air New Zealand and a kiwi biofuels producer to produce the jet-fuel based on algae.

The company, known as Aquaflow Bionomic, harvests its algae from ponds.

Other engine makers have successfully tested blends of biofuelsl with conventional jet fuels. The rush to seek alternative fueling solutions for airplanes is understandable, as airlines' fuel costs and carbon footprints are huge -- and oil executives and analysts predict a crude oil crunch in coming years if demand doesn't stop growing.

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Techs vs. biotechs on patent reform

Posted by Angel Gonzalez at 1:42 PM

Both the computer industry and the biotechnology industry want new laws that would streamline the patenting process and help spur innovation. But what's good for the one is not good for the other, it seems.

The computer industry pushed hard for the major overhaul the House Judiciary Committee passed Wednesday, which limits damages during patent infringement lawsuits.

The Coalition for Patent Fairness, which represents technology companies ranging from Microsoft to Apple, says the current system allows "baseless" patent claims that can cost millions in legal bills "and can coerce large settlements that cost upwards of $100 million," deterring innovation.

Biotech companies oppose these damage limitations, as they live in perpetual fear of generic drug makers, which can cheaply copy drugs that take decades to develop and billions of dollars to market.

The Biotechnology Industry Organization, which groups most biotech companies, said in a statement that "the bill, as it currently stands, threatens continued biotech innovation."

A Congressional Research Service report from last year goes into the details of how patent reform would affect the different industries. The full House now has to consider the matter, and the Senate Judiciary Committee is debating similar legislation, according to this AP story.

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Microsoft breaks $50 billion in sales, meets expectations

Posted by Benjamin J. Romano at 1:34 PM

There's a quick summary of Microsoft's quarterly numbers in this story. You can also read the full earnings release here.

Executives are crowing about a significant emotional milestone for the company: Passing the $50 billion mark for annual revenue. The company posted $51.12 billion in sales for the 2007 fiscal year.

The fourth quarter was pretty much as expected. The charge for the Xbox 360 failure rate and associated warranty extension looks to be on the low end of the range the company announced July 5. It works out to be a $1.06 billion hit to operating income, which translates to a $749 million charge against net income.

Executives also revised upwards their guidance for the full 2008 fiscal year. But the new numbers -- revenue between $56.8 billion and $57.8 billion, operating profit of $22.2 billion to $22.7 billion -- do "not include the impact of currently undetermined costs associated with Microsoft's [$6 billion] acquisition of aQuantive, Inc., which is expected to close in the quarter ending September 30, 2007."

The gains made in the regular trading session today, pushing Microsoft stock to a new 52-week high, held through the bell and traders were bidding the stock higher in the early minutes of the after-hours session. We'll see if the trend continues through the evening.

Meanwhile, it looks like Google is missing analyst targets for the quarter, even though it posted another set of strong gains.

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News and numbers ahead of MSFT, GOOG earnings

Posted by Benjamin J. Romano at 10:17 AM

Shares of Microsoft stock are up 54 cents, 1.75 percent, to $31.46 in mid-day trading today ahead of the company's after-the-bell earnings report. The stock has been on a bit of a tear this week and is threatening to take out its 52-week high.

Google, which also reports earnings today, is getting more scrutiny of its proposed acquisition of online advertiser DoubleClick. The Senate Judiciary Committee's antitrust subcommittee and the House Energy and Commerce Committee's consumer protection subcommittee are planning to call Google executives to testify in hearings on the $3.1 billion deal in late summer or early fall, according to The Associated Press.

A key measure of the competition between Google and Microsoft is the share of Internet searches performed on each companies' service. Nielsen//NetRatings today confirmed what the comScore figures released earlier this week showed: Microsoft had a substantial year-over-year gain in U.S. search share during June. That's not the whole story, though. Microsoft acknowledged that its Live Search Club games were probably behind the gains, and another AP report explained how many people playing those games didn't even know they were performing the searches.

U.S. Web traffic to the two companies' sites, another important part of the online battle, was almost equal in the June quarter, but Google's growth rate is much faster. According to Nielsen:

-- Google's traffic grew "20 percent year over year, from a three-month average monthly unique audience of 95.9 million in Q2 2006 to 115.2 million in Q2 2007."

-- Microsoft's traffic "increased 3 percent year over year, from a three-month average monthly unique audience of 113.9 million unique visitors in Q2 2006 to 117.8 million unique visitors in Q2 2007."

As I reported today, many analysts will be watching Microsoft's report today to see how Windows Vista performed in its first full-month of availability. One analyst I spoke to talked about better-than-expected growth for the operating system on a strong PC market. IDC confirmed that just such a market existed in the second-calendar quarter: Worldwide PC shipments were up 12.5 percent.

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Clearwire signs big pact with Sprint Nextel

Posted by Tricia Duryee at 6:16 AM

Kirkland-based Clearwire, the company founded by wireless entrepreneur Craig McCaw, has partnered up with its rival Sprint Nextel to build a nationwide mobile broadband network using the emerging WiMax technology.

The partnership, announced this morning and outlined in a letter of intent , is expected to be finalized in the next two months. The deal will be subject to review by the Department of Justice.

The two companies said with the partnership they would be able to build the network faster, providing online access to consumers, businesses and even the federal government for public safety use.

Since 2003, Clearwire has been working to build a nationwide network by quietly acquiring airwaves for wireless broadband and raising millions of dollars through private placements, public offerings and debt.

About a year ago, Sprint Nextel also announced its intent to build a nationwide WiMax network. Today, Clearwire is operating a proprietary wireless broadband network in 39 U.S. cities (to about 258,000 customers, which includes networks abroad), and Sprint Nextel expects to get an initial handful of markets by the end of the year.

Both companies have faced skepticism for the role that the new networks will play in the daily lives of consumers and corporate customers, especially as cellphone companies expand their own high-speed networks, called 3G.

"Our companies share a vision of doing for the Internet what cellular and PCS networks did for voice communications starting more than 20 years ago," Clearwire Chief Executive Ben Wolff said. "Based on this shared vision and the expected benefits to each company and our respective shareholders and customers, it is natural that we would work together."

In the deal, Sprint Nextel and Clearwire expect to build out a portion of the nationwide network and enable roaming between their two systems. Sprint Nextel covers the more populated areas, potentially reaching up to 185 million people, or about 75 percent of the population in the 50 largest markets. Clearwire is focusing on areas covering about 115 million people. The two companies expect to be able to cover about 100 million people by the end of next year.

The companies also said today that they will work jointly on product and service evolution, shared infrastructure, branding, marketing and distribution. They also intend to exchange selected airwaves in the 2.5 GHz spectrum band. Spectrum license transfers must be approved by the Federal Communications Commission.

What's interesting is the deal goes fairly deep. The two will market the service under one brand, and Clearwire will be able to bundle 3G service from Sprint Nextel to its customers. The initial partnership is for 20 years with three 10-year renewal periods.

For people familiar with Craig McCaw, Clearwire's founder and chairman, this sounds like another venture he did not too long ago.

When he was reorganizing Nextel Communications into a cellular company, he helped to start Kirkland-based Nextel Partners, a company responsible for rolling out in rural and smaller markets, freeing Nextel Communications to focus on the larger cities.

That idea is not foreign to Sprint, which bought Nextel Communications, and later was obligated to buy the smaller affiliate Nextel Partners. The two-company approach to market -- at least in the case of Nextel -- had a lot of benefits. It allowed Nextel to move faster, while also providing better customer service. It also gave two companies independent access to the public markets.

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How does muni Wi-Fi become free?

Posted by Tricia Duryee at 6:01 AM

A number of cities across the country have decided to build Wi-Fi networks that l hover over residents like a cloud and provide free Internet access.

It's been a lot harder to deliver on those promises than people thought.

First, there have been a lot of difficulties in deploying the networks. How strong should the signal be? Should it be able to work in everyone's home? At what cost? These and other questions have surfaced.

While networks are continuing to be built, the next question is still being fleshed out.

In November, Microsoft announced a partnership with MetroFi to add local content from its MSN property and ad services to the MetroFi network in Portland.

MetroFi has its own ad network and today also uses Microsoft's adCenter platform to help advertisers reach local Wi-Fi users in return for offering free Internet service.

Today, Microsoft is annoucing a partnership with San Francisco-based JiWire, which is best known for its Web directory, which attempts to list all hotspot locations.

Microsoft said through this partnership it will use JiWire's advertising service called Ultramercial to deliver ads in Portland and Oakland County, Mich..

Ultramercial ads are interactive advertisements that Wi-Fi network users agree to watch in exchange for free network access -- perhaps a 30-second ad for half hour of access.

Stefan Weitz, a director of planning at MSN, said they are experimenting to determine which ads work better in the Wi-Fi environment.

"These are ad-supported networks, so they are free, but we all know that nothing is actually free," he said. "So we are working with these folks to find the right mix of advertising and to optimize the usage, so users are not bombarded with ads when they are on the networks."

One Ultramercial Weitz has seen involves Nike, where prior to showing a video, the ad asks whether the viewer is a runner or a basketball player. The ad can then be be tailored to that person. Here's an example on the JiWire Web site.

"They are cool, they are interesting and immersive," he said. "Advertisers love them because they have hugely high click-through rates and they aren't some banner, they are interesting."

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July 18, 2007

Microsoft patents desktop application ad framework

Posted by Benjamin J. Romano at 3:48 PM

Some people have reacted with fear and skepticism to a patent application Microsoft filed for a new advertising framework that would gather data from Word documents and e-mail messages to display more targeted advertising in the context of desktop applications.

The patent application, reported first on Monday by InformationWeek, offers a description of targeted advertising:

Targeting advertisements is highly valued by advertisers because it allows placement of advertisements that are theoretically of greater interest to a particular audience member than blanket advertising.

How it is currently done on the Web:

Targeting advertising to a user viewing content on the Internet or web-browsing on computers creates an opportunity for an "audience of one." By analyzing what a user is performing web searches on or by watching clicks on a web portal, advertisements may be targeted to a particular user.

And how this new client-side advertising framework could expand targeting to desktop applications:

An advertising framework may reside on a user computer, whether it's a part of the OS, an application or integrated within applications. Applications, tools, or utilities may use an application program interface to report context data tags such as key words or other information that may be used to target advertisements. The advertising framework may host several components for receiving and processing the context data, refining the data, requesting advertisements from an advertising supplier, for receiving and forwarding advertisements to a display client for presentation, and for providing data back to the advertising supplier. ... An application, such as a word processor or email client, may serve as both a source of context data and as a display client.

Here's a statement from David Kaefer, general manager of intellectual property and licensing at Microsoft, in response to my request about any plans the company might have to make an actual product/service out of the ideas covered in the patent:

Microsoft is constantly developing innovative, rich technologies in the user interface area. We have over 5,000 patents worldwide and we are proud of the quality of these patents and the innovations they represent. As a general practice, we do not typically comment on pending patent applications because it is unclear if the claims in the application may be modified through the approval process by the patent office.


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Web 2.0: good or bad?

Posted by Tricia Duryee at 1:08 PM

The Wall Street Journal today hosted a debate between two experts -- one who argued that the Web has become a noisy place that's hard to understand. The other argued that the so-called Web 2.0 revolution enables the noise to be filtered out, so that more information can be found and understood.

The conversation between Andrew Keen, who wrote "The Cult of the Amateur" (and the one who thinks the Web is cluttered), and David Weinberger, author of "Everything is Miscellaneous," is definitely an academic look at the still-emerging medium, but I think has some interesting points worth pondering.

Keen starts the debate:

Yes, the people have finally spoken. And spoken. And spoken. Now they won't shut up. The problem is that YOU! have forgotten how to listen, how to read, how to watch....

A flattened media is a personalized, chaotic media without that essential epistemological anchor of truth. The impartiality of the authoritative, accountable expert is replaced by murkiness of the anonymous amateur. When everyone claims to be an author, there can be no art, no reliable information, no audience.

Weinberger responds:

So, Andrew, you join a long list of those who predict the decline of civilization and pin the blame on the latest popular medium, except this time it's not comic books, TV, or shock jock radio. It's the Web.

This time, of course, you might be right ... especially since you and I seem to agree that the Web isn't yet another medium. Something important and different is going on....

The Web is far better understood as providing more of everything: More slander, more honor. More porn, more love. More ideas, more distractions. More lies, more truth. More experts, more professionals. The Web is abundance, while the old media are premised -- in their model of knowledge as well as in their economics -- on scarcity..."

For more, check out the article.

I tried to relate this back to the many Web 2.0 companies being started in Seattle. What ones are providing information and which ones are providing clutter?

Is a company like Avvo, which provides information on lawyers, or Zillow, which provides information on houses, clogging the system? Are social networking companies like Facebook, which provide a person's thoughts or photos, or even Amazon.com, which has thousands of amateur reviews, helpful or necessary? Or are they distractions?

Should we care?

If a company falls into one bucket or another, does that influence its fate as to whether it will succeed or not?

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M-commerce: a study just a day late

Posted by Tricia Duryee at 11:28 AM

Seattle-based mPoria believes there's a huge market potential for selling physical goods over the phone, just as they are bought online today.

I wrote a story on Monday about m-commerce, which many people are expecting to become one of the next mobile frontiers. The idea is that first people get comfortable buying digital content on their phones, such as ringtones and music. Next, they will start surfing the Web to find relevant information while they are on the go. And next, it will make sense to do a bit of shopping.

Following the publication of Monday's story (isn't that always the way it goes?), the research firm Strategy Analytics released a report called: "M-Commerce: Search Efficiency and Results Customization Critical," which looked at the perfromance of eBay, lastminute.com and Odeon Cinema on the phone.

This result: The phone experience was substantially inferior to that of the Internet on a computer.

In a test that I detailed in the story, where I was buying a bouquet of flowers, this was partly true. The process required a lot of clicks, but it was easier to enter text than I had previously imagined.

The study found that users were surprised that they were unable to purchase content from lastminute.com and Odeon Cinema and bid for items on eBay using the mobile portal.

"Consumers were profoundly dissatisfied with the concept of only using the M-Commerce sites for research and pre-purchase evaluation," said Paul Brown, senior analyst. "Participants were surprised and disappointed that when using the lastminute.com mobile portal they could search for flights and vacations but could not purchase either tickets or trips."

Interestingly enough, the report also found that Amazon.com -- followed by iTunes -- were the two most-sought-after e-commerce sites on mobile phones.

I contacted Amazon for my story, and it was unwilling to talk about its vision and current activities on the phone.

"While I'd really like to help you, we do not discuss the details of our mobile strategy," a spokesman said.

He did direct me to a Web site that explains what you can do on the mobile phone today. Amazon does have a pretty slick mobile site -- it eliminates a lot of the headaches by pulling information from your account so you don't have to fill in your credit card or shipping information if it had been stored online.

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The Ethanol Curtain

Posted by Angel Gonzalez at 10:16 AM

Biofuels are tres a la mode. On Tuesday, the House passed an appropriations bill that would give alternative fuels research and development $250 million, $50 million more than last year. But the United States' main source of biofuel -- corn-based ethanol -- remains controversial.

Ethanol supporters say that the fuel burns cleaner, can help free the country from dependence on foreign oil, and boosts local farmers' revenues. Critics argue that it's inefficient to produce and that the ethanol craze can have significant social and environmental impacts -- and raise food prices. Two recently published reports illustrate this chasm -- which has grown wider as Congress decides on farm subsidies and energy programs for next year.

In "The Rush to Ethanol", Food & Water Watch and the Network for New Energy Choices say biofuels "are not the silver bullet solution that some say they will be."

High corn prices foster the concentration of ownership and the industrialization of agricultural lands. Most subsidies will end up in the pockets of big agri-business, the report says. Moreover, corn-for-ethanol crops won't reduce overall greenhouse gas emissions, and is a drop in the water amid our growing energy needs. The report authors recommend pushing for better energy efficiency, as well as sustainable standards in the production of biofuels.

The report says:

Even if the entire U.S. corn crop was dedicated to ethanol, it would displace only a small share of gasoline demand.

On the other side of the curtain, sits Ethanol Across America, an industry-government partnership that favors the advancement of the renewable fuel. In a brief published Tuesday, the organization rebuffs the argument that more corn-based ethanol comes at the expense of food production and significantly raises food prices. Corn is used not only in producing corn flakes and many other human-consumption products, but is also widely used as feedstock for beef and pork.

"The raw material in many products is a very small portion of the cost paid by the consumer," the report says. The middle man accounts for most of the cost, and more expensive food prices are due not only to higher corn costs, but blizzards, ice storms, and overall inflation.

The report says:

Ethanol critics routinely overstate how much corn is actually consumed as human food. Less than 12% of the nation's field corn crop is processed directly into human food products in the United States. Corn syrup, sweeteners, starches and cereals are examples. Corn demand for the human food market has been flat over recent years.

In any case, the oil-industry led National Petroleum Council says in a draft report that the world will need any type of energy that's thrown at it, as conventional sources of oil and gas won't be able to fulfill growing demand, according to a recent Wall Street Journal story.

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July 17, 2007

Biotechs cheer FDA funding proposal

Posted by Angel Gonzalez at 4:25 PM

A proposed boost in the U.S. Food and Drug Administration funding is making biotech companies smile -- as the money could help speed up the grueling approval process for new treatments and devices.

On Tuesday, a Senate appropriations subcommittee voted to give the FDA a $1.75 billion budget -- a $186 million increase.. That "represents the most significant increase in the FDA's budget in recent memory," said Jim Greenwood, president of the Biotechnology Industry Association.

He said:

"This will greatly enhance the ability of biotechnology pioneers to get life-enhancing and life-saving therapies out of research labs and into the hands of patients as quickly as possible."

The FDA has been under increased pressure to step up its vigilance over the biotechnology and pharmaceutical industry in the wake of problems with approved drugs such as Merck's Vioxx arthritis treatment. Both the House of Representatives and the Senate have recently approved bills strengthening the agency's power.

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Xbox boss reschedules career

Posted by Benjamin J. Romano at 1:19 PM

Microsoft confirmed this afternoon that Peter Moore, the head of the company's video games business, is resigning for personal reasons. Those reasons? He and his family want to get back to the San Francisco area and he got a job as president of EA Sports, the sports label of leading game publisher, Electronic Arts.

Replacing Moore is Don Mattrick, a game industry veteran who spent 23 years with EA.

People attending the Casual Connect gaming conference in Seattle this morning might have caught a scent of this news coming. In opening remarks at the show, Mark Cottam, CEO of MumboJumbo, noted that Marc Whitten, general manager of casual games at Microsoft, would be subbing for Moore, who was billed as a keynote speaker.

"Unfortunately, Peter Moore had a last-minute scheduling change," Cottam said.

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Is Google's strategy increasingly anti-telecom?

Posted by Tricia Duryee at 12:04 PM

Google's mobile search strategy was the subject today of a story in The Wall Street Journal that hints the Internet giant is becoming even more anti-telecom.

The story said Google is developing technology that will allow it to go beyond just looking up Web pages on the mobile phone and offer a way to search for mobile content, such as ringtones and graphics.

A number of startups have been doing this for a while, including Seattle-based Medio Systems and JumpTap of Cambridge, Mass. Bellevue-based InfoSpace is also a player and Microsoft and Yahoo! are working on technology in the area.

But from what the article says, it sounds as if Google will be approaching the market differently. It is working directly with media companies to compile a database of content and then it will sell the content directly to the user. Users will pay for the content with Google's own checkout account, rather than on their phone bill.

This approach is clearly trying to go around the wireless carrier, which today controls most mobile content sales. That's unlike Medio, JumpTap and InfoSpace, which are all all trying to partner with the carrier.

This is the second time in recent weeks that Google has lined itself up as a competitor to the wireless industry.

In an upcoming spectrum auction, which will be selling valuable wireless broadband airwaves, Google has sided with a company called Frontline Wireless, which argues that competition has been stifled because telecom giants own existing wireless networks.

The governmen, they argue, should create an open network with the spectrum so that entrepreneurs can easily launch applications, thereby better serving the consumer.

There's more information in a blog post here and here and in a story here.

If the FCC chairman and Google get their way, the industry will likely undergo dramatic change -- a situation that will likely be favorable to Google and others.

If the telecom carriers get their way, and the spectrum remains operated by a select number of companies, will Google will become an outcast in the wireless industry?

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Tech exports grow, but Washington not a large player

Posted by Kristi Heim at 10:17 AM

Technology exports from Washington state grew 7 percent last year, totalling $3 billion, according to the trade association AeA.

Interestingly, Washington's high tech exports did not match the growth of the same goods nationally. U.S. high tech exports grew by 10 percent in 2006 for a total of $220 billion. The growing trade gap was also apparent in this category: as a country, the U.S. imported $322 billion in high tech goods last year, up 9 percent from 2005.

Also surprising was that Washington, a trade dependent state with a vibrant tech industry, ranked only 18th among states in the dollar value of tech exports. Only 6 percent of overall exports from Washington were considered tech related, landing the state in 41st place on that list.

So just what are we selling abroad? Industrial electronics, computers and peripheral equipment and semiconductors. The leading destinations were Canada, Taiwan and the Netherlands. Details of the AeA report are here.


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July 16, 2007

Microsoft Search posts gains in June

Posted by Benjamin J. Romano at 3:14 PM

A Microsoft search executive made a few calls to reporters last week to tout what the company expected to be a marked improvement in its share of U.S. Internet searches.

Today, comScore released the numbers for June, and not only did Microsoft's Live Search gain 3 percentage points from a year ago, its chief rivals, and the occupants of the No. 1 and No. 2 spots on comScore's list, saw their numbers decline.

Microsoft still got only 13.2 percent of the roughly 8 billion Internet searches performed in the U.S. last month. Yahoo had 25.1 percent, down a little more than 1 percentage point. Google still dominates the market, notching 49.5 percent in June, also down slightly more than a percentage point.

Brad Goldberg, general manager of Microsoft's search business group, said on Friday that the company was expecting to see a "more significant uptick" with this report because of its efforts with the Live Search Club. The program is designed to show off some of the features of Live Search in an "entertaining and contextually relevant way," he said.

The company's hope is that it will convince more people who try Live Search to stick with it and use it more frequently.

"Today, about 30 percent of people who search use Live Search," Goldberg said, "but that only translates into 10 percent of queries." (Now 13.2 percent.)

Goldberg said Microsoft plans "another turn of the crank" on Live Search by the end of the year to make engineering improvements to search relevance and performance. He said that Microsoft today feels it has a leadership position in areas including mobile search, image search and mapping.

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Two ways of exterminating the mobile browser

Posted by Tricia Duryee at 11:40 AM

Blue Flavor, a Seattle design, development and consulting company with a focus on new media, launched a new iPhone application today.

Called Leaflets, it runs on the Safari browser on your iPhone and allows a user to add icons for a whole bunch of favorite Web sites, such as Flickr, search and The New York Times.

Blue Flavor described the genesis of the application, this way: "The seeds for Leaflets were planted when we learned that the mobile web would be the primary way to deliver applications to iPhone. We knew what kind of apps we wanted on our own iPhones, so we built those. Then we found a few that other folks had built. Then we put them all together at getleaflets.com."

There's also a Leaflets icon for Seattle-based Newsvine. It was through Newsvine that TechCrunch's Michael Arrington heard about the new Leaflets application and wrote about it on his blog today.

Arrington points out that the neat thing about the service is that it does more than just link to Web sites. The icons use open APIs to minimize page load times and get right to the content.

I thought the service looked like the application Seattle-based ZenZui is building. The prime difference, I would guess, is that ZenZui is building a whole ecosystem --- from an application to an advertising network -- not just a Web page.

I'm not sure how Blue Flavor will make money on Leaflets. But the one it has going for it is that the service is available today, whereas ZenZui is still plowing through the early stages of launching a mobile application.

Leaflets has a great demo you can view on Apple's Safari browser.

Here's a video of ZenZui's product:

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Debate on biotech drug generics lies ahead

Posted by Angel Gonzalez at 10:57 AM

The House of Representatives voted last week to strengthen the U.S. Food and Drug Administration's rule over drug companies, but the fate of biotech drug generics is yet to be written, according to this Wall Street Journal story.

The House bill must be reconciled with a measure recently passed by the Senate, opening the way to follow-on biologics, as identical copies of biotech drugs are known. Biotech companies -- including many local firms -- dread their coming.

The current Senate bill would allow the FDA to waive clinical trials for generic versions of already approved drugs, something that could eliminate most of the incentive to develop costly therapies and pose a safety risk, opponents say. Supporters say generics could lower health care costs and increase access to life-saving medicines.

"A compromise version of the two measures is expected to be completed in the next few months," the Journal story says.

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July 13, 2007

So you want to make this blog, huh?

Posted by Tricia Duryee at 3:56 PM

A panel discussion coming up in two weeks will provide entrepreneurs and VCs a chance to grill the media on how to get noticed.

Well, here's an early hint -- if you are looking for publicity for your panel, invite the media.

Five reporters, including myself, will make themselves available for a panel discussion starting at 5:30 p.m. July 24 at The Havana Social Club on Capitol Hill.

At 6:30 p.m., the organizer Glenn Kelman, CEO of Redfin, has planned quite the after-party. The sponsors are Redfin and Madrona Venture Group, but it looks like other startups, including iLike, WetPaint, Farecast, Jobster and WildTangent, are also really pitching in.

With this list of reporters, the discussion will likely be lively:

Tricia Duryee, The Seattle Times
John Cook, The Seattle Post-Intelligencer
Rebecca Buckman, The Wall Street Journal
Fred Vogelstein, Wired magazine
Michael Arrington, TechCrunch

Kelman announced the event -- being called "The Naked Truth" -- on his blog and he's asking people to RSVP to both the panel and the party at this wiki.

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July 12, 2007

E3: Games gain cinematic qualities

Posted by Benjamin J. Romano at 5:37 PM

SANTA MONICA, Calif. -- For years now, developers have been trying to incorporate more cinematic elements into their video games. Some of the games on display this week at the E3 Media & Business Summit are starting to reach the goal of looking and acting like immersive movies.

Today I talked with a couple of developers to find out how and why they're doing it.

I should note up front that the guys I talked to are squarely within the Sony fold and they spent a lot of time explaining how none of what they are doing would be possible without the expanded storage capacity of the PlayStation 3's high-definition Blu-ray discs and the processing power of its Cell Broadband Engine.

Tam Antoniades, co-founder of studio Ninja Theory, drew the most direct parallels between film production and the forthcoming "Heavenly Sword," an action-adventure game that was hands-down the best looking title at E3, to my eyes anyway. It's exclusive to the PlayStation 3 and one of the titles Sony hopes will attract hard-core gamers to the platform.

"'Heavenly Sword' was shot over six weeks and it was shot just like a movie," Antoniades said, noting that the budget was comparable to that of a mid-sized motion picture: somewhere in the neighborhood of $20 million.


Sony

Performances by actors, including one playing Bohan, were recorded through digital motion-capture technology to give the game "Heavenly Sword" a cinematic feel.

As many as five professional actors were on the set, each covered with hundreds of diodes that allow the digital capture of their movements and facial expressions. In addition to facial expressions, the actors voices and full-body movements were captured as well. While games such as "Tiger Woods Golf" have captured facial expressions using this technique, "Heavenly Sword" marks the first time that actors' facial expressions, movements and voices have been captured simultaneously for a video game, Antoniades said.

The actors rehearsed their parts and "actually played the entire game as a [theatrical] play," before filming began, Antoniades said. The scenes were shot with multiple actors on stage together, allowing them to "play off each other as they would in a movie or a play," Antoniades said, adding that this too was a first for the industry.

The performances are then rendered for the cinematic sequences that carry along the game's story -- evil army invades, red-head heroine gets magical sword, starts kicking butt -- in between fight scenes that are animated in a more typical way, but still look awesome. The appearance is not photo-real, but that's by design. "We did go for a stylized look," Antoniades said. The skin tones, textures and details of the characters were impressive.


Sony

Another richly rendered character in "Heavenly Sword" is Nariko.

The cumulative effect of all this detail and content is to provoke empathy for the characters in the game, creating a more immersive experience. "Just like when you watch a big movie, you feel for the characters," Antoniades said. "... I think that from this point on, a lot of games are going to have to go down this route if they want to have great stories."

It's still not quite on par with the special effects we see in movies -- think Gollum in "The Lord of the Rings" trilogy. Antoniades said the movie industry uses equipment costing millions of dollars to create a frame of action with a computer-generated character in it. (Gollum, not coincidentally, was played by Andy Serkis, who has a starring role in "Heavenly Sword" as the invading King Bohan.) Video games, on the other hand, have to generate their images with technology that costs far less.

"The fact that you can approach almost cinema-level [quality] on a home console is amazing even to us," Antoniades said.

The technology inside the PlayStation 3 is by far the most powerful of the current generation of game consoles -- and also the most expensive. But it's the high-capacity Blu-ray, along with the powerful processor cores, that allow developers like Antoniades to cram in the rich detail that makes their games so beautiful and realistic. "Heavenly Sword" is a 29 gigabyte game. A typical DVD can hold about 9 gigabytes.

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China's Internet growth bringing sea change

Posted by Kristi Heim at 11:28 AM

We all know the rapid growth of the Internet in China is bringing changes to China itself. But it will also have consequences for the rest of the world. A new study by the Pew Internet & American Life Project points to some of those shifts.

About 137 million people are online in China now -- second only to the number of Internet users in the U.S. but still just 10 percent of China's population. In the U.S., about 65 percent of the population is online.

China's Internet population is growing faster than that of the U.S. and is projected to exceed the number of U.S. Internet users in just a few years.

That means more Web sites in Chinese, the one written language that is shared by speakers of many different dialects of the Chinese diaspora. This could have a unifying effect on China's citizenry, the Pew report predicts. Already, the Web is becoming a vehicle for expressing dissent and exposing problems that would not otherwise come to light.

But those voices are often squelched if they threaten Party control. Different approaches to the Internet could create more tensions with Western countries and non-Chinese companies like Microsoft over human rights and censorship, the report said.

When Bill Gates was asked in an interview with Fortune how he squares Microsoft's position in China with its leaders' suppression of free speech on the Internet and disregard for human rights, even China's most admired Westerner had no answer for that one.

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PopCap gets Retro

Posted by Kristi Heim at 10:05 AM

PopCap Games has acquired Chicago-based game developer Retro64 for an undisclosed sum, the Seattle casual game maker said this morning. The deal will allow PopCap to bring new action and puzzle games into its library of computer game titles. In addition, Retro64's Chicago office has become a PopCap development studio, managed by chief producer Mike Boeh, who was director of technology for Rollingstone.com before founding Retro64. Retro64's arcade style games include Venice, Water Bugs and Platypus.The company takes its name after the Commodore 64 computer, popular in the 1980s, and the fast, simple games created to play on it.

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July 11, 2007

Treemo's latest contest

Posted by Tricia Duryee at 6:37 PM

Seattle-based Treemo is launching a contest on its social networking site made for mobile phones.

The winner will receive tickets to a Velvet Revolver's concert in New York on Aug. 18. The plane tickets will be provided by another Seattle company, Farecast.

Participants are asked to send in videos, photos and essays on Velvet Revolver's new album -- Libertad, or freedom. Submissions are made by mobile phone.

There's already quite a large collection of entries on the Web site. There are several pages of thumbnails, where you can view pictures and text messages people have sent in representing freedom, including pictures of snowboarding and flowers.

To enter, you must register for a Treemo account or log in to your existing account, and then upload photos, videos, audio or text. The entry must be tagged "libertad." Winners will be decided by a combination of number of views, favorites, comments and shares, as well as a final vote among judges.

Brent Brookler, the company's CEO, said so far Treemo has more than 50,000 registered users and 95 percent of its traffic is coming from mobile. He added that Velvet Revolver has band members from Guns n' Roses and Stone Temple Pilots.

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E3: New, slimmer, lighter PSP

Posted by Benjamin J. Romano at 11:54 AM

CULVER CITY, Calif. -- Sony Computer Entertainment made some additional hardware announcements here. This one is focused on the company's PlayStation Portable, or PSP.

An enhanced PSP will be 33 percent lighter, 19 percent slimmer and with a longer battery life, among other new features. It can also be hooked up to a television to display PSP content on a larger screen.

In September, the enhanced model will be available in black, silver and a "Star Wars" design. Each one is packaged with additional content such as games and videos and will sell for $200.

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E3: Sony shipping 10 million PS2s this year

Posted by Benjamin J. Romano at 11:39 AM

CULVER CITY, Calif. -- Jack Tretton, Sony Computer Entertainment's president and CEO, started his presentation as a digital avatar inside the PlayStation Home environment. The 3-D customizable online space, similar to Second Life, is a big push for Sony and Tretton said it has been greatly improved since it was announced in March.

"Everyone here is extremely proud of PlayStation Home," he said. "This is the kind of innovation that Sony is known for."

He said the presentation will feature "games, games and more games" -- 50 games across the company's major platforms: PlayStation 3, PlayStation 2, the portable PSP and the PlayStation Network. That's in stark contrast to Nintendo's event earlier this morning, which focused on new controllers and expanding the video-gaming audience (see posts below).

Tretton reviewed the company's recent PlayStation 3 price cut. He then moved on to the platform that made Sony the undisputed leader in the last generation of video game consoles: PS2. It has an 118 million-unit install base, seven years into its life cycle, and Sony plans to ship 10 million units this year.

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Clearwire entering Taiwan?

Posted by Tricia Duryee at 11:38 AM

Clearwire may partner with Taiwan's Pan Overseas to create a joint venture that would invest in building out a WiMax broadband network in Taiwan, according to StreetInsider.com.

Looks like the rumor, which is showing up in a number of online newsletters, originates from a Commercial Times report on Monday that cited unnamed sources.

According to StreetInsider, the paper also cited a Pan Overseas official as saying the company has been in contact with Clearwire and Motorola, but declined to elaborate.

Pan Overseas is one of 13 Taiwanese companies that has applied for a WiMax license on the island. By the end of the month, the government is expected to award six WiMax licenses, lasting six years each.

Clearwire's stock is up 13 cents to $24.15 in afternoon trading.

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E3: On the set with Sony

Posted by Benjamin J. Romano at 11:28 AM

CULVER CITY, Calif. -- The traveling media circus of E3 made its way a few miles inland from Santa Monica for the Sony press conference, starting presently.

The event is in a giant sound stage -- Stage 16, to be precise -- at the company's movie studios here. Despite the size of the space, I'm cramped in the back.

Outside, Sony was serving Bloody Marys. Let's see what they're serving for the PlayStation 3.

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E3: 'Wii Fit' turns game machine into personal trainer

Posted by Benjamin J. Romano at 9:58 AM

SANTA MONICA, Calif. -- Reggie Fils-Aime described how Nintendo is aiming to improve mental health with a range of puzzle games and educational software for the Nintendo DS handheld device.

The "Brain Age" franchise has already sold 15 million titles and new titles from Ubisoft promise to help improve spelling and even be a virtual "life coach."

But the big news, saved for the end of the press conference is "Wii Fit." Fils-Aime said this "effectively takes our big lead in audience expansion and laps it."

Three fitness trainers are on stage now, each standing on a weight-sensing pad. The game depicts a movement, such as a one-legged stretch. The player, or exerciser, follows along and the pad gives you feedback on how you're doing.

A video about the game depicted yoga, push-ups, step aerobics and other exercise movements and balance movements. There are more than 40 activities in the game. The game prompts you with tips.


Nintendo

The Wii Fit -- a new controller from Nintendo -- allows players to perform different exercises or actions.


Shigeru Miyamoto, senior managing director, general manager, of Nintendo's Entertainment Analysis and Development Division -- a rock star in the company -- took the stage to introduce this game. He said through an interpreter that he's more excited about this than some of the higher-profile games announced today.

Miyamoto said the device that they were using is the Wii Balance Board. It's very thin. It can measure your weight and balance shifts while standing on the board. It can be used as a new interface for games that allows you to use your full-body movement for input. It's wireless and can be used anywhere in the room.

Another feature measures your body mass and graph changes in your Body Mass Index over time

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E3: Wireless Wii Wheel for Mariokart

Posted by Benjamin J. Romano at 9:41 AM

SANTA MONICA, Calif. -- Reggie Fils-Aime just announced the Wii Wheel, a wireless steering wheel for use with "Mariokart Wii," a forthcoming release of the classic Nintendo franchise for the company's current-generation console.

"Like the Wii Zapper, this custom steering wheel has the potential to level the track for beginners while offering a new feel, even if you first started racing with Mariokart 15 years ago," Fils-Aime said. (Was it really that long? Yikes!)

"Mariokart Wii" will be available during the first quarter of 2008 and will feature real-time online multiplayer races and battle mode. Fils-Aime suggested that the number of players who can participate at once might be higher than in past versions.

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E3: Nintendo ups the controller ante with Zapper

Posted by Benjamin J. Romano at 9:19 AM

SANTA MONICA, Calif. -- Reggie Fils-Aime just announced "the first offspring of the Wii Remote and Nunchuck."

He showed pictures of a plastic housing that holds both pieces of the motion-sensing control of the Wii in a gun shape.

"The Wii Zapper: On one hand it's a new housing for both the Wii Remote and the Nunchuk, but the real news is what it represents for game play," he said. The Zapper will "change the dynamics of the first-person shooter" category of video games.


Nintendo

The Wii Zapper houses the Wii Remote and Nunchuk.

Capcom is developing a special "Resident Evil, The Umbrella Chronicles," that uses the Zapper. Other third-party developers are working on games for it, too.

It will go on sale for $19.99, and be packaged with Nintendo software as well.

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E3: Reggie is happy 'because everyone's a gamer'

Posted by Benjamin J. Romano at 9:05 AM

SANTA MONICA, Calif. -- Nintendo opened with a montage of news clips and advertisements for the Wii and Nintendo DS. Then Reggie Fils-Aime, president and chief operating officer of Nintendo of America, took the stage.

"My name is Reggie and I am ... happy," he said, riffing on the introduction he gave at this show in 2004. "To us, today is more than a press conference or a business meeting, we see today as a celebration."

He said the celebration extends beyond Nintendo.

"We think this E3 marks a conclusive turning point for the video game market, welcoming more players and more opportunity to our form of entertainment," Fils-Aime said.

Here's a number: 69 percent of all game industry growth comes directly from the sales of Nintendo products, he said.

Another one: A third of Nintendo DS players are women. In households with a Wii, the regular players include: 95 percent of males under 25; two-thirds of men 25 to 49; one-third of women in that age group. in the over-50 age group, 1 in 8 men are playing regularly, along with 1 in 10 women.

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E3: Nintendo is tee'd up

Posted by Benjamin J. Romano at 8:49 AM

SANTA MONICA, Calif. -- We're waiting on Nintendo's press conference, due to start in about 10 minutes. The setting is a bit less dramatic than Microsoft's was last night. It's a pretty standard set up inside the Santa Monica Civic Center.

The decorations Nintendo chose speak to its strategy: About a dozen pictures of people of all ages playing with a Wii remote or quizzing themselves on a Nintendo DS. There's plenty of gray hair on the models in the photos and a fair number of people with perplexed but pleased looks on their faces, as if to suggest this is the first time they've played a video game, but they actually like it.

Check back for updates as the conference gets going.

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July 10, 2007

E3: Only at a video game conference

Posted by Benjamin J. Romano at 9:40 PM

SANTA MONICA, Calif. -- A fairly surreal moment here just now. Microsoft showed a full-length cinematic preview of the forthcoming "Call of Duty 4," an intense first-person combat game. It was loud, scary and very realistic.

Then two of the game's developers came on stage to play through a level, in which a pair of snipers infiltrate an enemy base. The audience of more than 1,000 people watched, rapt and silent, as a guy played a video game on the big screen of an outdoor high school amphitheater.

OK, I know, it's a video game conference. But still.

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E3: Microsoft pairs with Disney on video rentals

Posted by Benjamin J. Romano at 9:34 PM

SANTA MONICA, Calif. -- Another significant piece of news out of the press conference: Microsoft has struck a deal to distribute movies for rent from Walt Disney Studios over the Xbox Live network in the U.S. The deal would further burnish the Xbox 360's credentials as a platform for video content.

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E3: Reggie Bush scores a touchdown

Posted by Benjamin J. Romano at 9:08 PM

SANTA MONICA, Calif. -- Microsoft exec Jeff Bell noted that the Electronics Arts lineup of sports games this year will run twice as fast on Xbox 360. Reggie Bush, the USC Heisman Trophy winning running back and current New Orleans Saints star, came on stage to talk speed. As the two squared off for a few plays on "Madden NFL," Bush said, "I know how you Microsoft guys try to cheat." Bush, er, the on-screen depiction of himself, then broke free for a touchdown. Bell's team? The Seahawks.

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E3: Microsoft introduces big red button

Posted by Benjamin J. Romano at 8:58 PM

SANTA MONICA, Calif. -- In a bid to expand the appeal of the Xbox 360, Jeff Bell, Microsoft corporate vice president, announced a new controller for the console. It's designed to be easy to use and features fewer buttons than the standard Xbox 360 controller, including a big red one.

Four of these wireless controllers will come packaged with "Scene It?" a movie trivia game based on the DVD board game from Seattle's Screenlife, which we profiled in 2002. The bundled game and controllers will sell for the same price as a regular Xbox 360 game.

This was the biggest news I've detected out of Microsoft's E3 press conference so far. Peter Moore spent a lot of time recounting statistics about the Xbox 360. One number he didn't share is the failure rate of the console, which was described last week as "unacceptable" in announcing an extended warranty program and non-specific engineering fixes that should eliminate the "general hardware failure"/ "red ring of death" that has upset a substantial number of customers.

So is the Big Button a direct rival to the Wii Remote from Nintendo? Not exactly. The "Big Button" pad isn't motion sensitive. But Microsoft is clearly experimenting with a controller designed to be less off-putting to non-gamers. It's a strategy that Nintendo has shown to be very successful, as the scarcity of Wii consoles on store shelves illustrates.

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E3: 'Halo' fans rock the press conference

Posted by Benjamin J. Romano at 8:43 PM

SANTA MONICA, Calif. -- Microsoft opened with "five Halo fans from Libertyville, Illinois." These apparently amateur musicians heard the music of the game "and heard rock," according to Peter Moore, Xbox boss.

The band took its instruments as the movie screen lit up with a star scape. The amphitheater was lit in blue and the band began to play. A lead violinist with '80s hair started rocking out. The screen shows dozens of shots from "Halo 3," due out in September. The crowd cheered.

Moore says they're about to unveil "the biggest lineup in video game history."

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E3: Microsoft invades Santa Monica High

Posted by Benjamin J. Romano at 8:05 PM

SANTA MONICA, Calif. -- You walk in between the high school cafeteria and administration building. The music is thumping louder than it was at prom. A security detail that looks like it should be protecting a head of state watches from the edges. Everything is bathed in the signature green of the Xbox.

Hundreds of mostly white and Asian men are sitting in the concrete amphitheater. Many have their laptops open. Others are brandishing cameras, camera phones. A section in the middle is given over to video cameras.

A stage is set in green, black. There's a pool next to a walkway and a few dozen large chrome balls scattered on black carpet. A drum set, keyboard, guitars and a gong stand at the ready.

On a movie-theater sized screen in the middle, thousands of names -- Gamer Tags -- are displayed, presumably as they exist in the Xbox Live network: They are attached in a giant expanding tree to other names. "tude," "Cindi," "CyberCooper," "lakergrul024."

Microsoft's E3 press conference begins in half an hour. If you want to watch it live at home, you can. Details will be posted here at 10 p.m., when the news embargo lifts. We'll try to get the details posted sooner.

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MediQuest Therapeutics Prepares To Seek FDA's Nod

Posted by Angel Gonzalez at 6:01 PM

Pharmaceutical start-up MediQuest Therapeutics, which specializes on topical treatments, is getting ready to seek regulatory approval of its first commercial treatment.

In late June, the privately held Bothell firm concluded its final clinical study of a therapy to treat Raynaud's disease, a disorder that makes the body's extremities overreact to cold temperatures.

MediQuest expects to file an application for the new treatment with the U.S. Food and Drug Administration "sometime before the end of the year," says Chief Executive Frederick Dechow. A new round of financing to underwrite the company's effort lies in the "not too distant future," he added.

The market for Raynaud's disease treaments could be in excess of $800 million a year, Dechow said. A successful venture round -- and product launch -- could mean up to 100 additional jobs, Dechow said. The company currently has 28 employees.

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Northwest Biotherapeutics gets Swiss jolt

Posted by Angel Gonzalez at 5:40 PM

It seems Northwest Biotherapeutics, a local biotech once derided by U.S. capital markets, is benefitting from the Alpine climate.

Shortly after its debut at London Stock Exchange's stock market for small caps, the company said that Swiss regulatory authorities approved the use of its brain cancer therapeutic vaccine.

The announcement, sent the stock into a wild ride Monday, closing 36 percent higher in London's Alternative Investment Market. The stock jumped even higher on Tuesday --- to an unbelievable 280 pence, up 104 percent.

Not bad for a Bothell-based company that was once kicked out of Nasdaq for running out of cash.

Chief Executive Alton Boynton said:

"Switzerland is an attractive place to begin commercialization, due to its highly respected regulatory oversight, and its growing experience with cellular therapies. Switzerland is also increasingly noted for medical tourism, and is easily accessible for many medical tourists."

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Ballmer acknowledges need to accelerate Web strategy

Posted by Benjamin J. Romano at 3:23 PM

Mary Jo Foley, longtime Microsoft watcher, has fantastic coverage of the announcements out of the company's Worldwide Partner Conference in Denver.

Her latest post covers Microsoft CEO Steve Ballmer's presentation to the audience of third-party software developers, system vendors, business consultants and others who represent the company's de facto sales force. They are gathered this week for the partner conference. About 12,000 people are in attendance.

Speaking to the audience "essentially the same way I speak to our employees," Ballmer offered the audience a view of where things are going with the company.

And to Foley's ear, he came "the closest I've ever heard him to admitting that Microsoft needs to change its course. And fast."

"'Consumers expect a move in this [Web] direction,'" Ballmer said.

Ballmer's broad talk aimed to clarify the company's vision for a new model of computing. Ballmer called it an "evolution in computation and user interface models," which Microsoft short-hands as "software plus services." That's as opposed to other buzz-phrases such as "software as a service" or "Web 2.0."

Foley reports on how Ballmer explained the company's move toward the Web:

Ballmer explained that Microsoft already is rearchitecting its core platform to be more of a Web-centric one. As he told the Partner Conference audience, "the programming model stays .Net and Windows." But beyond that, Microsoft is is redoing its products and business models from scratch.

In a nutshell, Microsoft is taking the datacenter infrastructure it has been building to support Windows Live, Office Live, Xbox Live and other Live services, and is making it the crux of the company's future products, all across the board.

A Webcast of Ballmer's roughly hourlong speech can be found in the middle of this page, under the Webcast heading. I imagine a transcript of the speech will be posted later today.

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Gates Foundation center as new tourist attraction?

Posted by Kristi Heim at 2:56 PM

The visitor's center at heart of the new Bill & Melinda Gates Foundation campus is being designed by Ralph Appelbaum Associates, the same firm that designed the Holocaust Memorial Museum in Washington, D.C.

Scheduled to open in 2010, the 15,000-square-foot center will be a public window on the foundation's work in global health, development and education.

In this interview founder Ralph Appelbaum says he intends to convey a message of optimism, that "all lives, no matter where they're lived, have equal value; that there are inequities, but today's problems are solvable."

The center aims to open people's eyes to global problems through a journey or personal encounter, similar to the way visitors experience the Holocaust Museum.

In Seattle, visitors will see "how an American family became engaged with complex and serious issues and found their own way to contribute," he said.

Since the new campus is at Seattle Center, just across the street from the Space Needle and Microsoft co-founder Paul Allen's Experience Music Project, it could become a regular stop for visitors to Seattle. Maybe they'll think of it as the Experience Philanthropy Project.

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E3: Thoughts on a competitive game console race

Posted by Benjamin J. Romano at 2:23 PM

SANTA MONICA, Calif. -- The 9 a.m. Alaska departure from Seattle to LAX, a flight packed with people from Microsoft and other companies bound for the E3 Media & Business Summit, finally made it here about a half hour ago. Don't ask us about the emergency landing back at SeaTac.

It's cloudy and a comfortable 70 degrees here. Perfect weather to stay indoors and play/talk about video games for three days (OK, not really), which is what the 3,000 or so people arriving here from around the world intend to do.

More signs are pointing to a very competitive, and interesting, cycle for video game consoles. I've seen a lot of recent analysis of the video game industry that suggests unlike the last hardware cycle, no one console will dominate this time around.

While the Nintendo Wii is sprinting through its first full-year on the market, Microsoft's Xbox 360 has a solid lead in total installed base as a result of its early launch in 2005 (this despite the hardware problems plaguing the console). Sony's PlayStation 3 is off to a rough and costly start, but it's hard to write off a company with Sony's depth of experience in the industry. The company is already cutting prices to get back in the game.

On Monday, JupiterResearch released a new report backing the view that the current cycle will be much closer than the last one, which Sony's PlayStation 2 dominated. The report also estimates the size of the purse these competitors -- gathered here for three days to make their moves for the coming holiday season -- are playing for: potential cummulative U.S. sales of $66 billion through 2012.

A press release describing the Jupiter report stated it this way: "Competition for console households over the next five years will be fiercer than ever and will result in a close sharing of the installed base of systems among platform suppliers."

"Each platform supplier brings a special set of strengths to the market and to competition in current generation of systems," Jupiter vice president and research director Michael Gartenberg said in the press release. "On top of that we have seen a dramatic rise in the proportion multiplatform releases from independent publishers over previous generations. This is no longer the winner-takes-all market of the past."

2007 will be the high-water mark in terms of console revenue, the report concludes, with potential sales of $12.8 billion. Next year, Jupiter predicts, more than half of all U.S. households will have a video game console.

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Steve Ballmer to keynote CTIA

Posted by Tricia Duryee at 1:09 PM

CTIA, the wireless industry trade association, announced today that Microsoft's Steve Ballmer, will keynote at its San Francisco convention in October.

The annual show, CTIA Wireless IT & Entertainment, focuses on the intersection of wireless and media. Dustin Moskovitz, co-founder and vice president of engineering at Facebook, will also deliver a keynote at this year's event.

In recent years, Microsoft definitely has been beefing up its participation in the major wireless shows.

In Orlando, at CTIA's larger annual convention in March, Pieter Knook
Microsoft's senior vice president of mobile communications business, was a keynote speaker. His speech, however, was mostly a review since the company rolled out its newest version of its mobile operating system a month earlier at 3GSM World Congress in Barcelona.

It was at 3GSM two years ago where Ballmer last addressed the wireless industry en masse. He enthusiastically told the crowd that Microsoft was there to partner with the industry, not dominate it. He went on to say that he spent more of his time with telecom folks than with any other executives.

So, if keynotes are typically reserved for making announcements, I wonder what Ballmer will talk about at 9 a.m. Oct. 23?

With Apple getting so much attention over the iPhone, will it possibly be a Zune phone?

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Spectrum auction update

Posted by Tricia Duryee at 11:28 AM

There's already an update to my Monday post on the upcoming 700 MHz spectrum auction for wireless broadband technology.

In a nutshell, a company called Frontline Wireless is arguing that because existing wireless networks are owned big giants, competition has been stifled. Entrepreneurs can't easily get their applications and equipment to run on these networks and, because of this, they are inherently slower to develop.

Well, it sounds like FCC Chairman Kevin Martin may agree.

USA Today reported that Martin is expected to propose ground-breaking rules accompanying the spectrum to be auctioned off early next year. The goal would be to allow consumers to have more choice.

From the story, quoting Martin:

"Whoever wins this spectrum has to provide ... truly open broadband network -- one that will open the door to a lot of innovative services for consumers."

What this would mean in practice: "You can use any wireless device and download any mobile broadband application, with no restrictions," Martin explained. The only exceptions would be software that is illegal or could harm a network.

The CTIA wireless trade association issued a statement that took particular offense to a statement in the article that said very few phones had Wi-Fi today -- an example on how things were not moving very fast.

"Contrary to what was reported in the media, many wireless providers are offering Wi-Fi-enabled devices, and consumers are purchasing and using those devices across the country, not just at company-branded hotspots. In fact, wireless consumers today have access to more than 700 different wireless handsets," said CTIA President and CEO Steve Largent.

So the question is, will it make the spectrum less valuable (and, therefore, less expensive) if the rules to make it more open are implemented?

AT&T, Verizon Wireless, Sprint Nextel and T-Mobile USA argue that they get to dictate the traffic, the services and the handsets because they took on the risk and the cost to build out the network.

Will companies still be willing to pay top dollar for this spectrum? Will they still be able to make a return in this more open environment?

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July 9, 2007

Suit says Xbox 360s scratch game disks

Posted by Benjamin J. Romano at 4:38 PM

Microsoft says it has not "received any widespread reports of Xbox 360s scratching discs." That's the line from company spokesman Jack Evans, who was responding to a class action lawsuit filed in Florida.

As reported in the South Florida Business Journal:

The suit, which seeks class action status, was filed on behalf of Jorge Brouwer, a Broward County resident who bought an Xbox 360 late last year. It says that damages exceed $5 million and Microsoft has sold 11.6 million units since it was launched in November 2006.

Evans said late this afternoon that Microsoft had "only just learned of this lawsuit so we haven't had time to evaluate it."

The suit was filed by Hodkin Kopelowitz Ostrow, a Fort Lauderdale law firm. Its offices were closed when I called just now for comment.

Microsoft has a program for replacing scratched disks, but it only applies to titles the company publishes itself. Only 10 titles are currently covered by the program and Microsoft charges $20 per disc.

The suit comes days after Microsoft acknowledged an "unacceptable rate" of "general hardware failures" with the Xbox 360. Microsoft executives declined to identify the exact nature of the failures, but reports suggested the video game consoles were overheating.

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Is charity contagious?

Posted by Kristi Heim at 11:48 AM

In the year following Warren Buffett's highly publicized donation to the Bill & Melinda Gates Foundation, all that generousity is clearly having one effect: peer pressure.

The act has spurred its share of philanthropic impulses around the globe. In case you missed it, Hong Kong superstar Jackie Chan said recently he is giving half of his fortune to charity.

While Chan didn't reveal his net worth, he did mention the influence of Buffett and Gates.

"I admire the efforts by Buffett and Gates to help those in need a lot," Chan said.
"Like Buffett and Gates, I want to help people, but I don't have as much money as they do," he said in an interview with the Associated Press.

Chan, 52, said his donation would go into his Jackie Chan Charitable Foundation, started in 1988 to help poor youth in Hong Kong and later broadened to include disaster relief, medicine and the arts.

Observers have also taken a closer look at the wallets of the world's richest and asked -- why hold out?

Mexican billionaire Carlos Slim has a fat piggy bank, adding $3.5 billion to his riches every month, according to Business Week. Now he is estimated to have overtaken Gates as the richest man in the world.

Slim's charities include a $1.2 billion endowment of his telecom company's Telmex Foundation and a family charity worth $2.5 billion. And he recently donated $100 million to the Clinton Foundation.

Slim pickings compared to Gates' philanthropy? Maybe, but better than none at all.

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The controversy on the Frontline

Posted by Tricia Duryee at 10:42 AM

The FCC is expected to announce shortly when an auction will be held to sell a band of wireless spectrum (700 Mhz) to be used for high-speed Internet access.

This auction has been quite controversial. The Washington Post has a good summary today on what the stakes are and who's involved.

Basically, the company causing all the stir is Frontline Wireless, led by Reed Hundt, who was FCC chief during the Clinton administration.

According to the Post, this is Frontline's proposition in a nutshell:

Hundt and his partners at Frontline want to create a public-private partnership for a national network that would compete against AT&T and Verizon. In addition to operating commercially, the proposal would carve out a piece of spectrum to create a public safety network that would give priority to first responders in an emergency.

On Frontline's side are Internet properties, such as Google. Opposing Frontline, are big telecom companies AT&T and Verizon.

Frontline argues that because wireless networks are owned by AT&T, Verizon and other giants, they stifle competition. Entrepreneurs can't easily get their applications and equipment to run on them and, because of this, they are inherently slower to develop.

The story also says Frontline already has $3 billion on hand, but claims it can raise up to $10 billion to purchase spectrum. Investors include former Netscape chief Jim Barksdale and big-name venture capitalist John Doerr.

The interesting thing is, although it may only be AT&T and Verizon who are raising a cry over Frontline's proposal, other companies have a big interest in the issue.

Kirkland-based Clearwire is building out a high-speed wireless network based on WiMax, as is Sprint Nextel. And T-Mobile USA, which has been slow to build out a speedier network, just gained enough licenses to do so last year.

All of these companies have invested millions, if not billions, in creating wireless networks.

Clearwire has not publicly said how it stands on the issue, but it and all of the parties have a lot at stake.

I'm sure there will be much more on this issue in the next few weeks.

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Sony cuts PS3, as predicted. Who's next?

Posted by Benjamin J. Romano at 8:49 AM

Video game industry analysts I spoke with last week for today's story previewing the Electronic Entertainment Expo (E3) were fairly certain we would see a price cut from either Sony or Microsoft sometime before the holiday season.

"These guys have got to do something, or Nintendo is going to run away with this business," said Mike Goodman, director of digital entertainment with Yankee Group Consumer Research.

Last night, Sony confirmed those predictions, lopping $100 off the price of the PlayStation 3. It now retails for $499, still the most expensive of the current generation video game consoles.

Sony also rolled out an 80 gigabyte hard-drive version of the PS3. According to this Associated Press report, the higher-capacity model will be packaged with racing game "MotorStorm" and sell for $599. This model won't hit North American markets until August.

From The AP:

[The higher-capacity PS3] plays into the company's upcoming strategy of eventually offering downloaded high-definition movies, video games, movie trailers and demos, Sony spokesman David Karraker said.

Karraker said further details on high-def movies for download would be released at a later date.

Could that later date be, say, Wednesday morning at 11:30 a.m., when Sony holds its E3 press conference? And what might this mean for Microsoft's Xbox 360?

The company isn't tipping its hand just yet. The president of Microsoft's Japan unit, Darren Huston, is quoted in this Wall Street Journal roundup as saying the Xbox 360 has "very competitive pricing" right now. He added that Microsoft would continue to "assess market dynamics." Not clear if his comments apply just to the Japanese market or to the Xbox 360 business globally.

Microsoft in March announced a $480 high-end version of the console, with 120 gigabytes of storage that appeared to be aimed squarely at the PS3's target audience.

I'll be keeping track of the major announcements from Santa Monica this week as E3 begins Tuesday. Check back here for updates following Microsoft's press conference Tuesday night at 8:30 p.m. Nintendo goes before the cameras Wednesday morning at 9, followed by Sony.

In other news going in to E3, Sony issued an apology for a shoot-out scene that takes place in an Anglican cathedral in "Resistance: Fall of Man." According to this AP report, the game depicts a "gun battle between an American soldier and aliens inside a building that resembles Manchester Cathedral in northwest England."

Here's another story updating Nintendo's efforts to make the DS Lite an integral part of baseball through a pilot project with the Mariners at Safeco Field.

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July 6, 2007

Microsoft-aQuantive deal clears regulatory hurdle

Posted by Benjamin J. Romano at 9:14 AM

The Federal Trade Commission has completed its 30-day review of the Microsoft aQuantive acquisition and raised no red flags. In a regulatory filing today, Seattle-based digital advertising company aQuantive said requirements under the Hart-Scott-Rodino Antitrust Improvements Act "have been satisfied."

In a statement, Microsoft indicated that the acquisition is on track to be completed this year.

"We're pleased that the FTC's automatic 30-day review period has concluded without a second request for information and look forward to finalizing this transaction by the end of the year, if not considerably sooner," said Microsoft spokesman Guy Esnouf.

On May 18, Microsoft announced plans to buy aQuantive for $6 billion, about an 85 percent premium to the company's market value the day before.

Shareholders in aQuantive will vote on the deal at a special meeting Aug. 9.

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July 5, 2007

McCaws flying home from Austria

Posted by Tricia Duryee at 3:04 PM

Susan McCaw, the U.S. ambassador to Austria and wife of wireless entrepreneur Craig McCaw said this week she will resign from her post by the end of the year.

Susan McCaw told President Bush, Secretary of State Condoleezza Rice and the Austrian government about her decision to leave and that it was for personal reasons, according to a press release.

"She would like to end her assignment as ambassador to Austria toward the end of this year," the release said. "The exact date of her departure has not yet been determined."

McCaw, who will have served for about two years by year's end, described her time in Austria as "remarkable and rewarding," and that it was also "a great honor to serve as the president's representative to Austria, this wonderful and dynamic country."

This report in an Austrian paper has a slideshow of McCaw photos, including one that pictures Susan McCaw standing next to Craig along with their three young children. There's also a story here (in German).

Craig McCaw is the chairman and founder of Clearwire; he also founded McCaw Cellular Communications, which later became AT&T Wireless before it was purchased by Cingular (now AT&T).

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T-Mobile vs. AT&T lines

Posted by Tricia Duryee at 12:32 PM

Here is one interesting contrast:

AT&T is the exclusive provider of iPhones:

Lines form at Apple and AT&T stores around the country on and prior to launch day, so that people have a shot to buy the $500-$600 device.


Ken Lambert

A line outside the Apple University Village store last Friday started Thursday night.

T-Mobile USA starts selling the first Wi-Fi cellphone service in the country:

Lines form after T-Mobile offers to give away the phone and offer the service free for a year to the first 100 people (wearing bathrobes) at stores in 11 cities.


T-Mobile USA

T-Mobile's event took place on Tuesday at the downtown Seattle store at 1527 Sixth Ave.


T-Mobile USA

Also, at each store, one person had a chance to win a Samsung 40-in. LCD TV and a $1,000 Pier 1 Imports gift certificate.

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Mobile advertising: Big bucks in 2011

Posted by Tricia Duryee at 12:09 PM

JupiterResearch analyst Neil Strother put out a report recently that forecasted the market size for mobile advertising.

The conclusion is that the opportunity holds great promise.

By 2011, the market could be as large as $2.9 billion.

The caveat is that there is a lot of fragmentation and significant hurdles that could easily dampen results.

The key questions the report attempts to answer are: What ecosystem are mobile advertising networks operating in?; What hurdles do these networks face? What conditions are necessary for mobile advertising to achieve rapid growth?

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Clearwire has $1 billion more

Posted by Tricia Duryee at 11:57 AM

Clearwire's CFO John Butler said in last quarter's earnings call that the company would close on a new line of financing soon.

So today's announcement that it has closed its first tranche of a fully committed $1 billion loan is really no surprise.

The company said the loan will be fully funded on a delayed basis lasting about 45 days. The transaction was led by Morgan Stanley, Merrill Lynch, JP Morgan and Citigroup.

Clearwire said the proceeds will be used to refinance its existing debt and to expand the company's money-losing operations.The Kirkland-based company is led by Craig McCaw, who is known for his fundraising capabilities, said

Clearwire added that by refinancing its existing debt, virtually all of Clearwire's debt is extended to a five-year maturity.

"Clearwire is capitalizing on the momentum we have in the market place to drive down our cost of capital, extend our debt maturities, simplify our balance sheet and provide additional capital resources," Butler said. "By opportunistically accessing the capital markets, we expanded our investor base and further strengthened the company's balance sheet."

The market, which has showed some concern over how the company was going to continue expanding at a fast rate, viewed the news as positive.

In afternoon trading, Clearwire's stock jumped 94 cents, or about 3.78 percent to $25.80 a share. That puts it above it's IPO price of $25.

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Microsoft building dev center in Vancouver, B.C.

Posted by Benjamin J. Romano at 8:43 AM

Perhaps in a nod to Canada's more open policies toward highly skilled immigrants, Microsoft is planning a new software development center in Vancouver, B.C., to open this fall.

In a statement announcing the Canada Development Centre today, S. Somasegar, corporate vice president of the Microsoft Developer Division, said, "Our goal as a company is to attract the next generation of leading software developers from all parts of the world, and this center will be a beacon for some of that talent."

This will not be one of the company's research and development centers spread around the world, but rather a software development center, comparable to others Microsoft operates in North Carolina, Ireland, Denmark and Israel. Most of the company's software development work continues to be done in Redmond.

In the company's statement today, it praised the virtues of the Vancouver area and contrasted the immigration situation in Canada to that of the United States.

"The Vancouver area is a global gateway with a diverse population, is close to Microsoft's corporate offices in Redmond and allows the company to recruit and retain highly skilled people affected by immigration issues in the U.S.," the statement reads.

Last week, Microsoft lamented the demise of the immigration reform bill under consideration in the Senate. Microsoft and other U.S. technology companies have complained that a limit on highly skilled immigrants is hindering their ability to obtain the talent they need to compete.

The statement did not describe the size or precise location of the new center. I've requested additional details and will update this post when I get them.

Update: Microsoft spokesman Lou Gellos said the Vancouver site will start out with "a couple hundred" employees with room to grow. An exact location has not been chosen yet. The company is still considering several sites in the greater Vancouver area, including the surrounding communities of Surrey, Richmond and Burnaby, he said.

Gellos said the U.S. immigration situation "is part of the reason for having a development center in the Vancouver area, however, I would have to say that it's only one reason."

Other reasons include British Columbia's "burgeoning tech sector"; "repeated requests" from the Canadian government about whether Microsoft would expand its presence in Western Canada; and the fact that Microsoft already recruits heavily from universities in the greater Vancouver area, Gellos said.

Further, he said the timing of the announcement is coincidental to the demise of the immigration reform bill. "The fact of the matter is, it's happening right after that happened, but we had been contemplating this for quite some time," Gellos said, adding that the announcement was timed to the summer tech recruiting season.

Gellos had no details on what specific functions would be performed at the Canada Development Centre.

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Gates headlining Consumer Electronics Show in '08

Posted by Benjamin J. Romano at 8:42 AM

Microsoft Chairman Bill Gates will again take his place at the head of the line to open the 2008 International Consumer Electronics Show.

Gates, whose keynote presentation has been a major attraction at the show for years, indicated at this year's show that 2008 would probably be his final time in the spotlight at the giant technology confab. He plans to leave behind his daily work at Microsoft next summer and move to working full-time at his philanthropy.

This morning, the Consumer Electronics Association, which puts on the show, announced that Gates' will have his customary pre-show keynote at 6:30 p.m. Sunday, Jan. 6 at the Venetian Hotel in Las Vegas (no, it's not too early to start lining up, based on last year's crowds.)

Other big names due to speak at the show are Intel CEO Paul Otellini and Toshihiro Sakamoto, president of Panasonic AVC Networks Company.

Gates has traditionally used his keynote presentation to unveil new Microsoft products or features. At his presentation this year, it was the expanded abilities of Microsoft's Xbox 360 video game console. Gates shared the stage with Microsoft Entertainment and Devices Division President Robbie Bach.

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July 3, 2007

Cell Therapeutics' Italian job

Posted by Angel Gonzalez at 4:46 PM

Cell Therapeutics executives will do a whirlwind tour of Milan this Friday -- not precisely to attend the widely acclaimed mise-en-scene of Leonard Bernstein's opera "Candide" at La Scala, but to meet with their Italian constituency.

The executives will brief some 30 shareholders on the company's activities, the company said Tuesday. Executives will also meet with media during their visit.

Despite being based in Seattle, Cell Therapeutics' has a strong Lombard connection: The company's research is based in the Milanese suburb of Bresso since it acquired local biotech Novuspharma in 2003.

Most of Cell Therapeutics' stockholders are based in Italy -- which makes the outreach important, as the company has had trouble in the past to meet quorum requirements for shareholder events.

Italian-speaking shareholders can check the company's Web site in Dante's language.

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aQuantive sets vote on Microsoft acquisition

Posted by Benjamin J. Romano at 10:53 AM

In a proxy filing today, aQuantive announced an Aug. 9 shareholder meeting to vote on the company's proposed $6 billion acquisition by Microsoft.

A letter to shareholders contained in the filing describes, in part, the mechanics of the transaction, which involves a Microsoft acquisition company called Arrow Acquisition. "The merger agreement provides for the merger of Arrow Acquisition with and into aQuantive, as a result of which aQuantive would become 100% owned by Microsoft."

The letter also reminds shareholders of the merger price: $66.50 a share, "a premium of approximately 85% over the $35.87 closing price of aQuantive common stock on May 17, 2007, the last trading day before the merger agreement was publicly announced." The company's shares gained slightly to close at $64.90 in an abbreviated holiday session.

aQuantive, a Seattle-based online advertising powerhouse, is holding the meeting in the swanky Hotel 1000, where shareholders will need to bring a couple of those aQuantive shares to trade for valet parking. Not surprisingly, the company's board of directors unanimously suggest a vote in favor of the transaction.

Meanwhile, according to this Bloomberg report, German authorities have started their review of the proposed acquisition, "triggering at least a 30-day review."

Microsoft submitted the bid, worth about $6 billion, on June 21, according to the German Competition Authority's Web site. The agency has opened an initial 30-day probe and will rule by July 23, Christiane Moch, a spokeswoman for the office said by telephone today.

The regulator can clear the takeover or start an in-depth probe that would last until Oct. 22, Moch said.

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Dendreon gets boost from scientific journal

Posted by Angel Gonzalez at 10:13 AM

Dendreon shares jumped nearly 14 percent to a high of $8.24 early Tuesday, boosted by a scientific article that cast positive light on its flagship anti-prostate cancer therapy, Provenge.

The stock's price and volume came down in later trading, but as of 1 p.m. Eastern time shares traded at $7.66, or 6 percent above Monday's close.

The article -- from a journal published by the American Association of Cancer Research -- says biotechnology therapies that spur the immune system to fight cancer help extend the survival of patients in clinical trials:

Evidence is emerging from several studies in which patient cohorts who first receive a cancer vaccine (as contrasted with control cohorts) benefit clinically from subsequent therapies.

Seattle-based Dendreon expected federal regulators to approve Provenge earlier in the year, but in May the U.S. Food and Drug Administration requested more data, sending the stock into a downward spin. The FDA's decision has generated controversy among investors and biotechnology activists.

The article is "sort of validation of the technology, which is good for everyone involved," said Dendreon spokeswoman Monique Greer.

This is the second time in less than 10 days that Dendreon gets a marketplace jolt. Last week, shares jumped 10 percent after an analyst said that the company was ripe for a lucrative foreign partnership.

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Microsoft investing in China's 3G market?

Posted by Kristi Heim at 10:09 AM

Microsoft may invest $10 million in Shanghai-listed Bright Oceans, news site Pacific Epoch reported today, citing an announcement by Bright Oceans on Monday night.

Bright Oceans is a telecom support and services provider with partnerships with all of China's major telecom operators. Its foreign partners include IBM, Hewlett-Packard, Cisco, Oracle, Siemens, Nortel and Lucent.

Slogans on the company's Web site attest to glorious ambitions: "Common Goal, Defined Target, Mutual Criticism, Joint Endeavor for Great Cause" and "Making Outstanding Contributions to Make China More Prosperous." Hmm... I'm picturing that on a bright red banner.

If the deal goes through, it could help Microsoft move into China's 3G market.
China has pledged to start providing 3G services in time for the 2008 Beijing Olympics, and 3G licenses are expected to be issued this year.

Last month Microsoft made an investment in China, announcing it would pay $12.3 million for a one percent stake in TV maker Changhong.

That deal allows Changhong to receive advanced IT and software from Microsoft to develop digital TV sets and other products, in exchange for helping Microsoft develop its business in China.

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Reuters: Mexican Slim surpasses Gates as richest

Posted by Benjamin J. Romano at 9:17 AM

A Reuters report, citing analysis in the online financial publication Sentido Comun, says Bill Gates is no longer the richest person in the world. His wealth was surpassed by that of Mexican magnate Carlos Slim after shares in one of Slim's biggest holdings increased 27 percent in the second quarter.

Reuters reports that shares of America Movil, the largest cellphone company in Latin America, increased during the period, making Slim $8.6 billion wealthier than Gates, according to Eduardo Garcia, founder of Sentido Comun.

Here's the Sentido Comun article, en espanol, that lists the wealthiest Mexicans and pegs Slim's stockpile at more than $67.8 billion.

Garcia estimated that Gates is worth $59.2 billion, according to Reuters.

That compares with the widely quoted Forbes ranking and estimate of the world's billionaires, which this year put Gates on top with $56 billion. The magazine reported in April that Slim had overtaken Warren Buffet for second place on the list as of March 29 this year, pegging his fortune then at $53.1 billion.

Sentido Comun adds some interesting perspective on the magnitude of the rich-poor gap in Mexico, via Reuters:

Garcia's Sentido Comun, which translates as "common sense," reckons Slim and his family own a fortune equivalent to 8 percent of Mexico's gross domestic product.

For Gates to be worth 8 percent of the U.S. economy, his fortune would have to grow to more than $13 trillion, 17 times his current wealth, according to Sentido Comun.

Update: Reader JJ Rathvon correctly points out that the math in that last comparison is "screwy." Gates' estimated wealth would have to be increased about 220 times to approach the $13 trillion figure cited.

Another update: Thanks to reader Jonathan G., who helps us get to the bottom of the erroneous comparison above. He provides a link to the latest Bureau of Economic Analysis report on U.S. gross domestic product, which was about $13.6 trillion in the first quarter of 2007. So for Gates' to match Slim's 8 percent of GDP for one quarter, he would have to be worth about $1.09 trillion, or about 18 times Garcia's estimate. But then again, that would only be 8 percent of one quarter's GDP.

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Google keeps pushing for more Microsoft oversight

Posted by Benjamin J. Romano at 9:14 AM

Google filed another brief Monday with the court overseeing Microsoft's antitrust settlement with the federal government. The company, in a response to a counter-argument filed by Microsoft last week, is forwarding its position that it should be granted status in the case to argue for an extension of oversight of Microsoft, which is set to expire later this year.

During a hearing on the antitrust settlement last week, U.S. District Court Judge Colleen Kollar-Kotelly indicated in comments from the bench that she would not grant Google status in the case, as has been her practice with other third parties in the past. She has yet to formally rule, however. A full transcript of the status conference is scheduled to be released later today. (Update: Turns out that transcript may not arrive until Thursday.)

In a five-page brief filed yesterday (PDF), Google renewed its arguments for why it should be allowed to participate. The company first raised its complaint about desktop search, which it contends limits competition and violates terms of the consent decree, last year. At that time, Google complained to the Department of Justice rather than addressing the matter through the court directly.

Two weeks ago, Microsoft, the Department of Justice and the state attorneys general charged with enforcing the antitrust settlement reached an agreement on changes to the desktop search software meant to address those complaints. Google was unsatisifed and pushed for additional changes in Vista as well as an extension of the court's oversight of Microsoft.

In yesterday's filing, Google told the judge, who was waiting for this formal response to Microsoft's counter-argument before she issues her ruling, that it "offers an important and useful perspective":

As the developer of a major desktop search product and the company that brought the desktop search issue to the attention of the plaintiffs, Google has familiarity with the issues raised and is well positioned to provide information to the Court. Google worked with the plaintiffs for an extended period of time to ensure that Microsoft's violation did not go unaddressed, and nothing in Google's request for leave to participate as amicus curiae is inconsistent with the plaintiffs' fundamental role in enforcing the Final Judgment, as confirmed by the fact that none of the plaintiffs opposes Google's motion.

Microsoft spokesman Jack Evans said the company has "already responded to [Google's] amicus request. Our filing is our response." Here's that filing, (seven pages, PDF).

See this story for additional background on desktop search and how Google's complaint unfolded.

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July 2, 2007

ZymoGenetics' names new president

Posted by Angel Gonzalez at 3:01 PM

ZymoGenetics, the area's largest independent biotech, named chief scientific officer Douglas Williams as its new president, the company said Monday.

Former president Bruce Carter will retain his role as chief executive and chairman of the board. Other executives were also promoted: James Johnson, chief financial officer and treasurer, has been named executive vice president, and Darren R. Hamby becomes senior vice president for human resources.

The changes come as ZymoGenetics "grows and gets bigger," Carter told The Seattle Times.

Carter will now "have the time to focus" on the commercialization of rThrombin, a product for surgical bleeding control expected to launch in October, and in the company's long-term strategy, he said.

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Wii continues on a roll before E3

Posted by Benjamin J. Romano at 8:00 AM

The Nintendo Wii is still flying off of shelves -- even in the middle of summer -- a development that has to have the folks at the company's U.S. headquarters in Redmond feeling pretty good going in to next week's E3 conference.

With all three next-generation consoles launched, the toned-down video game confab in Santa Monica, Calif., will likely focus on upcoming games for the holiday season. But you can bet that Nintendo, Microsoft and Sony will be touting their console sales numbers -- or spinning them -- and Nintendo has plenty to crow about.

An AP story out of Japan this morning reports that the Wii outsold Sony's PlayStation 3 at a rate of six to one in June. The Wii also outsold Microsoft's Xbox 360, according to the statistics from Enterbrain, a publisher. Nintendo seems to be succeeding in its strategy of selling the console to a broader demographic.

From the story: "The Nintendo's game console is catching on not only among children but also adults and singles," said Enterbrain spokeswoman Yuko Magaribuchi.

Sales in the U.S. are going gangbusters, too. While Friday's iPhone lines got most of the attention, people are still queuing for fresh shipments of the Wii, more than seven months after it launched. See this AP story for details, including this one: Inside a Brooklyn Toys "R" Us store, "the systems didn't even make it to the shelves before they sold out."

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