Microsoft News Tracker

Microsoft has announced another spinoff under their IP Ventures program:

Microsoft Corp. today announced the launch of ZenZui, an independent company with the mission of transforming the way people engage, consume and interact with Web content through a revolutionary mobile user experience and information ecosystem. ZenZui’s Zooming User Interface, a technology patented by Microsoft, was initially developed by the Microsoft Research lab in Redmond, Wash. Microsoft’s IP Ventures helps startups and growing companies speed their time to market through access to Microsoft innovations. ZenZui worked with IP Ventures to acquire the technology and assistance in securing venture capital funding to help launch its company.
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ZenZui’s core technology brings advanced information visualization techniques out of the research lab and onto mobile phones and into the hands of mobile device operators, marketers and consumers. ZenZui’s high-frame rate Zooming User Interface employs up to 36 individual “tiles” that are selected and customized by users to reflect their interests and lifestyle with relevant content, interactive communications and fresh data.
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ZenZui has closed a Series-A financing round of $12 million from Oak Investment Partners and Hunt Ventures. Wireless entrepreneur Tom Huseby of SeaPoint Ventures acts as chairman of the board. Leading ZenZui as CEO is Eric Hertz, who brings 22 years of international wireless experience to the venture.

If the description of the technology is somewhat obtuse, this demo video will help as will Nick Gonzalez’s description from Techcrunch:

The whole service is a a clever way to increase deck placement on mobile phones. Deck placement is the set of default applications that come on mobile phones. It’s the most coveted space on your mobile and distribution through deck placement makes or breaks most mobile apps. Currently deck placement is hard to come by because it’s determined by carriers at the highest levels and often includes some revenue sharing. ZenZui application has essentially turned one spot into 36 (they hope to make it 1000).

This would all be well and good if ZenZui wasn’t essentially doing the same thing carriers are doing right now, charging for placement. You see, ZenZui isn’t a new way to surf the web on your phone, but rather a new way to surf ZenZui’s web on your phone. It’s all elegantly summed up in this chart showing marketers and developers piping content into your phone.

Each of the 36 spots currently included with ZenZui are powered by content partners, such as Zillow, Eventful, Kayak, OTOlabs, Avenue A, Razorfish and Traffic.com. They will be monetized using “well-established advertising principles like CPA and CPM (we call it CPZ – Cost Per Zoom)”. To encourage development, ZenZui will split ad revenue with widget developers.

I knew there was sure to be some money in the deal somewhere. Also, although it is not spelled out explicity in the press release, it is being generally reported that Microsoft reatins an equity stake in the company.

It seems to be Microsoft deal day and leading off is the news that Microsoft’s Halo video game based movie, which went on the rocks when Universal and Fox withdrew their funding, has been indefinitely postponed:

Microsoft Corp. on Tuesday said the company and the Oscar-winning team behind “The Lord of the Rings” films have postponed “Halo” — the movie based on Microsoft’s popular alien shoot-up video games.

“At this time Microsoft, Peter Jackson and Fran Walsh have mutually agreed to postpone making a feature film based on the Halo video game,” Microsoft said in a statement.

“While it will undoubtedly take a little longer for Halo to reach the big screen, we are confident that the final feature film will be well worth the wait,” said the company, which through a spokesman declined further comment.

Leaving broken Hollywood dreams behind for the mundane technical variety, if Microsoft did a big unified communications deal with Nortel why are they demoing with Mitel?

Well, if past deals have problems, there are always new deals like Microsoft and Zend Technologies Announce Technical Collaboration to Improve Interoperability of PHP on the Windows Server Platform. No financial terms were disclosed, but I find it hard to believe that it is a great business opportunity for Zend without some reimbursement from Microsoft. Best line:

The companies believe the alternative “WIMP stack”–which substitutes Windows and the Internet Information Server (IIS) for Linux and Apache–will have some appeal.

Here’s another one that asks more questions than it answers, but in a potentially interesting way:

Autocell Laboratories Inc., a maker of automatic frequency management software for wireless networks and applications, has confirmed that it has entered into a licensing agreement with Microsoft Corp., the company said on Tuesday.

The licenseing agreement is with respect to Acton-based Autocell’s patent portfolio related to load balancing, automatic channel selection, transmit power control, fast roaming, automatic secure wireless key distribution and generation, as well as various software architecture patents.

Microsoft has also obtained non-exclusive rights to use the Autocell access point and station source code bases.

And Microsoft isn’t just buying technology, it’s also selling - in China:

Today at the Innovation Summit in Beijing, Microsoft Corp. announced the first-ever licensing of technologies to two Chinese software companies, Comtech Group Inc. and Hunan Talkweb Information System Co. Ltd. (Talkweb). The innovative mobile communications technologies were developed by scientists at Microsoft Research Asia in Beijing. Comtech and Talkweb are demonstrating the potential for intellectual property created in China to be the basis for new businesses in the growing Chinese knowledge economy. Although Microsoft has successfully partnered with other companies and entrepreneurs in Europe and the U.S., this is the first time early-stage intellectual property-based technologies are being licensed under the shared-success business model of Microsoft IP Ventures in China.

The financial part of “shared-success” was not disclosed, but Microsoft says that they like the Chinese deals so much that they are working hard on more.

Back in April, Microsoft did a “spinout” of some Microsoft Research social networking technology to a startup called Wallop as part of their IP Ventures program. Aside from the basic novelty of Microsoft selling off unused technology for a share in the resulting company, it raised a few eyebrows since Wallop competes with Microsoft’s own social networking initiatives like Windows Live Spaces as well as the biggies like MySpace.

Well, whatever the wisdom of dividing the field, Wallop launched its service in beta today:

Wallop, a company spun out of Microsoft and backed by veteran venture capital firms, today launched its beta product, a breakthrough innovation in the social networking space with a unique business model. Wallop, an invitation-only network, for the first time combines a social networking site with a marketplace, enabling an entirely new way to self-express and enhance a person’s increasingly important online image. Central to Wallop’s business model will be Adobe® Flash developers and designers who will sell their personal creations on Wallop’s marketplace. Now Flash experts, who have been responsible for many of the most innovative Web concepts, can make money doing what they love without any of the business hassle.

Wallop’s marketplace model empowers users to further enhance their online image by purchasing ready-made, interactive forms of self-expression, or what Wallop calls “Mods” from Flash developers and designers who are members of the Wallop Modder Network (WMN). Thanks to this rapidly growing group of Modders, Wallop’s marketplace is populated with original Flash content, such as interactive characters, stylistic backgrounds, graphical features and games, ready for purchase by the broad market of Wallop consumers.
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More than four years of research at Microsoft combined with Wallop founders Karl Jacob and Sean Uberoi Kelly’s vision for leapfrogging existing social networks, led Wallop to focus on the larger trend of self-expression online with the simplicity people experience in the real world.

I view it as a spiffier version of the pervasive MySpace “enhance your profile” business, presumably without the cheesecake (or maybe not). If this sounds a little wacky, read Michael Arrington’s discussion of the Wallop business model at TechCrunch:

Unlike the other social networks, Wallop CEO Karl Jacob says he has no plans to ever put advertising on the site. It just lessens the user experience, he says. Instead, Wallop wants a piece of the $3 trillion per year U.S. market for self expression items (clothes, furniture, beauty supplies, etc.). As sites like Cyworld have shown, people are willing to spend money for online expression items, too (Cyworld brings in a reported $300,000 per day in microtransactions to its users).

So Wallop has created a marketplace for “self expression” items on the site. Flash developers can create items and sell them to users. Music clips, animated widgets, artwork, avatars, clothing for avatars, etc. will all be for sale. Wallop handles payments and DRM, and takes 30% of the sale price. The rest goes to the seller.

At the moment, membership in Wallop is by invitation only from someone who is already a member or by asking for an invitation at http://www.wallop.com/.

Update: Best line - “Wallop, the social network where you pay for pretty.”

We first noticed Microsoft’s IP Ventures program last April when they sold some social networking technology to startup Wallop Inc. for a stake in the company. The admirable objective is to profit from technologies that Microsoft has developed but has no current use for, and late last night another deal was announced:

Tomorrow at the Business of Innovation conference, Microsoft Corp. will announce it has licensed technology, code-named “TouchLight,” which it developed in its Redmond, Wash., research lab, to EON Reality Inc., a leading interactive visual content-management software provider. The technology will augment EON’s visualization offerings with its cutting-edge ability for users to physically interact with 3-D visual content. Completed as part of Microsoft’s IP Ventures program, an initiative that allows companies to refine and sell early-stage technologies first developed by Microsoft, the agreement is the latest based on a shared-success business model that fosters opportunity for startup companies in California and other technology hubs around the world.
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EON Reality will incorporate the “TouchLight” interactive display technology into its existing commercial, automotive, aerospace and defense industry product lines. EON’s customers will be able to use the technology for dynamic marketing displays, product demonstrations and truly interactive training experiences. Within the next two years, EON estimates that the technology will be used in stores to facilitate advanced shopping experiences and interactive technical support with products and assemblies appearing to float in the air during interaction. EON estimates that within the next 24 to 36 months this technology could be affordable enough for desktops. Interested parties can view a demonstration of the technology at http://www.eonreality.com/video/touchlight/touchlight.wmv.

Per Ina Fried at CNET:

Microsoft is not taking an equity stake in Eon and will get licensing payments only when Eon has sales from a product using TouchLight. Other financial details were not disclosed.

And from the AP:

David Harnett, senior director of Microsoft IP Ventures, said the license is perpetual as long as certain milestones are met. Specific financial terms were not disclosed.

The deal allows Microsoft to also license the technology to others or use it in-house for other products.

Harnett said Microsoft has completed between 10 and 15 similar licensing pacts since launching a division devoted to such deals in May 2005.

The latter might be an interesting list. Here’s the original IP Ventures press release from May 2005 and the IP Ventures home page has more including an online catalog of available IP.

Press release:

Microsoft Corp. today announced the spinout of a new social networking technology, developed by Microsoft Research, to create a new Silicon Valley startup, Wallop Inc. Wallop, whose aim is to deliver the next generation of social computing, is led by experienced entrepreneur and CEO Karl Jacob, with 30-year veteran Bay Partners providing Series A financing.

Microsoft IP Ventures will celebrate its one-year anniversary next month. “We’re excited by the interest it has attracted with entrepreneurs and the venture capital community,” said Eric Rudder, senior vice president of Technical Strategy for Microsoft. “Microsoft has one of the world’s preeminent R&D labs, and we are committed to getting our innovations into the hands of entrepreneurs. This deal is another great example of Microsoft working with the right team to get this next-generation technology into the marketplace quickly.”

There’s more there and from Microsoft’s Don Dodge about the Microsoft IP Ventures program where Microsoft licenses technologies they have no immediate commercial use for to entrepreneurs. It’s more than just patent licensing though - in this case, Microsoft took a stake in the company.

As for Wallop itself, it’s yet another of the social networking sites like MySpace that hopes to attract eyeballs and presumably thereby sell advertising. Micahael Arrington notes that the current mywallop.com is not what the ultimate site at wallop.com will look like and:

I’ve seen a bit of what they plan to offer, and I’ll say that this is not another “me too” social network offering. And there are a number of unique business model twists that they aren’t announcing yet. The launch is scheduled for this summer. One interesting thing to note: the current Wallop site is all-Flash. hmmm.

Arrington has more on the Wallop CEO, Karl Jacob, as does the press release.

I continue to retain my skepticism about the business aspects of the cloud of Web 2.0 social networking fluffiness exemplified by MySpace and its ilk. Per the press release:

Launching later this year, Wallop solves the problems plaguing current social networking technologies and will introduce an entirely new way for consumers to express their individuality online. For example, today’s social networks have difficulty enabling people to interact in a way similar to the way they would in the real world. Wallop tapped legendary Frog Design Inc. to conceive a next-generation user interface enabling people to express themselves like never before. In addition, Wallop departs from the friend-of-a-friend model common in all social networks today and the root of many of their problems. Instead, Wallop developed a unique set of algorithms that respond to social interactions to automatically build and maintain a person’s social network.

Whatever (although recent Microsoft offerings are based on apparently different formulations of a person’s social network).

It’s not that there is no market for online “social networking,” since it’s been evident ever since man invented modem that a large part of what was going on was people interacting socially with each other. The difficulty is the faddishness of the activity where yesterday’s Hula Hoop (e.g. Usenet, BBS, AOL) is soon catching dust in the garage and hordes of wannabees (e.g. The Source, Compuserve, Prodigy) didn’t even achieve that. The commercial trick is to be the first mover in a fad and make hay while the sun shines because inevitably your fadshare will get diluted by imitators and interest will dim as the ever fickle audience moves on.

For an entrepreneur hoping to capitalize on social networking, nimbleness and a lot of luck are survival, but for a large company like Microsoft the former is increasingly unlikely (if not always admitted) and the latter is really unnecessary. Microsoft can afford to attempt its own social networking offerings and also make widely placed insurance bets as long as the competitive overlap isn’t glaring, and that’s what Wallop appears to represent. Beyond that, of course, I’m sure Microsoft is perfectly willing to act as an “arms seller” and build a nice business selling their usual technologies (not Flash of course) and ads to the combatants without waiting and hoping for lightning to strike their own particular offerings.