Boxee Raises Another $6 Million for Assault on Big Media

Boxee, the controversial company trying to marry Internet video to the big-screen TV, has raised its second round of financing. The New York start-up says it raised $6 million from a group of investors lead by Boston-based General Catalyst Partners. Spark Capital and Union Square Ventures, which contributed to a previous $4 million round raised late last year, also contributed.

Avner Ronen, Boxee’s founder and chief executive, said the company would use the capital to add more content, make the service friendlier to independent developers and approach makers of Web-ready TVs, DVD players and set-top boxes to add Boxee software to their devices.

Boxee, which I first profiled earlier this year, is a free service that draws in a wide variety of video from the Web and presents it in an interface designed for viewing on a TV screen and navigating with a remote control. The company is perhaps best known for its cat-and-mouse struggle to add Hulu.com to its lineup, which also includes the Netflix streaming service, YouTube and MLB.com.

Boxee represents a potentially dangerous idea for the TV industry. The more free Web video that makes its way to the television, the fewer reasons people have to pay those hefty monthly bills to the cable and satellite companies, which split revenue with cable networks. The big media bosses understand that, which is why they are engaged in efforts like “TV Everywhere” which will offer cable TV programs on the Web only to people who pay for them.

It’s not clear what Boxee brings to a world in which content creators are shunting their most precious content behind pay walls and Web companies like Netflix and Amazon.com are independently forging deals with TV and set-top box makers. Mr. Ronen said that Boxee’s appeal lies in its accumulation of hundreds of video services, unique applications and social features. He said it would be easier for some TV makers to simply do one deal with Boxee rather than multiple deals with various video sites.

He also noted that Boxee’s future would be limited if it only appealed to people willing to connect their PCs to their televisions. “It has given us a great platform of over 600,000 users to grow from, but if you really want to make it more accessible for a mainstream consumers, you need to install it on the connected devices people put in their living room,” he said.

By Brad Stone

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Solid-State Drives Get Warmer Reception From Businesses

While high prices are keeping consumers away, solid-state drive technology is finding a more receptive audience at businesses.

A flurry of announcements preceding the annual Flash Memory Summit in Santa Clara, Calif., which began Tuesday, are putting the technology in the limelight this week. Intel, Micron Technology and Toshiba have all announced drives in the last two weeks with larger data capacities and better performance.

Solid-state drives, similar to the flash cards used in digital cameras, first caught consumers’ attention in the spring of last year, when they were used Apple’s MacBook Air laptop and in the initial wave of netbooks — small laptops priced under $500 — from companies like Asustek and Acer. The technology typically provides faster performance but more limited storage capacity than traditional hard drives.

However, in second-generation netbooks, some of which sell for less than $300, PC makers reverted to the tried-and-true hard disk drive because of its economics: more data at a lower price.

Indeed, high prices — solid-state drives typically cost at least twice as much as a hard drive with the same storage capacity — have relegated consumer use of the technology to luxury laptops, where buyers are willing to pay more for the faster performance.

Prices need to approach $1 per gigabyte of storage before there is mass adoption by consumers, said Gregory Wong, an analyst at Forward Insights. This may not happen until 2011, according to Mr. Wong.

Businesses, however, are beginning to warm to the technology as the largest server computer makers, including I.B.M., Hewlett-Packard and Sun Microsystems, all get behind solid-state drives due to their overwhelming performance advantage compared to hard disk drives.

Because SSDs are composed of flash memory chips, not mechanical spinning disks, they offer instant data access. In the argot of server makers, this translates to more IOPS or input-output operations per second. Salt Lake City-based Fusion-io recently disclosed that it had achieved about one million IOPS, many times faster than is possible with a hard disk drive.

Wine.com, an online retailer, switched to H.P. using SSDs from Fusion-io and has never looked back. “We have an incredible holiday volume spike. We’re shipping 20,000 orders a day,” said Geoffrey Smalling, the chief technology officer at Wine.com. Before using SSDs, it took four minutes to post a batch of 100 invoices. “After Fusion-io, it was 10 seconds. It was the first time that every night we were able to post everything from order to invoice to general ledger,” he said. Over all, the upgrade resulted in a 400 percent improvement in speed, according to Mr. Smalling.

Other specialty SSD suppliers are also seeing success. STEC, whose share price has more than tripled over the last six months, offers enterprise-class solid-state drives to I.B.M., Fujitsu, and Hitachi.

Businesses are also beginning to look harder at SSDs for laptops, according to Troy Winslow, marketing manager for the NAND Products Group at Intel. “We have upgraded our entire sales force, almost 4,000 strong, with SSD-equipped notebooks,” he said. He noted that some PC makers were also upgrading their mobile users to SSD notebooks.

Solid-state drives are finally catching up to hard disk drives in data capacity. Toshiba recently announced it was shipping a 512-gigabyte version of its drive, rivaling some of the largest hard drives, and Micron announced last month that it was shipping a 256-gigabyte drive.

Intel and Micron, who jointly manufacture flash memory chips, said Tuesday that they had developed NAND flash memory capable of storing 3 bits per cell. This allows greater data density than the
2-bits-per-cell flash memory chips the companies are offering now and will result in high-capacity flash drives for digital cameras and other consumer products, according to Micron.

“I think it’s safe to say that the value of SSDs are now clear” to business customers, Mr. Winslow said.

By Brooke Crothers

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Microsoft-Nokia Alliance: An Assault on the BlackBerry

Top executives from Microsoft and Nokia elaborated on their new alliance in a conference call this morning.

The takeaway? First, the partnership is aimed initially at Research in Motion and loosening the hold that its popular BlackBerry e-mail software and service has on business customers.

Second, Microsoft is unbundling its strategy in the cellphone market, with Microsoft’s Office division free to step away from the company’s operating system business. And Microsoft is trying to use its powerful Office franchise — Word, Excel, PowerPoint, but also collaboration tools like SharePoint — to shift the smartphone technology competition to its advantage.

Stephen Elop, president of the Microsoft division that includes Office, said business customers were first focused on mobile e-mail. But the next competitive terrain in the business market will be productivity and collaboration software and services on smartphones. And, Mr. Elop said, “This isn’t a browser discussion at all. This is about rich Office experiences that truly bring these devices to life.”

In reply to a question, Kai Oistamo, executive vice president at Nokia, pointedly mentioned Research in Motion, maker of BlackBerry devices and software, as the rival most likely to feel increased competition as a result of a Microsoft-Nokia alliance.

But any assault will be a long-term challenge. The first Microsoft Office product to be on Nokia smartphones, which run the Symbian operating system, will be its Mobile Communicator, which allows business users to find and then communicate with colleagues by instant messages. That offering will come next year on one of Nokia’s E-series phones for business customers.

The full range of Office productivity and collaboration software will follow, and the two companies have pledged to jointly develop new applications, tailored for Nokia smartphones. At first, Nokia and Microsoft will focus on the business market, but consumer smartphone applications will be part of the alliance, the company executives said.

By Steve Lohr

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Goodbye, Hedge Fund; Hello, Touch Revolution

In the middle of San Francisco’s financial district sits Touch Revolution, a start-up that just hit the scene this year. As the name suggests, Touch Revolution specializes in making touch-screen technology for a wide range of computing devices.

Or, as the company’s chief executive Mark Hamblin puts it, “We sell the touch experience.”

Touch Revolution calls the 42nd floor of a 48-story office building home. A hedge fund used to occupy the space but bailed out as Wall Street’s collapse, um, affected its business model. And so, a line of trading desks packed with power to fuel monitors and computers has been turned into a workbench covered in motherboards, testing equipment and touch displays.

(Apparently, the hedge fund left a few mementos behind, including one white board outlining the condition of foreign markets and another detailing where the company went right and where it went wrong. The “where it went wrong” list was much longer, I was told.)

Mr. Hamblin cut his touch chops at Apple, where he worked on the iPhone’s touch technology, which managed to do little more than revolutionize the cellphone market.

Inspired by the success of the iPhone, Mr. Hamblin set out to create his own company that would build touch devices around Google’s Android software. At present, it’s working on building touch-screen home phones and touch-screen products aimed at specific markets like medical devices.

Touch Revolution resembles an O.D.M., or original design manufacturer, more than a new consumer electronics company trying to make a big name for itself.

O.D.M.’s lurk in the shadows, manufacturing the products that other companies eventually plaster with their brands. A host of Taiwanese companies, for example, produce the laptops, music players and phones sold by the likes of Hewlett-Packard, Dell and Apple.

Touch Revolution designs its products here and then has them built in Malaysia. It has a business partnership with a company that specializes in making touch-screen displays, although Mr. Hamblin has declined to reveal the name of the partner.

The Touch Revolution products rely on projected capacitive touch technology, which is similar to what’s used on the iPhone. There’s basically a grid of tiny wires that sit between two layers of glass and sense your finger’s movement.

This approach allows you to move objects on the screen without pressing hard or needing to dig in a fingernail, as is often required with the other leading touch technology known as resistive capacitive.

Projected capacitive technology costs more money, but Mr. Hamblin argues that the better touch experience is worth the higher price.

Touch Revolution looks to create a circuit board tuned to run Android that can be adapted quickly to a variety of markets in which companies hope to add touch technology to their products. So far, the company has focused on constructing devices for phone companies that would let people make calls, store their contacts and surf the Web.

By using Android, Touch Revolution hopes to capitalize on broad software developer interest to add some pizazz to its hardware. For example, there’s an Android application that presents recipes to people along with step-by-step guides for making a meal and videos. So, you could have a Touch Revolution phone sitting in the kitchen and use it for help making dinner.

Quite the updated take on this gem from the Neiman Marcus catalog in 1969.

Touch Revolution also expects medical device companies to jump on touch technology early and home appliances makers to follow.

The presence of consumer electronics-focused companies in downtown San Francisco is starting to look downright commonplace.

Pure Digital produced the Flip video recorder at its office on Union Square above the Gump’s department store. Cisco Systems bought Pure Digital for $590 million in March.

Touch Revolution expects its first products to start appearing later this year, and said that consumers should expect to see a host of new home phones early next year.

By Ashlee Vance

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China Scales Back Software Filter Plan

BEIJING — Chinese officials retreated on Thursday from a plan to install so-called anti-pornography software on every computer sold here, saying instead that Internet cafes, schools and other public places must use the program, but that individual consumers will be spared.

The industry and information technology minister, Li Yizhong, said the notion that the program, called Green Dam/Youth Escort, would be required on every new computer was “a misunderstanding” spawned by poorly written regulations.

The ministry order, first issued last May 19, had stirred an outcry from Chinese Internet users and foreign computer manufacturers alike, arguing that the software ran counter to China’s proclaimed goal of creating an information-based society.

The United States warned China that the installation requirement could be seen as a violation of world trade regulations.

Although the government insists that the program is meant to shield children from online pornography, its filter — automatically updated by the government — targeted many topics with political overtones. Free-speech advocates said that the program was a government attempt to extend its control of political opinions into people’s living rooms.

The information ministry previously had suspended the Green Dam pre-installation mandate on June 30, one day before it was to take effect, saying that computer makers needed more time to accommodate it in their manufacturing.

The Thursday statement by Mr. Li appeared to make that suspension permanent. Mr. Li said the government would neither require the program to come pre-installed on new computers or force computer makers to include the program on a CD with optional software.

A few Asian computer manufacturers, led by China-based Lenovo and Taiwan’s Acer, nevertheless include the software on computers sold in China.

Although Mr. Li’s concession is a step backward for the Green Dam program, the software remains mandatory in schools, Internet cafes and other sites used by scores of millions of people. The government already takes extraordinary steps to monitor computer use in Internet cafes, which remain common in a nation where owning a computer remains a comparative luxury.

China has sought to increase government control over ordinary people’s use of computers in recent months. The government has systematically blocked ordinary citizens from viewing foreign-based websites like Facebook, Flickr and YouTube that sometimes include comment critical of the government.

Domestic websites with political content also have increasingly been censored or blocked. Experts are divided over whether the increased censorship is a temporary measure in a year filled with sensitive events, including the coming 60th anniversary of modern China’s founding, or is a permanent attempt to clamp down on unapproved speech.

The government recently proposed a requirement that all users of online chat rooms and bulletin boards use their real names when posting comments, a move that would stifle the sometimes-freewheeling debate on many sites. Until now, government censors have played a cat-and-mouse game with anonymous Internet users who posted comments that flout approved positions.

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Netscape Founder Backs New Browser

SAN FRANCISCO — It has been 15 years since Marc Andreessen developed the Netscape Internet browser that introduced millions of people to the Internet.
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Phil McCarten/Reuters

Marc Andreessen is backing a start-up called RockMelt.
Richard Drew/Associated Press

Marc Andreessen in 1996. Netscape was the dominant Web browser until Microsoft introduced Internet Explorer.

After its early success, Netscape was roundly defeated by Microsoft in the so-called browser wars of the 1990s that dominated the Web’s first chapter.

Mr. Andreessen appears to want a rematch. Now a prominent Silicon Valley financier, Mr. Andreessen is backing a start-up called RockMelt, staffed with some of his close associates, that is building a new Internet browser, according to people with knowledge of his investment.

“We have backed a really good team,” Mr. Andreessen said in an interview earlier this summer. A moment later, Mr. Andreessen appeared to regret his comment, saying he was not ready to talk about any aspect of the company.

But Mr. Andreessen suggested the new browser would be different, saying that most other browsers had not kept pace with the evolution of the Web, which had grown from an array of static Web pages into a network of complex Web sites and applications. “There are all kinds of things that you would do differently if you are building a browser from scratch,” Mr. Andreessen said.

RockMelt was co-founded by Eric Vishria and Tim Howes, both former executives at Opsware, a company that Mr. Andreessen co-founded and then sold to Hewlett-Packard in 2007 for about $1.6 billion. Mr. Howes also worked at Netscape with Mr. Andreessen.

Little else is known about RockMelt, and Mr. Vishria was unwilling to discuss it. “We are at very early stages of development,” Mr. Vishria said. “Talking about it at this stage is not useful.”

After Microsoft defeated Netscape, it controlled more than 90 percent of the browser market. Interest in browsers among technology companies waned and innovation ground to a halt. But in the last 18 months, the Internet browser has become a battleground again with giants like Google, Apple and Microsoft fighting one another.

The renewed interest in browsers is partly a result of the success of Mozilla, a nonprofit. The speedier, safer and more innovative Mozilla Firefox browser, introduced in 2004, has grabbed 23 percent of the market, and Microsoft’s share has dropped to 68 percent.

But the latest battle was also prompted by a giant shift in computing that is increasingly making the Web, not the PC, the place where people interact with complex software applications. Technology giants now see the browser as a control point to what users do online, and they want a say in shaping it.

In the last 18 months, Microsoft and Apple introduced greatly improved versions of their browsers, Internet Explorer and Safari. And Google entered the fray last fall when it released its Chrome browser. Last month, Google said it would build an operating system, also called Chrome, with its principal function being to support its browser.

“The days of working in isolation on your computer are mostly gone,” said John Lilly, the chief executive of Mozilla. “Because the Web has become so central to what we do, and the browser is the technology that mediates our interaction with the Web, the way the browser works is really important. There is a lot of room for innovation.”

Mr. Andreessen’s backing is certain to make RockMelt the focus of intense attention. For now, the company is keeping a lid on its plans. On the company’s Web site, the corporate name and the words “coming soon” are topped by a logo of the earth, with cracks exposing what seems to be molten lava from the planet’s core. A privacy policy on the site, which was removed after a reporter made inquiries to Mr. Vishria, indicates the browser is intended to be coupled somehow with Facebook. Mr. Andreessen serves as a director of Facebook.

The policy says that a person could use a Facebook ID to log into RockMelt, suggesting that the browser may be tailored to display Facebook updates and other features as users browse the Web. Another browser, Flock, based on Firefox, already incorporates feeds from social networking sites.

But RockMelt is not currently working with Facebook. “We are not aware of any details about RockMelt and its product,” said Brandee Barker, a Facebook spokeswoman.

In the interview this summer, Mr. Andreessen credited Mozilla with coming up with an economic model to support Web browsers. The organization has an agreement with Google that makes Google the standard home page when people start Firefox, and sends them to Google when they type something into the search box at the top of the browser. In 2007, Google paid Mozilla about $75 million for the alliance.

“Browsers today have a great business model,” Mr. Andreessen said.

But experts say a big challenge for any new Web browser could be distribution. Despite Google’s heavy promotion of Chrome, the browser has gained just 2 percent of the market.

“If anybody could do it today, one would imagine Google would be best positioned, and it is obvious they have made only meager gains,” said David B. Yoffie, a professor at the Harvard Business School, and the co-author of “Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft.” Professor Yoffie said that aiming the browser at Facebook users could be a good strategy.

“If you can get Facebook’s millions of users to think that this is a better way to do what they do on Facebook, that would be an opportunity to take advantage of,” he said.

By MIGUEL HELFT

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