TechFlash: Seattle's Technology News

Zulily CEO Darrell Cavens wasn't looking for fresh capital. But when the former Blue Nile executive received interest from August Capital for his company's new private-sale shopping service, he decided to pull the trigger. Zulily today is announcing a new $6 million round, which follows a $4.6 million round from Maveron last December.

"We've been very, very excited about the momentum we are seeing," said Cavens, who launched the online private shopping service for kids' apparel, toys and other goods earlier this year. "It certainly wasn't due to us needing it, which is a good place to be." The money will be used to fuel growth, with Zulily expected to nearly double its staff of 40 by the end of the year.

Using Microsoft's new Windows Phone interface feels at times like placing a small frame on wide landscape, and then moving it around to get a sense for the larger picture. People accustomed to self-contained mobile screens will find this jarring at first. For example, as noted in one early review, "PowerPoint" looks like "PowerPoir" because the text trails off the edge, until the user swipes to see the rest.

You can see the effect above, in one of the promotional images Microsoft is using to illustrate the concept. It's almost as if Microsoft designed the Windows Phone software for something larger, and then figured out a way to make it work on smaller screens. What if that's actually what the company did? How would this look on a slate?

Pretty cool, as it turns out.

Yes, in fact, Steve Ballmer did promise that Microsoft's interns will get Windows Phone 7 devices, on him. It sounded sketchy at first, but we've been able to independently confirm the story, first reported by Gizmodo earlier this week.

The site quoted an anonymous "intern tipster" who said the CEO made the promise in response to a question an event with the interns, when asked whether they would get new Windows Phones like the company's employees are.

"Recruiting doesn't have the budget, but I do. So, Yes!" he said, according to the site.

No word on how many phones or how much money that translates into, or how the giveaway will work. But it's clearly a lot, with Ballmer reportedly calling it "the most expensive last question I've ever had."

Today's must-read story is this Wall Street Journal investigative piece on the way websites and third-party marketers track and profile users based on their web browsing. Bellevue-based BlueKai's CEO, Omar Tawakol, is quoted in the story. (More background on BlueKai in this previous TechFlash story.) The Journal's investigation puts a spotlight on the activities of sites including Microsoft's MSN.com portal.

Microsoft Research this week showed off a project called "Street Slide" that takes a different approach from Google's Street View by stitching together street-level pictures into a horizontal panorama, rather than making it look as if they're being viewed from inside a bubble. The project was presented at the SIGGRAPH 2010 conference. Read the paper and watch a video demo here. CNet News.com has more details.

Microsoft will formally oppose the proposed partnership between Google and Yahoo Japan, and present evidence to Japanese regulators, a company representative tells Business Insider. Microsoft had previously spoken out against the deal but not gone so far as to say it would formally oppose it. Yahoo Japan is an affiliate of Yahoo Inc., but not a wholly owned subsidiary, which gives it the freedom to operate outside of Yahoo's separate search and advertising partnership with Microsoft in the U.S. and elsewhere.

And finally, Microsoft's Ballmer this week told Wall Street analysts that a location in Bellevue Square mall will be among its next wave of retail stores, confirming news that we reported here in May. No specific date was given. Microsoft also is planning new stores in Oakbrook Center near Chicago, and the Mall of America in Minneapolis. Those three will join existing stores in Denver, San Diego, Mission Viejo and Scottsdale, giving Microsoft a total of seven.

This week on the TechFlash Podcast, continuing our partnership with 97.3 KIRO-FM in Seattle, we bring longtime Microsoft watcher Mary Jo Foley and veteran Apple watcher Glenn Fleishman into the studio to talk about the rise of the iPad, the prospects for a legitimate Microsoft response, and the announcement of a new Kindle. We also hear the funny story of what happened when Mary Jo, a newly minted iPad owner, first went to an Apple store to research her purchase.

The show airs on the radio at 7 p.m. Saturday night in the Seattle region, but you can also listen below right now or subscribe to the TechFlash Podcast using this RSS feed (http://feeds.feedburner.com/techflashpodcast), or via iTunes or Zune. Call 206-876-5465 to leave a message for our next show, and continue reading for links related to this week's episode. Access the podcast archive here.

It was fun having Kara Swisher of AllThingsD.com at our TechFlash Summer BBQ and Ping-Pong Tournament earlier this week, where she not only won her first-round match but also, as it turns out, got a little work done -- seizing the opportunity to take the temperature of the Seattle technology scene.

Here's the video, above, posted by Kara today, including her classic reaction upon seeing the tournament ping-pong balls and paddles, emblazoned with the logo of Bing, the presenting sponsor of the event. And continue reading for our video from the event, in which Kara momentarily convinces me that Walt Mossberg plays polo.

Matt Hulett

The new head of RealNetworks' games division, now operating as GameHouse, is a familiar face around the Seattle tech community. Matt Hulett, a veteran of such companies as Expedia and AtomShockwave, was the CEO of online advertising startup Mpire before he was named the chief revenue officer for RealNetworks' North American games unit last year.

In an interview with TechFlash, Hulett talked about the departure of RealNetworks games chief John Barbour, his own plans for GameHouse, the ongoing possibility of the separation of the division from the broader company, and the rise of social and mobile gaming in the division's strategy. Continue reading for edited excerpts.

Ballmer during yesterday's meeting. (Microsoft photo)

The threat posed by Apple's iPad was a central topic during Microsoft's annual meeting with financial analysts yesterday in Redmond. But analysts don't seem to have walked away convinced that Microsoft can come up with a true iPad rival.

As noted by Fortune's Philip Elmer-DeWitt this morning, Ballmer talked at length -- too much length -- about Microsoft's plans for tablet and slate computers. He made it clear, at least, that Microsoft is enthusiastic about its prospects in the market, but his comments at times required a translator to decipher. As an example, here's one exchange from the Q&A session.

Shakil Haroon, GM with Brazil's Spring Wireless. (Marcus Donner/PSBJ)

Shakil Haroon, a former manager in Microsoft’s mobile business, is the Seattle-based general manager for Spring Wireless, a Brazilian company that makes mobile software applications for big companies. The company established its U.S. headquarters in Seattle last year.

Haroon's past experience at Microsoft and current work in enterprise mobile software gives him a unique perspective on trends in the world of smartphones and mobile devices. Continue reading for edited excerpts from our conversation.

Microsoft this morning filed its annual Form 10-K with the Securities and Exchange Commission, a treasure trove for anyone digging for nuggets of information about the company. The first one that jumped out at me: Microsoft made more money selling companies than it spent buying companies in its last fiscal year.

The company says it spent $267 million to acquire five entities in its 2010 fiscal year -- a small fraction of its available balance of more than $31 billion in cash and short-term investments. That was down from $925 million on nine companies in fiscal 2009.

Meanwhile, the company says it sold three companies "for total consideration of $600 million" during the year. One of those companies was Razorfish, the advertising agency picked up in Microsoft's $6 billion purchase of aQuantive in 2007, which Microsoft sold to Publicis Groupe for $530 million last year. The other two aren't identified.

Auburn-based custom computer maker Puget Systems, which caused a huge stir on YouTube three years ago with its ambitious aquarium PC project, is out today with a new-and-improved, third version of the machine.

It's still a novelty, more than anything else, but it's geeky and fun.

As in the past, the components of the computer are immersed in mineral oil in the aquarium, providing a high-efficiency cooling mechanism and, more to the point, putting the inner workings of the machine on full display. Differences in the new version include a tank that's twice as large as before, about 12 gallons.

Ever wanted to track down a funny line from a TV show, movie or comedy act? If so, then you'd feel right at home with Entertonement founders David Aronchick and Fouad ElNaggar who started their Seattle company three years ago after reciting lines from the 1980s classic thriller "War Games." The 15-person Internet startup now has thousands of audio clips spread among dozens of channels, including those devoted to comedian Will Ferrell, the hit movie "The Hangover" and even Nintendo's "Super Mario" franchise. Entertonement is attracting about 10 million visitors each month as it looks to become the one stop destination for sound bites. We caught up with Aronchick, a former Microsoft manager, for the latest installment of Startup of the Week.

What’s your elevator pitch — in 140 characters or less... Entertonement is the YouTube for sound bites. Our goal is to let people express themselves through the universal language of pop culture -- also known as sound bites.

Expedia boosted its profit beyond analysts' expectations during the second quarter, despite hits associated with the Iceland volcanic eruption which disrupted travel in much of Europe in April. The Bellevue company posted revenue of $834 million -- an eight percent gain -- during the second quarter. Analysts expected revenue of $845 million.

The online travel landscape is changing rapidly, especially with Google purchasing ITA Software for $700 million earlier this month. Expedia CEO Dara Khosrowshahi addressed the Google threat in a call with analysts today, noting that the search giant could create an "unfair playing field" if it started to favor its search results over those of third party travel companies.

Amazon.com founder Jeff Bezos chatted with Charlie Rose last night, touting the new $139 Kindle and speaking in great detail about how his company's device is different than Apple's iPad. Bezos made his point by arguing that the most popular application on the iPad right now is a game called "Angry Birds" in which players throw birds at pigs. That compares to the Kindle, whose best seller is a book by Stieg Larsson.

"At $139, some people spend more than that for their sunglasses, Charlie," Bezos said at one point when asked about the Kindle. "I mean it is not an expensive device." Asked about Steve Jobs and the iPad competition, Bezos added: "From where I sit, all of the data that I have, the evidence is very clear that Kindle is a companion to tablet computers, laptops..."

Matt Hulett

RealNetworks today continued the shakeup of its management ranks, naming Seattle technology veteran Matt Hulett as the new head of its games unit, simultaneously disclosing in a regulatory filing that it decided yesterday to end the employment of its previous games division president, John Barbour, effective Aug. 13

The company didn't go into detail about the reasons for the change, but CEO Bob Kimball suggested in a news release that the decision was based in part on the fact that Barbour doesn't live full-time in the Seattle region.

Microsoft CEO Steve Ballmer today acknowledged the momentum seen by Apple's iPad in the market for slate-style, consumer-oriented computers -- a sector that his company has been trying to crack, without as much success, for the better part of the past decade.

But Microsoft hasn't given up on the market, he said, noting that the company sees new hope on the horizon.

"They’ve sold certainly more than I’d like them to sell, let me just be clear about that," Ballmer said after raising the topic of Apple's iPad during a speech this afternoon at the company's Financial Analyst Meeting in Redmond. "We have got to make things happen. Just like we had to make things happen on netbooks, we’ve got to make things happen with Windows 7 on slates, and we’re in the process of doing that as we speak."