TechFlash: Seattle's Technology News

Drugstore.com said that sales grew by 25 percent during the fourth quarter to $117.4 million, driven in part by sales at its Beauty.com unit. The results also were bolstered by the fact that the fourth quarter of 2009 consisted of a 14-week period, which compared to a 13-week period for 2008. Nonetheless, CEO Dawn Lapore said in a statement today that she was pleased with the results.

RealNetworks says it's spinning off its Rhapsody music joint venture into a separate company to be based in downtown Seattle and operated independently.

RealNetworks will maintain a considerable stake in the Rhapsody business, but will reduce its ownership to slightly less than 50 percent, equal to its partner, Viacom's MTV Networks. The Seattle company currently has a controlling stake of 51 percent in the joint venture.

About 150 of RealNetworks' approximately 1,600 employees will shift to the new company. The move, which follows the departure of founder Rob Glaser as CEO, is part of an effort by the Seattle company to streamline its business following an extensive review of its operations during Glaser's tenure.

Word leaked out yesterday that Google was planning a new service for Gmail that essentially turned the popular Web-based email service into a rival to Facebook and Twitter. Now, we're finding out more details about the service, which has been dubbed Google Buzz.

"Google Buzz is a new way to start conversations about the things you find interesting. It's built right into Gmail, so you don't have to peck out an entirely new set of friends from scratch — it just works," the company writes in a blog post today. "If you think about it, there's always been a big social network underlying Gmail."

Microsoft was unimpressed. “Busy people don’t want another social network, what they want is the convenience of aggregation. We’ve done that," said Dharmesh Mehta, director of product management for Windows Live , in a statement. "Hotmail customers have benefitted from Microsoft working with Flickr, Facebook, Twitter and 75 other partners since 2008.”

Three-and-a-half years after the suit was filed, a federal judge in Seattle has dismissed a case that alleged Microsoft's distribution of anti-piracy detection technology to Windows users through its Automatic Update system amounted to spreading spyware. Both sides requested the dismissal after a series of rulings against the plaintiffs -- including the rejection of their proposed class-action claims.

Although the outcome was technically a settlement, sources said Microsoft wasn't required to pay any money to the plaintiffs or their lawyers as part of the dismissal.

Photo: TMZ.com

Gossip site TMZ.com doesn't identify the man standing next to Brad Pitt and Angelina Jolie in this photo from a Super Bowl skybox on Sunday in Florida, as the couple engaged in a very overt PDA in an attempt to dispel reports that they're splitting up. But pretty clearly it's Paul Allen, the Microsoft co-founder and Seattle Seahawks owner, who was separately reported to be hosting the couple on his yacht.

LiquidPlanner, the Bellevue online project management startup, has named Eileen McCormack to the position of vice president of finance. McCormack most recently served as acting CFO of SnapIn Software, and before that she held finance positions at companies such as Western Wireless, T-Mobile and Norcom Networks.

Hipcricket said that it will provide its mobile marketing tools to Journal Broadcast Group, which operates 33 radio stations and 13 TV stations. Milwaukee's WTMJ-AM and WTMJ-TV have already been using the Hipcricket service to run a school closure email and text message alert program. That program already has 18,000 members.

Barnes & Noble says that its Nook electronic book reading device will be in stores by midweek at the majority of its stores. FierceMobileContent says the release of the $259 device follows weeks of delays.

Glengarry Glen Ross showcases the sales industry at its absolute worst, one of the reasons we love it. David Mamet's award-winning play of foul-mouthed real estate agents looking to close deals is on stage this month at the Seattle Repertory Theater, and Thursday marks "Sales Rep Industry Night."

What does that mean? Well, it means you have a chance to win some cool prizes and have a little fun in the process. We're looking for TechFlash readers to share their horror stories from the sales world. In 500 words or less, tell us your worst sales experience, toughest pitch or the most unusual thing you've encountered in trying to close a deal. Please post your mini essays in the comment thread below, and we'll choose our favorite tomorrow morning sometime before noon. (Make sure you're registered in Disqus with a valid email so we can contact you).

The winner of the contest will receive season tickets to the Seattle Rep's 2010-11 season, as well as two tickets to Thursday night's performance. Heck, we might even toss in a set of steak knives for second place. Third place? Well, lovers of the play and movie know all too well that you don't really want to go there. (Check out the video trailer below to see what I mean).

I realize that Glengarry Glen Ross is filled with profanity, but please try to keep your stories somewhat clean. Also, if possible, please remove references to individuals or companies where appropriate. Enjoy.

Less than six months after rolling out the Twitter application TweepML, Seattle entrepreneur and developer Marcelo Calbucci has put the service up for sale on the public auction site Flippa. Calbucci set a "Buy it Now" price of $79,000, which he told us is "somewhat arbitrary" but does value the service at what he called the bargain price of less than $1 per unique visitor per month. He said he'd be happy with an offer over $10,000.

Started as a side project by the Seattle 2.0 and Sampa founder, TweepML was unveiled just a few months before Twitter itself introduced its list functionality. While the two services often drew comparisons, Calbucci said he was surprised that TweepML continued to attract users despite the new competition.

Could we see a color-screened Kindle?

The New York Times suggests that a color screen and Wi-Fi might be in the works for the next generation Kindle, citing the job descriptions at Amazon.com's hardware unit. The Times -- which last week reported that Amazon had purchased touch-screen technology provider Touchco -- now reports that the online retailer is looking for a hardware display manager.

Among the requirements are a "deep knowledge of current display technology and potential future technologies." The description goes on to say: "Significant exposure to high volume manufacturing environments; you will know the LCD business and key players in the market."

John Arnold

In a decision that U.S. Magistrate Judge Brian Tsuchida called "very difficult," Intelius co-founder John Arnold is set to be released from federal detention on bond tomorrow after being held for allegedly contacting a witness in the investigation into the activities of Seattle strip-club owner Frank Colacurcio Sr.

"I stupidly reached out to a witness, and I know that to be a colossal mistake at this point," said Arnold, addressing the court. Noting that the last four days in detention have been tough on friends, family, colleagues, and himself, Arnold added, "This has been a phenomenal lesson for me, and I have no intention ... to compromise this situation further." [Post updated with additional details from a Tuesday morning court hearing]

Sujal Patel

Isilon Systems, the Seattle-based digital storage company that turned its first quarterly profit last week, today announced plans to boost the salary of CEO Sujal Patel by 30 percent, to $325,000, effective April 5. The company said in a regulatory filing that its compensation committee also raised the base salary of Isilon's chief financial officer, Bill Richter, from $185,000 to $225,000.

The company has turned itself around under the leadership of Patel, its founder, who stepped back in as CEO after a series of accounting problem under the previous executive team. The company is also boosting Patel's approved performance-based incentive compensation targets from $200,000 to $250,000 for the 2010 fiscal year.

Microsoft's investigation of reports about errant Windows 7 battery messages has shown that the warnings are actually accurate, according to a blog post this afternoon by Steven Sinofsky, the Windows president. Sinofsky's post also explains why the alerts surprised some users: The messages result from a new feature in Windows 7 that alerts users when their batteries are performing at 40 percent or less of designed capacity.

"Essentially the battery was degrading but it was not evident to the customer until Windows 7 made this information available," Sinofsky writes in the post. "We recognize that this has the appearance of Windows 7 'causing' the change in performance, but in reality all Windows 7 did was report what was already the case."

A technology company has been named the best place to work by Fortune magazine, but it is not the usual suspects of Google, Cisco or Microsoft. Nope, it is perk-heavy SAS, which according Fortune offers employees child care, unlimited sick days and free access to a 66,000 square-foot fitness center. The Cary, North Carolina maker of business analytics software -- with revenue of $2.3 billion last year -- actually rose 20 spots to claim the honor.

So, where did the other tech stalwarts rank? Google -- with offices in Seattle and Kirkland -- remained steady in 4th place. Microsoft, meanwhile, tumbled from 38th to 51st place. Others on the list included NetApp (#7), Cisco (#16), Adobe (#42), Salesforce.com (#43) and Intel (#98). Noticeably absent from the list was Amazon.com, which is Seattle's second largest technology company.

The Wall Street Journal, citing unnamed sources, reports this morning that Google is set to launch a dedicated module in Gmail that will let people share and view status updates from friends -- turning the free email service into a more direct rival to Twitter, Facebook and other social networking services.

As the WSJ notes, Gmail users can already alert contacts to their status in the program's built instant-messaging module. The new feature, expected as early as this week, would be more similar to the dedicated stream of updates and messages provided by existing social networking services.

Sometimes new features can be overblown as a competitive threat, but the potential for the search giant to rival Twitter and Facebook is generating lots of attention already. "HUGE!" declares internet entrepreneur Jason Calacanis. Clearly Google is one company with the potential to buck the trend we identified in this story: Twitter, Facebook, LinkedIn get free pass from potential rivals.

Venture capitalists are hoping that 2010 proves to be a more lucrative year than 2009. And because of that, it appears that the funding spigot is back on to some degree. We've been tracking the SEC filings over the past few weeks to see who is raising money. Here's a quick look at the raw data, with links to the filings. You'll notice that two Washington companies with large appetites for capital make appearances.

Infinia photo

Infinia, which is developing technologies to convert the sun's rays into electricity, said it raised $11.5 million of a $75 million round. The Kennewick company has certainly been no stranger to the capital markets in the past, having raised $9 million in debt and equity financing last November and $50 million in February 2008. Investors include Vulcan, venture capitalist Vinod Khosla, and others.

Telecom Transport Management said it has raised $40 million of a $58 million round. The Seattle company -- which provides back-haul networks for wireless carriers -- announced in 2007 that it had raised $55 million with an option for $65 million more. TTM brought in $20 million of that last May, and the $40 million that just appeared in the SEC filings could be part of that previously announced round too. The 7-year-old company -- backed by Rally Capital, Ignition Partners and others -- could not immediately comment on the financing.

IP Street of Seattle said it has attracted $1.5 million. The company lists Richard White, Lewis Lee and Arthur Coffey as executives.

Eden Rock Communications said it has raised $500,000 in equity financing. The 3-year-old Bothell company -- led by former engineers on AT&T's "Project Angel" -- provides consulting and design services to operators of 4G wireless networks. It is also working on Eden-Net, a "self organizing network" technology that's designed to reduce the costs of WiMax and LTE deployments.

Etelos -- a Maple Valley company which helps businesses move their applications into the cloud -- raised $250,000 of a $375,000 round, according to a recent filing. Directors of the company include Andy Liu, Ronald Rudy, Daniel Kolke and Robert Thordarson. More details on the deal here.

Limeade said in a filing that it has raised $2.9 million of a $3.4 million round. The Bellevue company -- led by former Bocada executive Henry Albrecht -- is developing online programs for workplaces to encourage employees to lose weight, quit smoking, reduce stress or stop drinking. Last summer, the company announced $2.4 million.

Incline Therapeutics said it has attracted $440,000 in debt financing. The Seattle company lists Alan Levy and David Socks as executives. Levy, a medical device pioneer who previously served as CEO of Northstar Neuroscience and Heartstream, is a venture partner at Frazier Healthcare Ventures in Seattle. James Topper, a general partner at Frazier Healthcare, and Jim Glasheen, a general partner at Technology Partners, are listed as directors.

Avalara, an 11-year-old maker of sales tax software, said in a filing that it has raised $5 million in equity financing. The Bainbridge Island company -- which helps business more cost effectively handle sales tax processing, return preparation and other tasks -- was founded by Jared Vogt, Rory Rawlings and Scott McFarlane. It says that more than 10,000 businesses have outsourced sales tax calculations to Avalara, the equivalent of about $10 billion in annual filings.

Hemaquest Pharmaceuticals said that it has raised $6 million of a $12 million equity financing round. The Seattle company -- founded in 2007 and backed by De Novo Ventures, Forward Ventures and Lilly Ventures -- is working on treatments for sickle cell disease and viral-related cancers. Hemaquest was co-founded by Ron Berenson -- the former CEO of Xcyte Therapies and a founder of CellPro-- and Susan Perrine -- the former president of Gene Regulation Laboratories and a professor at Boston University School of Medicine.

Blueview Technologies of Seattle raised $215,000 of a $500,000 round. The company -- founded in 2003 -- has developed multibeam imaging sonar which is used to provide detailed views into what is occurring underwater. The technology has been deployed by port security agencies, the military, academic research groups and offshore oil and gas exploration firms.

Outcome Concept Systems -- a provider of business intelligence services to healthcare companies and government agencies-- said it has pulled in $1.1 million in funding. The Seattle company -- founded in 1997 -- was started by Amanda Twiss and Lance Pilichowski