Israel Innovation 2.0

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Globes reported yesterday that Google Israel, which has been behind Google Trends and YouTube Annotations among other features, will be restructuring its presence in Israel and creating a Google – Israel R&D Center.

According to the article, the new center will combine Google’s R&D operations in Tel Aviv and Haifa but will still allow them to function as two separate offices, though the longterm fate of the Haifa is questionable. It will also add data analysis and search to its responsibilities.

The article drew my attention because it indirectly raises the questions:

  • How long will the Google -Israel R&D Center continue to function in two separate locations? (It sort of addresses it – “At this stage we are keeping the existing situation.”)
  • Will it be hiring or firing based on this? (Google Israel currently only has openings in Tel Aviv)
  • Given Microsoft Israel’s and EMC’s recent outsourcing and recruiting programs in Israel, will Google follow with its own program and incentives?

Expanding on the last question, in a post a few weeks ago about Microsoft Israel’s efforts, some of the benefits I listed of implementing such programs included: additional exposure, new products and a large pool of potential future employees. Of course, there’s also the cost-efficiency advantage. It seems now would be the perfect time for Google Israel to implement its own program. 

What do you think?

Microsoft Israel announced earlier this month that it is making its DreamSpark program available to students in high-school and university in Israel.

According to the site, the program – which will provide $10 million in equipment – enables students to “download professional-level Microsoft developer [and design] tools to advance your learning and skills through technical design, technology, math, science and engineering activities.” 

Around the same time as this announcement, Microsoft Israel also announced Israel’s inclusion in the Imagine Cup 2009 worldwide competition. Imagine Cup, which focuses on students studying computer science and engineering in specific, challenges students in those areas to “Imagine a world where technology helps solve the toughest problems facing us today.” Students who participate can choose from one of 9 categories, including Software Design, IT, Design and Photography, among others,  to create their solution. 

Microsoft’s announcements together with EMC’s Center of Excellence program that was announced last month seems to indicate a trend among big IT companies to reduce their R&D costs by outsourcing while developing and building a pool of potential future employees. Aside from being cost-effective, it can help prevent some participants who might have an entrepreneurial flare from creating a company that could turn into a competitor or which these companies would have to purchase for a lot of money.

Regarding Microsoft’s move in specific, four possible benefits of the program for the company are:

  • Additional exposure: It is good publicity for the companies products and raises awareness of them among potential users.
  • New products: Microsoft can further develop any of the projects submitted in the Imagine Cup competition. This can help it gain valuable ground in Web 2.0 and especially Enterprise 2.0. 
  • Long-term future users: Similar to Microsoft’s strategy of providing poor countries with free copies of its customer software products, any students who use Microsoft’s developer software via DreamSpark who might not have ever used it, will now gain a familiarity and knowledge of it that will make them more inclined to continue to use Microsoft products in the future. It also can create loyalty among a young crowd that can lead to several sales over a long period of time. 
  • Large pool of potential future employees: With both programs, Microsoft will now have a major database of students worldwide who can be tapped for jobs in the next few years as they finish schoo. Having a larger database will give it the ability to be selective and ensure that only the top candidates will be hired. 

It wouldn’t be surprising if other companies also went after students for R&D-related purposes in the next few months. 

More information about DreamSpark can be found here.


During the week of January 18, 2009, business was back to normal for better and for worse. Announcements were made that Israel is planning the largest desal plant and Varonis and SAManage received funding. On the other end, the Israel Venture Capital Research Center released VC funding numbers for the fourth quarter of 2008 that were expectedly very low and promising social search engine, Delver announced that unless it receives more funding or gets acquired in the next few weeks it will cease its operations. For these and the rest of the 18 Israel-related headlines from the week of January 18, check below. 


1. Israel plans largest desal plant in $513M deal

2. Cleantech Expert: “In Financial Crisis Context, Israeli Solar Energy Companies Could be Shining Stars”

Investments and Economy

3. Aviv VC raises half of what it hoped

4. EMC leads $15m round for Varonis

5. Global crisis hits local venture capital industry

6. Nokia, Intel Slump Torpedoes Israel Economy as Rockets Grounded 

7. SAManage Secures Series A Funding from Xenia Venture Capital

Information Technology

8. BPM VIEWPOINT: The Opportunity in Unstructured Business Process Management (ActionBase)

9. Cordys Process Factorytrade; Wins Best Cloud Management Solution

10. Leading Industry Analyst Positions Magic Software in Three Quadrant Reports on Application Infrastructure

11. ClickSoftware launches new system for customer interaction management

12. Kontera and Advertising


13. Which companies will Nortel take down in its crash?

14. Skuku Embeds GIPS VoiceEngine

15. AudioCodes Announces Availability of VoIPerfect and High Definition VoIP on MIPS Technologies’ Cores


16. Michigan, Israeli companies share business growth ideas

17. Peres invites new envoys to join science and tech R&D council

18. Social Search Engine Delver On Death Watch


Much attention in the news was paid to Israel’s operation in Gaza during the week of December 28, 2009, including to online technology related to it. Different Israeli government branches, from the IDF to Israeli Consulates in the U.S., began to leverage popular social media tools, such as blogs, YouTube and Twitter, to explain the purpose of Israel’s operation and its objectives, while supporters around the world used the same mediums and others, such as Facebook, to show their support for Israel and its troops. During the week it also became clear that the conflict wouldn’t be bound to physical operations as several Israeli sites became the targets of cyberterrorism.

Despite the conflict, there was plenty of news of unrelated innovations coming from Israel. Funds were raised and contracts were signed in Israel’s IT and cleantech sectors and announcements of foreign companies opening R&D offices were made. Not all the news that wasn’t related to the conflict was good though. For all these stories and more, check out this week’s special edition of Israel-related headlines from the week of December 28, 2008 below.

Israel-Hamas Conflict (Technology side)

1. Israeli news site down, blames cyber attack

2. Muslim hackers attack Israeli websites as Gaza strikes continue

3. Israel Backed by Army of Cyber-Soldiers

4. War sickens me, but I stand with Israel (HelpUsWin*)

5. The Big War You Never Hear Much About

6. Israeli Consulate to tweet about Gaza war


7. Israel’s SolarEdge Raises $23M to Crush Shady Solar

8. BrightSource Energy signs contract with Siemens for solar-powered generator

Investments and deals

9. 2009: Year of the survival of the fittest

10. Bluephoenix Announces Multi-Million Dollar Modernization Contract With a Large Scandinavian Bank

11. Intrinsyc Signs Soleus Licensing Agreement With ODM for Industrial PDA and LBS Phone
12. Oy Vey! Israeli VCs Exceptionally Gloomy on 2009

Information Technology

13. HCL opens office in Israel

14. Invention: Software research assistant

15. EMC continues to move forward


16. The American Idol for blogging superstars

17. One to Watch: Tvinci

18. Israeli’s documentary is drawing wide acclaim

19. MyHeritage Makes Family History Research Easier With Launch Of Family Tree Builder 3

20. Crude oil rises after Israeli attacks on Gaza roil Middle East

Israel Innovation 2.0 content related to Israel-Hamas conflict

21. Direct from the streets of Gaza… and Israel. How TechCrunch UK’s post could have read regarding UGC

22. Cyberterrorism against Israeli and American sites: How to Stay Secure

Video from IDF Spokeperson’s Unit TouTube Channel (Capt. Benjamin Rutland on the ground forces entering Gaza on 3 Jan. 2009)

*HelpUsWin is an online grassroots campaign helping to ensure that international coverage of the Campaign Against Hamas is balanced. To learn more about it or how you can become involved, please check out the HelpUsWin website.

richi_countriesForget BRIC-countries. It’s the R.I.CH.I-countries. David Hill of eChannelline wrote today that EMC, an IT-supplier, recently announced that it established a Centers of Excellence program in four emerging markets, Russia, India, China and Israel. Under the program, EMC will invest locally in software development and manufacturing and gain access to the local talent pool that can help with future innovation.

Hill’s article describes how the program works using China as the example,

 “How EMC taps into that talent pool to hire the proverbial “best and brightest” is illustrated in China. The country annually produces a huge population of computer science and engineering graduates, and EMC receives thousands of resumes. Through a process that includes standardized testing and multiple interviews, the company is able to winnow down to a selected number who are given job offers.

EMC is able to select the crème de la crème from a very deep talent pool, and the company states that its employee turnover is a fraction of the industry mean. Maybe that’s because EMC has figured out how to make the COE developers work together, drive productive relationships with developers around the world, and innovate based on country or regional opportunities.” 

It’s intersting to note that EMC chose Israel in place of Brazil, which is an emerging market that along with China, India and Russia are known as the BRIC-countires and are the largest emerging markets. It’s not a surprising decision though considering that in the past year, EMC’s competition, IBM in specific, have acquired Israeli companies with key technology that threatens EMC’s business, especially storage.

Data storage and data security were hot topics in 2008 and are expected to continue to be in 2009 with Israel leading the way in innovation. The smartest part of this move for EMC is that instead of spending millions on purchasing companies with these technologies in the future and then converting them into R&D centers, it can now go after these future entrepreneurs before they start their own company and offer them incentives to stay (such as a good work environment). It can be assumed that EMC will get a positive ROI from the Israeli COE program in the very near future. 

In addition, this news answers the question I asked after reviewing IBM’s purchase of FilesX last year.

    Globes is reporting that in the next 24 hours, IBM is expected to officially announce its purchase of Diligient Technologies, an enterprise data storage and deduplication solutions provider, for an estimated $200 million. Here are some quick facts from the Globes article regarding the deal:

    • Diligent Technologies is IBM’s third acquisition in Israel so far this year (after XIV in January and FilesX Ltd. last week).
    • Diligent Technologies is a spinoff from EMC Israel, which still owns a 20% share in Diligent.
    • Diligent was co-founded in 2002 by current CEO, Doron Kempel and data storage legend, Moshe Yanai (currently the XIV chairman and an IBM employee).

    For more details, check out the Globes article and my entry on the rumor from a few weeks ago.

    About the author: Lisa Damast is the Membership
    Manager of and currently resides in Israel. Any questions or
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    directed to her via email at ldamast (at) ebizq (dot) net. She can also be followed on Twitter, where she covers additional Israeli technology companies and Israel-related headlines and topics.

    Making the headlines both left and right this week have been the rumor and then announcement that International Business Machines (IBM) purchased Israeli grid storage start-up, XIV.

    According to XIV’s Company Profile on its website,

    “XIV was founded in 2002 by five graduates of Talpiot, Israel’s preeminent military incubator for technology leaders. The company spent three years developing Nextra’s innovative technology prior to implementing the first customer system. XIV has built an outstanding team of storage and computing talent, including veterans of IBM, EMC, and other storage giants, and world-class engineers. All bring their vast best-practice knowledge to every aspect of the company’s endeavors. XIV is led by Moshe Yanai, one of the key architects of modern data storage.”

    Analysis: What the media is saying and what you actually need to know
    The sale of XIV to IBM is all over the news and blogosphere. Most articles have focused on different aspects of what is generally the same four things: IBM making this move to try to get an advantage over competitor EMC, how IBM gains not just a fast-growing successful company but a highly-regarded “brain” in the field and, sometimes, the actual benefits of XIV’s product, NEXTRA.

    When the acquisition had just started to spark rumors earlier this week, while speculating on the at-the-time still-in-talks IBM-XIV acquisition, Mary Jander of the Storage Networking site, Byte and Switch, took the opportunity to sum up the major storage-related deals that IBM’s competitors, EMC, Dell and Double-Take have made. She also reminded everyone of the next major deal that will shake up the storage world, which is “a potential sale of all or part of Hitachi Global Storage Technologies (HGST) by its Japanese parent.”

    While competition is one reason why IBM made this deal, the company’s internal development strategy shouldn’t be overshadowed by it. According to David Needle on InternetNews, IBM made the purchase to “address the demanding storage requirements of Web 2.0 applications and digital media.” Also, as it is soon after IBM’s purchase of Cognos, it shows IBM’s “more aggressive stance on intellectual property ownership.” Of course, solidifying the company’s storage strategy and, in the process, snagging up XIV Chairman, Moshe Yanai, an ex-EMC employee and technology storage legend, is pretty much the best of both worlds for IBM.

    Moshe Yinai’s claim to fame in the technology storage world is his having “designed and built EMC’s key Symmetrix [now the “DMX series”] product line.” He is a legend and as having made his name with a major IBM competitor, the media, such as eWeek, has emphasized Yinai’s “changing sides.” Though it is a great story that will be interesting to watch unfold over the next few years, Yinai’s involvement is still only as XIV’s chairman, offering the guidance. He wouldn’t be back in the fold without the five young Israelis having started the company and developed its break-through product, Nextra, which, according to Duncan Riley on the Ajax-Blog,

    “is a storage system based on a grid of standard hardware components. XIV will become part of the IBM System Storage business unit of the IBM Systems and Technology Group.”

    Shaun Nichols on Venunet explains that,

    “XIV’s flagship Nextra platform allows multiple storage devices and applications to be managed under a single system…The company estimates that Nextra systems are responsible for managing more than four petabytes of data worldwide… Big Blue plans to use Nextra as the basis for many of its future enterprise storage offerings.”

    Indeed, aside from just publicity, XIV and Nextra, should provide IBM with a strong foundation for the trend of moving the enterprise onto the Internet and dealing with Web 2.0 in the coming years. XIV will remain and fully operate in Israel. Globes estimates that XIV was sold for between $300 million to $350 million after only having $3 million put into it.

    Additional Resources IBM Buys Israeli Storage Startup XIV
    Congratulations to Moshe Yanai. I Hope the Shorts Fit.
    Wanna make a quick $300 million? Sell your startup to IBM
    IBM buys into massively parallel storage
    An IBM developer’s perspective on the deal
    A Forrester analyst’s perspective on the acquisition
    EMC’s Vice President of Technology Alliances perspective on the deal