Hajati Muheki Aisha is a woman in rural Uganda who, because of a meeting a decade ago between cell phone magnate Craig McCaw and a Bangladeshi economist named Muhammad Yunus, is helping her village raise itself up out of poverty.
Aisha got a small loan to buy a solar-powered cell phone system and sells phone time to her neighbors. She now makes money running the pay phone business. Her neighbors also gain because farmers, for example, can use the phones to compare market prices and arrange better deals.
The breakfast meeting that helped make this happen was arranged by Bill Clapp, an investment manager and great-grandson of one of the founders of Weyerhaeuser Co. Clapp had met Yunus years earlier and become enamored with what was then a little-known anti-poverty system called microcredit making small loans of as little as $20 to help poor people help themselves.
When (Yunus) came to Seattle, I sent invitations out to many of the top people I knew here, but only Craig and his people showed up, Clapp said.
That likely wouldn t happen today. Yunus was awarded this year s Nobel Peace Prize for his advocacy of microcredit as a proven, self-sustaining method for combating poverty. The Bill Melinda Gates Foundation, which in the past year began talking to Yunus about his work, plans to make microcredit a major part of its new global development strategy major usually implying projects funded in the hundreds of millions of dollars.
Microcredit, also known as microfinance, is no longer viewed as so micro in significance, and Seattle is poised to play an increasingly macro role, with Bill and Melinda Gates joining in with Clapp, McCaw and other local pioneers.
It s truly amazing what s happening around here now, said Clapp, a local pioneer in the field who will be honored tonight by the World Affairs Council for helping to make Seattle a leader in the global do-gooder financial business of making small loans to the poor.
Clapp co-founded his own microcredit loaning organization, Global Partnerships, in 1994 after learning about this anti-poverty scheme from Seattle members of RESULTS a U.
S. non-profit organization Yunus works with that today will announce that more than 113 million people have so far received these microloans.
Yunus message is simply that there s no reason poverty should exist anymore, said Stacy Carkonen, a Vashon Island resident who is national advocacy director for RESULTS.
The difficult thing for many people is overcoming their perception that the poor need training and guidance from the wealthy countries, Clapp said. The genius of microcredit, he said, is that it fosters growth and development from the ground up by putting the power and responsibility in the hands of the individual.
It s very simple in concept, but it was truly a breakthrough, Clapp said.
Aisha is just one of many thousands of Ugandans who today operate or use a VillagePhone business the cellular phone system designed for use in the poorest parts of the world by the Seattle-based Grameen Technology Center.
The center, at the north end of Lake Union in the same building with Clapp s Global Partnerships, was launched in 2001 with a $2 million donation from McCaw intended to marry technology solutions with these microcredit efforts.
One of the things people in these poor communities lack most is information, knowledge, said McCaw by telephone from France.
It may be difficult for Westerners to appreciate just how critical a role telephones can play in alleviating poverty, he said, but consider the difference just for the farmers.
Now, they can call the markets before leaving to get the best prices rather than simply showing up and taking what they re given, McCaw said. Cell phone technology, especially text messaging, is now so cheap it can easily pay for itself in cost savings even for those living in the poorest place on Earth, he said.
The Grameen Technology Center s VillagePhone project follows Yunus emphasis on loaning to women such as Aisha because women in the developing world are often the most disenfranchised in poor communities and in most need of a small loan to help them escape the many vicious cycles that often keep them in poverty.
And women also have been shown to be good risks in terms of paying back the loans, said David Keogh, deputy director of the Grameen Tech Center.
Grameen is Bengali for rural and was the name Yunus gave to his first bank for the poor in Bangladesh, the Grameen Bank.
Keogh, an electrical engineer from Australia, came to Seattle from the Grameen Foundation USA, the U.S. affiliate of Grameen Bank headquartered in Washington, D.
C., to apply his technology skills to fighting poverty.
Many, if not all, of the challenges faced by poor, rural communities can be addressed with technological solutions, Keogh said.
And where better to coordinate techno-fixes than in tech-savvy Seattle, he added.
Besides expanding the VillagePhone approach globally (which Grameen Bank launched first in Bangladesh before the creation of the Grameen Tech Center), Keogh said they will be looking at finding ways to get computer technology into poor communities.
Another project, known as Mifos (for microfinance open source ), is intended to provide borrowers, lenders and client communities with simple, uniform software that will better enable them and the microfinance movement itself to manage the ever-increasing amount of information.
It s still incredibly inefficient, said project manager and former Microsoft employee George Conard.
The Grameen Technology Center, RESULTS and Clapp s Global Partnerships are some of the leading players in Seattle s burgeoning microfinance scene, but they are not the only ones.
The Gates Foundation is a supporter a minor donor to the cause so far, having given what for the world s largest philanthropy constitutes chump change of a million or two with plans to greatly expand its investment in the near future.
There is also Unitus, a Redmond-based non-profit that uses strategies from venture capital and investment banking to increase access to microcredit, and some relief organizations such as Federal Way-based World Vision that are active in this field.
Clapp also recently co-founded the Initiative for Global Development, which pushes for change in U.S.
foreign policy that can assist microfinance and other anti-poverty efforts worldwide. The institute s first national summit was in June, and attendees included Colin Powell and President Bush.
In a week and a half, many of Seattle s microfinance activists and advocates will meet up again with Yunus, Sam Daley-Harris (head of RESULTS) and others in Halifax, Nova Scotia, for the Microcredit Summit.
At the first such meeting, in 1997, Yunus and Daley-Harris set the goal of reaching 100 million of the world s poorest (those living on less than $1 a day) with loans. At that point, fewer than 8 million had been reached with these loans.
Today, Daley-Harris and Alex Counts, director of Grameen USA, plan to announce that more than 113 million have been helped but that only 82 million of them are the poorest.
The rest are certainly poor, but Yunus goal has always been to focus on methods that target first those most in need.
The original goal of reaching 100 million of the world s poorest by 2005 will perhaps come next year instead, but billions more still live in poverty. Even with assistance from the world s richest couple, Seattle s growing microfinance community will have plenty of work to do for the foreseeable future.
Microcredit aims to eliminate global poverty by providing very small loans, often to the poorest of the poor, often to women. Here s how it is working in one case, as described in last week s issue of The New Yorker:
Ilze Concepcion Rodriguez Chavez the mother of eight and grandmother of 25 and her husband were extremely poor in a small town in Mexico and saw no way out. But a local group invited her to a training program and helped her develop a business plan.
She realized the hot tamale vendor outside a local school came only in the afternoons. She could be there in the mornings.
She started with a four-month loan amounting to about $200.
She used the loan to rent her workroom. With a second loan of about $350, she bought a bicycle and modified it to become a three-wheeled, portable oven with a propane tank.
Now she makes about $200 a week.
She is paying off her loans.
Next, she plans to ask for $650 to buy a professional oven that could be transported by a car.
SEATTLE Microsoft billionaire Charles Simonyi plans to be the fifth space tourist and the 450th person to orbit the Earth.
He announced plans today at the Museum of Flight in Seattle to go up on a Russian rocket to the international space station.
Liftoff is scheduled for March 9, 2007.
The 58-year-old Medina resident is retired from Microsoft where he is known for leading development of the Word and Excel programs. He s the co-founder and CEO of Intentional Software in Bellevue, a pilot and friend of Martha Stewart s.
The 10 day space trip will cost $20 million.
The arrangements are made through the Space Adventures company of Vienna, Virginia, which has sent four other space tourists. Simonyi has already started training with cosmonauts.
He says he has always wanted to be an astronaut since he was a child in Hungary. He came to the United States when he was 17.
A roundtable discussing the newest trends in the wireless industry last week drew a hearty crowd to a Seattle law office on an otherwise overcast day.
But the 60 people there were hardly gloomy.
In fact, they brought an enthusiasm that spurred such responses as of course when attendees were asked whether they, too, were starting a wireless venture.
It turns out half of the people in the room were starting companies, allowing the event to serve as a microcosm of today s Seattle startup scene.
The wireless industry has always been strong here, something amplified by a quarterly report on venture investing issued today by VentureOne and Ernst Young.
The Puget Sound region has been home to McCaw Cellular Communications, which later became AT T Wireless (and today is Cingular Wireless), and Bellevue is where VoiceStream Wireless was founded and later became T-Mobile USA.
But there is a new generation of wireless companies in development.
This time, upstarts are less concerned with networks and more centered on applications.
The trend is said to be a reflection of the second wave of the Internet, called Web 2.0, and it doesn t hurt that Seattle has a lot of software engineers.
I think a Web 2.0 company that has thought about its wireless strategy is something fundamental, said Dan Rosen, a startup consultant and former venture capitalist.
If you think about it, Web 2.
0 is about the realization of using the Web in your daily life, and most of our life is spent wirelessly, he said.
A number of startups locally are building off the dual expertise of wireless and software.
The Venture One/Ernst Young report shows Washington communications companies — many developing wireless networks and services — are on track to receive at least as much money this year as last, despite a downtick this past quarter.
National figures also show a slight increase in activity in the communications sector.
Two companies participating in last week s roundtable are developing wireless applications.
Seattle s Ontela is creating a wireless service that helps camera-phone users upload pictures to the Internet, and mPoria provides a shopping service on the mobile phone.
But countless other wireless companies have started here, including M:Metrics, which researches wireless consumer habits; Melodeo, which creates mobile podcasting software, Medio Systems, which is creating a mobile search application; Bellevue s SNAPin, which is developing self-help tools for the mobile phone; and Sotto Wireless, which helps companies cut their landlines by providing cellphones that work off a Wi-Fi network when indoors.
This is a wonderful confluence of things. There s still a lot of carrier presence in Seattle, compared to anywhere else, said Tom Huseby, a partner at Bellevue s SeaPoint Ventures.
In addition to Cingular s offices and T-Mobile s headquarters, Alltel maintains an office in Bellevue after buying Western Wireless.
Clearwire, a company started by pioneer Craig McCaw, is building a wireless data network called WiMax from its headquarters in Kirkland.
Huseby said that when that level of wireless expertise is mixed with rich software skills, innovation starts to occur.
We basically have 1 ½ carriers, which is more than any other location; we have the McCaw mafia rattling off the walls, and then we have Microsoft, which has been a magnet for software engineering, Huseby said.
Innovation is only one side of the equation. There also must be money to fuel the startups, a resource flush here with multiple investment organizations focused almost exclusively on wireless.
For instance, former Western Wireless executives including CEO John Stanton have started Trilogy Equity Partners. Rally Capital is led by Dennis Weibling, formerly of Nextel Partners, which was a Nextel Communications affiliate before both were purchased by Sprint. And there s also Eagle River, McCaw s investment arm.
In addition, Huseby s SeaPoint scouts wireless deals for funds in California. Bellevue-based Ignition Partners, which has a number of partners from the wireless world, is fairly active.
If wireless products and services are being created and getting funding, it s only a recent occurrence.
The broader communications sector, which includes fiber-optic networks, wireless networks and services and telecom companies, was hugely affected by the technology bust in 2000, even though it received far less publicity than the downturn of the Internet business.
In 2000, almost $23 billion in venture capital was invested in communications deals, according to VentureOne. The following year, that fell to $8.
6 billion.
In Washington state, that sector was hit even harder — $715 million was invested in 2000, plunging to $150 million the following year.
The downward momentum continued until bottoming out in 2004 and 2005.
VentureOne research manager Jessica Canning said investment soared during the bubble because everyone assumed the increase in Internet traffic would need a network to support it.
It really was the telecom and Internet bubble that hit at the same time, she said.
Although things have improved, it is still early to call the increase a full recovery.
In the U.S., the communications sector received $2.
4 billion during the first three quarters of this year. That will likely meet or surpass the $3.1 billion invested in 2005.
If you look at what is doing well within that sector, you will see increased investments in wireless equipment and service providers.
So far this year, $969 million has been invested nationally in wireless deals, beating the $931 million raised for all of 2005.
The equivalent figures are not yet available for Washington state, but the broader communication sector is faring well.
So far this year, three companies here raised $44.3 million. Although none received investments in the third quarter, the year is still on track to outpace 2005 when four companies received $50.
5 million.
Clearwire, considered a wireless-network company, has raised more than $2 billion but was not included in the report.
Huseby said one challenge with more companies entering the space is that it increases competition.
Typically, if a company is building a mobile application, it is trying to sell it to the wireless carriers.
It s getting harder to sell anything to the carriers, he said.
That raises the question as to whether the short-term increase in investments and interest by entrepreneurs will be sustainable.
Just because there s a lot of startups, doesn t mean there s going to be a lot of successes, Huseby said. SEATTLE – The Bill Melinda Gates Foundation is spending $30 million to help build 200 new charter schools for low-income students around the country.The grant to the NewSchools Venture Fund, announced this week, is the foundation s second donation to the organization that supports nonprofit charter management organizations, which start and run charter schools, said foundation spokesman Eli Yim.
A $22 million Gates grant in 2003 gave NewSchools the money to help create five new charter management organizations.
The NewSchools Venture Fund supports charter organizations running schools in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania and Washington, D.C., that enroll more than 26,000 students a year.
This year s grant will help support as many as 20 charter networks that are expected to start 200 schools and eventually educate 100,000 students in low-income urban communities including New York, Los Angeles, Chicago and Washington, D.C.
, the foundation said.
The foundation s support for charter schools will focus on high schools, Yim said. He said the foundation s officers have been impressed by the results of NewSchools efforts, especially preparing low-income students to succeed in college.
NewSchools said low-income students in the charter schools it supports were outperforming students in their host districts by 36 percent in math and 52 percent in reading.
The charter school movement holds the promise of improving radically the quality of public schooling in America, said Ted Mitchell, chief executive officer of NewSchools Venture Fund. These schools are proving that all children can meet high standards if given the right tools and the right environment.
Yim said the $30 million grant is not a renewal of the previous $22 million grant; it is an expansion of support.
We don t really renew grants, he said. They came to us with a proposal for another grant.
The Gates Foundation continues to invest in American high schools in a number of different ways — from paying large schools to recreate themselves into groups of small learning communities to supporting new technology and teacher training initiatives. Foundation money has impacted a total of 1,100 schools serving an estimated 700,000 students.
We continue to just work from the strategy of trying to improve student outcomes.
We continue to explore a wide range of entry points to do that, Yim said, emphasizing that the foundation is not changing its education program to focus on charter schools.
We want our money to be catalytic and do whatever works for a particular community, Yim said. Organizers of the Performing Arts Center Eastside (PACE) have received half the money and will get the rest over the next two years, company officials said.
A Microsoft executive will also join the PACE board of directors.
The company decided to make the donation because the theater will benefit employees and the community, including children who will see performances and perform there themselves, said Jane Broom, senior program manager for local community affairs.
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It s very important to us that our employees and their families have an opportunity to access a vibrant and diverse arts and culture scene, Broom said.
PACE officials say the relationship with Microsoft is important, especially since next year, the company will move its North American sales headquarters into 15 floors of the Lincoln Square office tower, a block away from the site of the new theater.
PACE now has almost $16 million of its planned $100 million budget, most of which will come from private donations.
Organizers will auction off 26 fiberglass deer — along with 40 smaller, tabletop deer — at the Oct. 21 Bucks for PACE gala. Seven of the deer were vandalized this summer while on display outdoors in Bellevue, but they have all been repaired.
PACE officials still hope to raise $500,000 at the gala, which starts at 5:30 p.m. at the Westin Bellevue, 600 Bellevue Way N.
E.
Groundbreaking is scheduled for fall 2007, with the facility opening in early 2009. The type of brain map that used to grace high-school biology texts looked like a quilt: A pink chunk labeled vision bumped up against a blue blob that was the seat of language and a yellow swath representing motor perception.
Those crude representations were the result of centuries worth of painstaking dissection, coupled with case studies of people suffering from brain damage and disease.
It took only three years for a Seattle lab founded by Microsoft mogul and philanthropist Paul Allen to revolutionize the landscape of neuroscience by creating a map of the brain that goes far beyond topography to pinpoint the workings of individual cells.
Allen, who donated $100 million to the lab, said he is so pleased with the results that he will consider similar, large-scale science projects in the future.
This was a great opportunity to do something here that made a difference, and that we could do quickly, he said. We ll certainly look for more opportunities like this.
Experts say the Allen Brain Atlas, which will be formally unveiled today, will boost understanding of brain circuits and chemistry — and what goes wrong in conditions ranging from schizophrenia and autism to Parkinson s disease and drug addiction.
The map is of the mouse brain, but that doesn t mean it s not applicable to humans. The two species share nearly 99 percent of their genes, and much brain research is conducted in mice.
Neurosurgeons at Swedish Medical Center in Seattle are already using the atlas to study the genetics of fatal brain cancers.
This really just bolts us ahead in our ability to understand brain function and brain disorder, said neuroscientist Marc Tessier-Lavigne, who discovered the molecules that trigger connections between nerve cells, and serves as a science adviser for the Allen Institute for Brain Science. It s cool, and it s important as well.
Allan Jones, the institute s chief scientific officer, likens the advance to leaping from a 19th-century map of Seattle that showed land masses and bodies of water, to zooming in on a single house with Google s interactive mapping system.
The project builds on the explosion of information from gene sequencing projects, like the Human Genome Initiative. Having lists of genes is valuable but doesn t necessarily reveal much about what those genes do in the body — or where they are active.
The atlas fills in those blanks for the brain, the body s most complex organ.
Using a robotic system to analyze 16,000 paper-thin mouse brain slices a week, the institute determined where in the brain each of the mouse s 21,000 genes is switched on, or expressed.
Almost every cell of the mouse body contains a full complement of all genes. What a particular type of cell looks like and how it functions is determined by which genes are switched on, so that a liver cell is different from a skin cell — or a brain cell.
The gene expression map provides unprecedented detail about the types of neurotransmitters and other chemicals produced in different regions of the brain and in different types of brain cells.
The way brain cells are programmed to do their job is through the expression of specific genes, said Tessier-Lavigne, vice president of research drug discovery for the biotech firm Genentech.
Scientists were surprised to discover that 80 percent of all mouse genes are switched on somewhere in the brain, Jones said.
We think there are probably more cell types within the brain than in all the other organs of the body combined, he said.
The free, online mouse atlas has been getting 250 hits a day from researchers working on a wide range of neuroscience problems.
I really can t live without it, said Ben Barres, professor of neurobiology and developmental biology at Stanford University.
He studies a little-understood class of brain cells called glia. The atlas allows him to quickly confirm which genes are switched on in various types of glial cells.
Mapping the genes himself would be far too time-consuming, he said.
Researchers studying Parkinson s disease can use the atlas to learn more about the genetics of the brain cells that are destroyed by the disease, leading to tremors. Multiple-sclerosis experts can explore why the crippling disease attacks some parts of the brain more than others.
As a programmer, Allen said he has long been fascinated by the ultimate computer: the human brain.
When he was considering a brain project, he convened a meeting of top neuroscientists to find out what would be most valuable.
The resulting atlas is one of his biggest philanthropic endeavors. And though it lacks the pizzazz of some of Allen s higher-profile projects, like the search for extraterrestrial life or his X Prize-winning Space Ship One, it similarly blends the billionaire s interests in science and technology.
The atlas also generated staggering amounts of data, and much of the project focused on computer programs to make the information easily accessible.
The federal government would have been reluctant to fund a project on such a scale, said Dr. Thomas Insel, director of the National Institute of Mental Health.
For a private donor to build this kind of a spectacular electronic atlas and just say to the world: Have at it — I can t think of a precedent for that, he said.
Completing the atlas cost about $40 million, leaving the institute $60 million while it works to become self-sufficient. Jones said he hopes to bring in federal grants and forge partnerships with other scientists.
The only outside money the institute has received so far is a $1.8 million grant from the U.S.
Army to study the brain effects of sleep deprivation.
With its remaining Allen money, the institute plans to map the human neocortex — the wrinkled outer layer that is the seat of higher thought and emotion. Jones said they ll use cadaver brains and pea-sized bits of living tissue excised by surgeons during brain tumor removal or aneurysm repair.
Dr. Gregory Foltz, a neurosurgeon at Swedish, is partnering with the institute to help zero in on the genetic abnormalities glioblastomas — a type of brain cancer that usually kills within 18 months. Understanding why some genes are switched off in the tumors may lead to better treatments, he said.
The Bill Melinda Gates Foundation announced Thursday four grants totaling more than $68.
2 million to fight three tropical diseases that affect hundreds of millions of people each year in Africa, Asia and Latin America.
The diseases hookworm, leishmaniasis and trypanosomiasis are transmitted by parasites and worms. They can cause death or lifelong disfigurement or stunt children s growth and mental development.
No vaccines exist to prevent these diseases and the few drugs that are available are expensive and have serious side effects, foundation officials said.
Many of the world s most debilitating illnesses are virtually unheard of in the rich world.
But they re a fact of life for millions of people in poor countries, said Tachi Yamada, president of the global health program at the Gates Foundation.
The largest of the four grants will give $32 million to the Seattle-based Infectious Disease Research Institute to speed up development of a vaccine for leishmaniasis. This parasitic disease affects more than 12 million people worldwide and kills thousands each year, the World Health Organization said.
Researchers at the institute, who already have a candidate vaccine developed, plan to use the Gates Foundation money to pay for clinical trials.
Leishmaniasis, which is spreading in some developing countries and in parts of southern Europe as a result of the HIV and AIDS epidemic, has been designated by the World Health Organization as a priority for vaccine development.
The other grants announced Thursday include: $13.
8 million to the Sabin Vaccine Institute of Washington, D.C., to develop a vaccine to prevent hookworm; $21.
3 million to the University of North Carolina at Chapel Hill to develop new drugs to treat the late stages of leishmaniasis and trypanosomiasis; and $1.1 million to the Public Library of Science to launch a new medical journal on neglected diseases. Microsoft has baked that idea into building a new portable media player that represents its most ambitious effort to challenge the Apple iPod s domination of the market.
After months of speculation, the company on Thursday officially introduced Zune, potentially the next big thing in the high-stakes digital transformation of entertainment.
For Microsoft, this is about more than just a competitor to the iPod, said Mark Anderson, an independent technology analyst. They re trying to create a new platform and they re a platform company, he said.
Early reviews of Zune were mixed.
J Allard, the Microsoft vice president who leads the project, said the idea behind Zune is that the entertainment industry was going to evolve and become a software industry.
One key to Microsoft s approach is the ability of Zune users to wirelessly share music and photos. Microsoft hopes this will build on the idea of social networking seen in popular Web sites such as MySpace and differentiate its player from the iPod line.
The amazing opportunity that s been left on the table [by Apple] is when you can make this experience much more social and much more connected, said Bryan Lee, a Microsoft corporate vice president in charge of the company s digital entertainment push.
A user can select music and photos stored on Zune and transfer it on the spot. The recipient, who has to be using a Zune device as well, can listen to a shared song up to three times over three days. To keep the song, it must be purchased at the online Zune Marketplace store that Microsoft is also introducing.
The songs will likely cost 99 cents, or what Apple s iTunes store charges, but Microsoft is also offering the music through as-yet-unpriced subscriptions.
The player, to be manufactured by Toshiba and due out for the holiday season, has not been priced, though analysts and retailers estimate it will be $250 to $300. It will boast a 30-gigabyte hard drive, 3-inch screen, FM tuner and Wi-Fi connection for sharing content and transferring music from a personal computer.
Microsoft showed off three color schemes: white, black with blue trim and brown with green trim. In addition, the company described Zune as the first in an extensive line of wireless media player products, eventually including a cellphone.
Zune fills a gap in Microsoft s overall connected entertainment strategy, an effort gaining importance as digital devices become more pervasive.
Zune will work with the company s Xbox 360 video-game console, and the song-sharing feature follows the social aspects of online gaming in Xbox Live.
Analysts found plenty to pick at with the Zune system, Microsoft s first effort to integrate hardware and software in this space.
It is not an iPod killer, said Aram Sinnreich, managing partner at Radar Research, echoing the criticisms of other analysts.
The incremental value presented by the sharing features and the Wi-Fi are simply not great enough to overcome the incredible marketing and social cachet of the iPod.
Apple s power to excite the industry, diminish the importance of features its line doesn t offer and play up the benefits of those it does will test Microsoft s marketing, analysts said.
One example is how Apple Chief Executive Steve Jobs set the tech industry buzzing in advance of his announcement Tuesday that the iTunes store would offer movie downloads.
He also showed off a set-top box, still in development, that would allow users to stream digital content from the computer to the television.
While video has grabbed the digital media spotlight in recent days — Seattle-based online retailer announced a movie downloading service last week — Microsoft made clear that despite Zune s ample screen, this player is about the music.
When we decided to approach this thing, we decided to celebrate the experience of music, said Lee, the Microsoft entertainment executive.
The device plays videos, even orienting the playback in landscape format to take advantage of the larger screen. But the focus is on content that complements the music, such as album covers and music videos. No television episodes, movies or other video content available through services including iTunes will be sold on the Zune Marketplace, at least initially, Lee said.
Microsoft s music-focused approach extends to its marketing of Zune. The company plans to promote the platform with emerging and independent artists, such as Band of Horses and CSS, a Brazilian group whose tour is sponsored by Zune, said Chris Stephenson, a former recording-industry executive who joined Microsoft in March as its general manager of global marketing.
We re not going to have the big advertising campaign on Sunset Boulevard, connected to major artists, we re not doing that, Stephenson said.
We re helping artists grow.
He added that the Zune Marketplace will debut with more than 2 million songs and feature big-name artists, which he called the industry s bread and butter. Microsoft is preloading music from many of the major record labels on Zune devices.
The company also plans to help unsigned musicians get their content on Zune Marketplace, he said.
Zune marketing will trade on Seattle s prominent place in the music industry. Stephenson mentioned partnerships with Seattle s Sub Pop Records, which recently signed CSS, and local independent radio station KEXP-FM (90.
3).
Like Stephenson, several members of the Zune team have recording-industry experience. There are about 170 people working on the project in Redmond, though the group draws on expertise from all over the company, he said.
Zune is much closer to a record company than a software or hardware company right now, said Rob Enderle, principal analyst with the Enderle Group. That gives Microsoft a skill set that is unmatched, including with Apple, in terms of the market.
Microsoft s financial investment in Zune is considerable, and it s not something top executives expect to pay off immediately.
In July, Robbie Bach, president of the company s entertainment and devices division, told financial analysts that the company would spend hundreds of millions of dollars over the next several years on the media player. That investment pales in comparison with the billions Microsoft spent entering the video-game console business with its Xbox product line.
Bach tried to set realistic expectations about Zune and its underdog status.
This not a six-month initiative, and somehow in six months we re going to have captured the marketplace, he said at the time. This is something that s going to be a three-, four-, five-year investment horizon.
The stock market appeared to view Microsoft s news favorably on Thursday.
Shares gained 35 cents, about 1.4 percent, to close at $26.33.
Whether consumers will react favorably to Zune, particularly its sharing feature, remains to be seen.
A recent Jupiter Research survey found that 18 percent of 18- to 24-year-olds — what analyst Michael Gartenberg called the Zune demographic — considered the wireless content sharing a valuable feature.
A lot of music is distributed by word of mouth, said 18-year-old Tim Sorensen, a longtime iPod user who s about to start his freshman year at Western Washington University.
You tell a friend to listen to a certain song, but you have to play it on a stereo or have one headphone in each ear. I think that would be really cool if you could kind of wirelessly give someone a song to listen to for a little bit.
Sorensen isn t rushing to trade in his new iPod, however.
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