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In an interview published this morning in the Financial Times, Microsoft CEO Steve Ballmer said he wouldn’t be looking to pick up any other Internet companies just because the Yahoo deal failed. One can only imagine how far shares of Facebook would have plummeted on that comment had the social networking site been publicly traded. Ditto for Slide and RockYou, both of whom recently raised money at lofty valuations.

“People don’t understand what they’re talking about,” Ballmer told the FT. “At the end of the day, this is about the ad platform. This is not about just any one of the applications.” And for Microsoft, according to the interview, the primary ad platform is search. That makes sense as search is a billion-dollar, proven business.

Application companies have some ad revenue, but right now they’re kind of like cable channels for the web, while an ad platform is the means to a business model that supports that cable channel. Microsoft wants to own the keys to the business model. So to prove their worth, it’s time for application developers to prove their business model.

Facebook users can already access the site on their mobile phones through the Facebook mobile page, but apparently the combination of the social network and 3G networks is what prompted Hong Kong tycoon, Li Ka-shing, to up his stake in the company to more than $100 million from $60 million.

Li talked about his Facebook investment on an earnings call for Hong Kong conglomerate Hutchison Whampoa this morning, where he is chairman. MarketWatch reported that Li is willing to invest even more because “we could have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones.”

Hutchison, which provides 3G service in Asia, Europe and the Middle East under the 3 brand, has lost more than $16 billion since 2002 building out 3G networks. In fact Hutchison today reported that its 3G services turned cash-flow positive for the first time in 2007, with 17.6 million subscribers worldwide and total sales of HK$ 59.91 billion ($7.7 billion). However, it still reported a net loss of $2.31 billion on 3G services.

An alliance with Facebook might be a way to pump up the brand a bit more. Actually, this looks remarkably similar to Microsoft’s reason for investing in Facebook. And who wouldn’t put a $15 billion valuation on sex appeal?

Years ago, Stephen Dukker helped to disrupt the personal computing industry when the company he founded, eMachines, started selling PCs for $400 each, effectively broadening the number of consumers who were able to buy computers. And now he’s trying to do it again, as CEO of Redwood City, Calif.-based virtualization startup NComputing, which just raised $28 million in a second round of funding.

NComputing makes terminals bundled with a keyboard, mouse and monitor that can be hooked up to a PC (given the processing power available in today’s computers compared with what’s needed for most applications, multiple terminal kits can be connected to a single PC.) After selling some 600,000 kits primarily to educational users over the past year-and-a-half, NComputing will take the $28 million it just raised (at a more than $100 million valuation) and use to target the enterprise market.

I spoke with Dukker about the importance of opening up new markets for PCs, and how that can be done using software. We also talked about NComputing’s push into the enterprise market, even as it continues to find success in education and the developing world. Currently the company sells 80 percent of its terminals to educational buyers, with 50 percent of its sales occurring in the U.S.

Q: Why would someone want to get into the PC industry today?

A: At eMachines we proved there is no low-cost PC that allows their suppliers to be profitable. Since the industry has not been able to bring prices down further, we have not been able to open up new markets. So all a PC maker can do to gain market share is to sell at low margins and steal share from other people.

Q: So why did you come back to the PC world?

A: After eMachines, I thought I was through with PCs, and then I got a call from my No. 2 guy at eMachines who was in Germany working with these guys who said they could lower the cost of PC ownership with software. I told him if you can do this, you can potentially change the world. The cost of the PC basically goes away. The chip costs $2 to produce, but the software is hard to do. It’s exactly what companies like VMware, Citrix and Microsoft are doing with desktop virtualization.

Q: What made the software so compelling?

A: With the PC what we have is a classic situation of the exhaustion of an architecture. PCs are becoming supercomputers and the applications are not keeping up. Unless you are doing some super science or are a hard-core gamer, you don’t need the processing power. With our software and hardware you can run a couple of terminals on one computer for about $70 per kit. It costs us about $11 to make the kit. This allows us to charge the customer less and make more at the same time, which is the hallmark of a disruptive technology.

Q: Why go after emerging markets first?

A: We gain credibility. By engaging enterprise customers later we will have more than 1 million people using our machines around the world. I want to further emphasize that this technology was not designed for emerging markets and education. It was originally designed to be a Citrix killer — the most efficient and cost-effective server-based computing solution for the enterprise. The reason we’re seeing the huge response in the education and emerging market is because their needs are immediate, whereas we know the enterprise markets are fairly slow.

Q: Where will you take this next?

A: We accepted the money to pick up the pace on the enterprise side without losing focus on our current markets. We are in trials in many large enterprise environments, and will make a meaningful impact on the Citrix and VMwares of the world in the back half of this year. We are also going to introduce a new product for broadband providers where you could have our chip inside a set-top box. It will be a desktop that’s being served to you for a couple bucks a month over your television by a broadband provider.

Social information sharing startup HiveLive launches their LiveConnect Community Platform today at the Defrag conference in Denver, but it’s not HiveLive’s first appearance on the web scene. In 2006, they opened a private beta that looked to some like just another Web 2.0 social sharing site. Now they’re finding success bringing the social web to businesses.

If this were 1999, you might say that HiveLive moved from a B2C (business-to-consumer) model to a B2B (business-to-business) model. But it’s 2007, so instead let’s call it Web 2.0 to Enterprise 2.0. Even that label is a bit misleading, though, because HiveLive is succeeding with nimble and innovative smallish organizations rather than the lumbering, multibillion-dollar giants that you might think of when you hear the word “enterprise.”

What is HiveLive?

HiveLive’s social sharing platform provides all the pieces you’d expect: user profiles, blogs, discussion forums, wiki-style editing, RSS feeds, and more. But it uses an architecture that makes it very easy to customize — without coding. HiveLive also includes features the business market demands, such as granular privacy settings, customizable skins, and moderated content editing.

HiveLive introduces the concept of a “hive” that brings people together with information. Instead of choosing from a set of predefined features like a blog, wiki, or discussion forum, HiveLive community creators (and even community members, if administrators allow it) define their own semi-structured information types using a web-based interface (shown below) rather than by writing custom code.

Hives serve as building blocks for creating flexible, customizable and social information spaces. You can use a hive for blog postings or wiki sites or, of course, forums. You can also use one for other social information sharing — classified ads, recipes, feature ideas, bug reports, video sharing, and more. For example, a file-sharing hive is shown below.

But is it enterprise scale?

While HiveLive says it’s currently in talks with very large businesses, the company has initially shown traction with smaller organizations using forward-thinking business models. Current customers include Alpine Access, a telephone support outsourcing concern that relies on home-based personnel; Rally Software, a SaaS (software as a service) provider of Agile development tools; and Stanford’s new Hasso Plattner Institute of Design, a “D-school” for multidisciplinary studies of design thinking.

HiveLive’s competitor Jive Software (profiled by GigaOM recently) may find it easier to work at enterprise scale, as Jive’s ClearSpace provides a Java-based, deploy-your-own solution that will fit into many big companies’ IT infrastructures. HiveLive, on the other hand, is a hosted service based on LAMP (Linux, Apache, MySQL, and PHP) reflecting its Web 2.0 roots. ClearSpace’s genesis, by comparison, was in knowledge bases and online discussion forums.

HiveLive claims to be “the first community platform to seamlessly integrate social networks with information networks” but they’ll compete in that space not only with Jive’s ClearSpace but also with Drupal, Ning, and even Microsoft (MSFT) Sharepoint. But Drupal requires coding for customization, Ning doesn’t offer the fine-grained permissions that HiveLive has, and Sharepoint will be mostly of interest to those with Microsoft-based infrastructures.

Moving upscale

HiveLive hasn’t given up on Web 2.0. But their focus right now is on enabling communities that are company-sponsored rather than organically formed. CEO John Kembel says that in the future they’ll open up HiveLive capabilities for personal use in a controlled way. He notes that the original private beta of HiveLive still exists, as Hive Commons.

HiveLive took venture funding last year ($1.65 million in an institutional angel round) and signed their first enterprise license the same week. Venture capitalist and HiveLive angel investor Brad Feld says that Hivelive’s strategic shift was “a deliberate, logical, and very successful one.”

So it seems HiveLive agrees with GigaOM boss Om Malik that the big opportunity for Web 2.0 tools lies not in winning 53,651 users, but rather in making social tools ready for business, whether you call that Enterprise 2.0 or not.

Microsoft (MSFT) has invested $240 million in Facebook at a valuation of $15 billion and gets the rights to sell third-party ads on the Facebook network. That’s about 2 percent stake. Not as crazy as the $900 million that MySpace (NWS) pried out of Google (GOOG), but still pretty steep. I thought the deal was for $500 million, so I am guessing there is another shoe to drop here. (Looks like Microsoft is going to be to Facebook what Yahoo was for Google…transition strategy!)

Today Facebook also launched an application for BlackBerry, and got RIM and T-Mobile USA on stage with Facebook co-founder Dustin Moskowitz to announce it today. Facebook already has an iPhone app that early adopters everywhere love to brag about. Moskowitz also announced the Facebook platform was expanding to all web-enabled phones, with apps appearing on mobile Facebook profiles and getting access to SMS to communicate with users.

Press call live blogging below the fold:

• The call was supposed to start at 2 pm, its already 2.04. Bad muzak playing!
• Mark Zuckerberg , if you want to play Steve Jobs, learn to be punctual like Steve.
• Maybe they are getting their stories right, and haven’t figured out how to put the obscene finger gesture to Google in polite/politically correct language.
• 2.10 pm, and still terrible music and no sign of anyone.
• 2.12 pm: It’s on. Vivek Verma and Kevin Johnson, president of the Platforms & Services Division at Microsoft, are on the call. Brandee Barker (spokesperson) and Owen Van Natta, vice president of operations and chief revenue officer at Facebook. are on the call.
• Mark is beyond all these PR things He got peeps it seems who are handling this!
• There is an error in the press release, and will be reissued.
• Owen is speaking. He is saying stuff which could be spoken by any executive on any conference call.
• Kevin - major win for Microsoft in advertising and strong signal from our biggest partner. Facebook is a strategic win for us. We are very pleased with the depth and the scope of this deal. Seems like Facebook is going to work on newer ads for social environment.
• Kevin says the equity stake is a strong statement of confidence in this partnership. Blah blah! 200 million users is in realm of possibility and combine that with monetization opportunity.
• Kevin - there are certain elements we won’t disclose about this deal. We have strong alignment around technology. Lot more we will do together.
• Owen says: lot of folks wanted to partner with us over advertising, and relationship has been great for us. We are now expanding our relationship beyond U.S. borders.
• Owen says: no restriction on 3rd party developers. I think they can tap into Microsoft ad center and other technologies.
• (Arrington asks) Any other investors in this round? Not announcing any other investors in this round for now. Just Microsoft.
• Kevin says - we are expanding our advertising relationship internationally and that is what we are announcing right now.
• In response to Josh Quittner’s question about who else were they talking to, Owen says not commenting on who were others they were talking to.
• Owen says lot of rumors about financing but this is the best set of terms we came up with this deal.
• Not talking about Facebook IPO.
• Is this deal just for banner ads? Will it be expanding to Internet Search deal and will it be separate deal? We are not announcing anything related to Web Search. This is only about advertising.
• Question Mine: Kevin Johnson (what we are seeing so far) we continue to see monetization which continues to improve. We will drive hire. Continues to improve… both parties are not disclosing the metrics. Part two - in terms of what we are using the capital for, our innovation and growth we are seeing today. Expanding our employee base. 700 employees in 2008 (wow). International growth and there is a lot of technical infrastructure we can build around the. Allow people to experience better Facebook. (I will expand on this point later)
• Building your own (FB) salesforce? Microsoft is an exclusive advertising platform partner. The two companies work together today and going forward - there are different needs advertisers have. Socialization of the Internet needs innovation.
• Does Microsoft have access to Facebook user data? User trust is core to what we focus on and we both are going to provide highly relevant advertising and focus on that. We don’t want to violate user trust…There are certain parts of the partnership we are not announcing. I think they are dodging a very relevant question.

Hitwise just sent me over some data that helps put the deal in perspective. According to the Internet monitoring firm, for the week ended 10/20/07:

*Facebook.com was the 9th most visited web site in the U.S., with .96 percent of all Internet visits.

*U.S traffic to Facebook.com has risen 102 percent year-over-year when compared with the week ended 10/21/06.

*Among a custom category of leading social networking web sites, Facebook.com received 15 percent of U.S. visits, putting it at No. 2 behind MySpace.com, which received 76 percent. Windows Live Spaces received 0.4 percent.

*Facebook.com received 9.9 percent of its U.S. traffic from search engines. Of that traffic, MSN Search and Live Search combined for .46 percent to Facebook.com. Google sent 6.82 percent of U.S. traffic while Yahoo! Search sent 1.34 percent of traffic.

*U.S. visits for Facebook.com among users ages 35 and over have increased 19 percent when compared with the week ended 10/21/06.

Everyone wants a piece of Microsoft’s (MSFT) Office suite. Google (GOOG), Sun Microsystems (JAVA), IBM (IBM), dozens of start-ups and now, Adobe Systems (ADBE). The company today bought Virtual Ubiquity, a Waltham, Mass.-based start-up behind Buzzword, an online word processing software offering. I guess this is one way to respond to Microsoft Silverlight that takes aim right at the heart of Adobe.

Buzzword is the right moniker: the product is getting a lot of buzz because it has all the right words in its “game plan.” Never mind, there isn’t many people who have actually used this product? (Liz gave them a great review when they launched, but still not clear how the start-up did in terms of sign-ups and users.) How this start-up fits into Adobe’s game plan, or how it adds to their bottom line, isn’t quite clear.

That’s not important! What’s important is to play the “give an Office wannabe away for free” game. Everyone, of course is slugging it out with, everyone of course. No one really wants to talk about how many people are actually using these online offerings.

Adobe also released a new document sharing product called Share, which used Flash to share documents. You can embed the shared “document” in any web page, much like Scribd. This Share application is bound to temper some of the hype around document sharing start-ups.

Microsoft’s response? It has come up with a new offering called Office Live Workspace targeting the consumers and small business owners. Mary Jo Foley explains that this is not a hosted Office suite. It is an extension to desktop based Office and will work with Office Wannabes like OpenOffice and StarOffice.

Back in September 2006, Nokia (NOK) CEO Olli-Pekka Kallasvuo declared that phones were no longer phones but multimedia computers that play back music, record videos, snap photos and — oh, yes — make phone calls. Apple’s (AAPL) iPhone has only reinforced that notion. And as the phone morphs into a multimedia marvel, there is a growing realization that the traditional user interface of a phone, the 12-key keypad, may no longer be enough.

The keypad limits how much information we can input into the tiny devices, and acts as a speed bump when we’re trying to navigate through a complex array of features. And what that means is that we need new ways to interact with mobile devices. Apple, for one, has bet on the touch screen and the fluid UI.

And then there are those who believe that voice input is the way to go.

Microsoft (MSFT) bet about $900 million when it bought TellMe Networks. Some startups are voice believers as well, such as Cambridge, Mass.-based Vlingo Corp, which I’ve previously written about. Earlier this week, I got a chance to see a demo by Yap, a Charlotte, N.C.-based company with a similar approach — that is, taking voice and inputting it as text for everything from IM to navigation.

Like Vlingo, you need to download a Yap application on your mobile phone to get going, and then use voice to enter everything from instant messages to TwitterGrams. Yap also does voice processing on the server side, and then sends information back on the mobile data channel.

There are others who are taking speech recognition even further — embedding it right into the chips that go into Bluetooth headsets. Cambridge Silicon Radio, a maker of Bluetooth chips, is now embedding speech recognition technology from Sunnyvale, Calif.-based Sensory into chips that will find their way into the Bluetooth headsets by the first quarter of 2008.

Sensory CEO Todd Mozer believes that everyone wants to do big things with speech recognition and mobiles, but in the end, the simple functions that enhance the hands-free experience are what make the most sense and are the most useful. Bluetooth devices make perfect sense as a starting point for voice commands. I agree with Mozer.

When I saw the Yap demo, I got the feeling that the application was trying to do too much; it needed some focus. After all, Yahoo (YHOO) and Google (GOOG) can take a similar server-centric voice synthesis approach and provide a more enhanced offering. Moreover, they can use their partnerships with large carriers to squeeze out little players such as Yap.

P.S.: All this interest in voice recognition and related technologies could explain the nice bump in the share price of Nuance (NUAN): up 64 percent for the year, even despite a recent pullback that’s mostly because company’s move into the mobile voice recognition arena isn’t sitting well with the Wall Street types.

Related Post: Sit Up and Listen, Future of Software.