ANT KATZ – EXCLUSIVE

Quite apart from having its own R&D facilities in the US, Microsoft has been buying up Israeli-developed products and patents since the 80s, spun off Microsoft-Israel and never really stopped buying, using and developing in the “innovation Nation” ever since.

Read this fascinating SA JEWISH REPORT EXCLUSIVE story on how a relationship which started with three people in the eighties is today one of the most used IT development facilities in the world. A good partnership which grew into a great one, and today possibly even an inseparable one! 

It wouldn’t have happened without Israel

With Microsoft’s announcement of the pending release of Windows 10, was the offering of another first for the company – Microsoft HoloLens – running on Intel microchips.

While HoloLens is still in its infancy, one can see from the short video that it seamlessly blends high-definition holograms with one’s real world needs.

Holograms will improve the way we do things every day, and enable us to do things we’ve never done before. Things we’ve never dreamed of doing.

Once again, Microsoft‘s Windows 10 (much of which was developed in Israel) will keep the company at the forefront of innovation and competition for years to come.

What makes Israel so tech-savvy?

How is the 100th smallest country in the world, with less than 1/1000th of the global population, able to lay claim to the title “Innovation Nation”?

While not new as high tech innovators (Israeli firms originally developed the cell phones and anti-virus software – way back in the 70s!), the small country has become a world leader. Consider some of the following statistics on what Israel has:

• The highest number of PCs per capita in the world;
• The highest number of university degrees per capita in the world;
• It produces more scientific papers per capita than any other nation – by a large margin (109 per 10,000 people) per year; and
• Has one of the highest per capita rates of patents filed.

MS’ first foreign facility

The Microsoft partnership with Israel goes back a long way. Back in 1989, Microsoft opened its first foreign branch in the world. It was in Israel and had a mere three employees.

LEFT: One of Microsoft Israel’s Research and Development Centres

But it wasn’t long before the newly-named Microsoft-Israel started to grow and to make a significant contribution to the development of Windows products.

Microsoft built their first foreign-based research and development (R&D) facilities in Israel and the company regularly invests in, partners with or purchases Israeli tech start-ups.

Most of the Windows NT (server software) and the then-revolutionary XP operating systems developed in the 90s were developed by Microsoft-Israel.

The Israel Research and Development Centre was Microsoft’s first outside of the US, There are now four such strategic regional development centres in Israel – which, according to the Microsoft website, “…are home to some of the company’s most exciting and innovative technologies.” The Israeli R&D Centres are strategically situated in several locations in the country;

Along with its core R&D and incubation activities, Microsoft-Israel is engaged in outreach activities to local communities through its Unlimited Potential Program;

Microsoft’s – one of the company’s R&D Centres in Israel

Bill Gates visited to Israel for the first time in 2005 and signed a cooperation agreement with the Government of Israel, establishing a program to support Israeli start-ups in developing innovative technologies and bringing them to the global market.

Israel has far fewer tech graduates than the US, said MS CEO Steve Ballmer a few years back. But, said Balmer, the country boasted the highest number of Microsoft workers per capita of any place on earth.

Some of MS-Israel’s major successes are:

• Developing the world’s largest document management system for the Israeli Ministry of Defence;
• Microsoft Corporation credits Microsoft-Israel for developing the largest active directory in the world. This system, which helps manage identities and relationships that make up network environments, was created for an Israeli health fund that has 3.7 million users;
• Primesense, from which Microsoft licenses 3D camera technology, key to Microsoft’s Kinect gaming system. A number of MS technologies were generated in Israel: Microsoft gateway VPN technology; Microsoft Security Essentials anti-virus suite; and the recommendation system for Xbox systems;

RIGHT: In Jerusalem, all the tech companies aspire to be in the Jerusalem Technology Park – part of which is shown here

• Microsoft is continually expanding its R&D facilities in Israel;
• Microsoft-Israel and SAP Labs Israel (a division of the giant German software manufacturer) initiated “Mendocino” – a jointly-owned product enabling access to SAP business processes and data via Microsoft. This is now offered to both companies’ clients globally;
• The Microsoft Accelerator for Windows Azure was developed at the Microsoft-Israel R&D Centre;
• Microsoft Corp has invested millions of dollars in the Microsoft Technology Centres in Israel. These serve mainly for the building and sale of IT infrastructure products and functions as a place where company reps spend several days in developing customised solutions with Microsoft-Israel staff;

RIGHT:Israeli Tourism has its fair share of the spin-off all year round as executives fly in and out, MS Corporation uses Israel to shmooze and develop for their clients – and most of all from the “Think Next” annual expo

Another positive spin-off of the amazingly close ties between Israel and Microsoft Corporation is “Think Next” – a Microsoft event which has become the most prestigious event in the Israeli high tech industry.

It provides an annual centre-stage for industry leaders, mind provoking speakers and ground-breaking developments. Says the corporate website: “A celebration of innovation, it brings together dozens of demos, from companies, big and small, in a variety of tech fields – offering everything that’s new – not just from Israel but from around the world.

LEFT: Microsoft-Israel’s R&D Centre in Herzlia

The event, which grows incrementally every year, does wonders for the Israeli hospitality industry as well.

Having proven its value to Microsoft Corporation with the development of their three most successful new products in the 90’s, it was through Microsoft-Israel that Microsoft Corporation went shopping for future products and development centres,

Microsoft’s next big buy was to acquire Panorama, an innovator of business intelligence solutions in 1997. The following year they made their first venture capital payment in Israel by investing in the Orion Israel Fund l – part of the international AIG Global Investment Group

Leading up to W/10

Microsoft went on to acquire WebAppoint for $10 million in 2000, the year before they bought Peach Networks Ltd., a provider of technology for enhanced TV services for digital television for $72 million. This was followed in 2002 with the acquisition of Maximal Innovative Intelligence for $20 million.

In 2003 Microsoft acquired Pelican Security, a security software start-up for $300 million and later, Gteko, a provider of automated technical support for personal computers and electronic end-user devices for $120 million.

By 2006 Microsoft was buying more than a company a year and it acquired Whale Communications, a developer of secure sockets layer (SSL) and virtual private networks (VPN) vendor for $76 million. It turned the company into its second R&D Centre in Israel.

In 2007 Microsoft’s large Israeli acquisition was a start-up, Secured Dimensions, with its patents and technology for the protection of applications. Then they bought ad agencies Yadata and Kidaro, seeing the need to create an innovative visualization solution company.

LEFT: The Azrieli Towers in Tel Aviv is the place to be – a technology hub within a land of  technology hubs

By 2012 Microsoft-Israel was outperforming most of the company’s sites in respect of R&D and it was in the small Mid-Eastern innovation hub that the accelerator for Windows Azure become a unique project, the first Microsoft accelerator of its kind anywhere in the world.

The accelerator is located in the Microsoft-Israel R&D Center in Herzliya Pituach and focusses on assisting start-ups to get going.

All in all, this is a good partnership which turned into a great one. And, today, possibly, an inseparable one!