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The iPhone can run a lot of applications. Some of them are simple, some, like several of the games, are complex. Whether you think of it as such or not, the iPhone is a computer. Soon, it can be made to look more like a traditional one.

A company named Olo Computer has a new product coming soon that is basically a netbook (a small laptop) with a built-in dock for the iPhone. The dock, which resides where a trackpad would be on a regular laptop, apparently allows you to run what is on your iPhone on the netbook’s larger screen. With its small camera above the screen, keyboard with small spaces in between the keys and pure white case Olo’s device even looks like a MacBook (at least until the new ones come out on Tuesday).

But the picture of the device on Olo’s site is deceiving. The image on the screen shows the computer running Apple’s OS X operating system — the real version, not the version that runs on the iPhone, as iTWire points out. So unless Olo is planning to install OS X on its systems (which Apple doesn’t allow), there is no way the netbook could pull information from the iPhone to run full OS X.

It’s not really clear what the Olo system will be able to pull from the iPhone. If it can completely recreate the iPhone user experience on a larger screen while you use the iPhone’s touchscreen itself to control everything, that would be pretty cool. But how would the system know to use the full-sized keyboard of the device rather than the iPhone’s keyboard if you’re using that to control other aspects on screen?

It would seem that Olo will have some kind of customized application for the iPhone to handle the transition to the netbook screen, but would Apple allow such an application in its App Store? Maybe, or maybe not. Apple has come under fire for rejecting some applications that compete with its own apps. Apple also might not like one that changes the way the iPhone is used.

If it works, such a device could be very useful — especially for heavy travelers. Or it could be another Palm Foleo — a similar device for Palm that was cancelled shortly after it was introduced in 2007.

Just because Google will soon release its mobile operating system Android, it’s not ignoring the iPhone. In fact, the online ad giant is preparing to offer advertisers a way to tailor ads for iPhone users, according to Adweek.

For example, a normal American Airline web ad would offer a link to American’s site where users could buy tickets. An iPhone-specific ad might let you call American with just the push of a button or take you to an iPhone-customized site.

In its article, Adweek cites unidentified ad agency executives who have been briefed on Google’s plans. Google itself hasn’t confirmed the report. This seems to match what we’re hearing about Google’s warming attitude towards the iPhone. For example, we’ve been told about a noticeable shift of tone in presentations given by Android’s Rich Miner, away from a generally competitive stance to one that’s closer to, “We’re all in this together.” (Not that Google was ever particularly hostile. The first iPhone app I downloaded was Google’s.)

That attitude makes sense, given that the iPhone really offers some rich advertising opportunities, and 10 million of them have been sold so far.

The question now is, what kind of functionality will Google and its advertisers come up with, and how will it stack up against iPhone-specific features offered by ad networks AdMob and JumpTap.

[photo:flickr/rustybrick]

Twofish has raised $4.5 million in a second round of funding for its business of creating the economic infrastructure behind virtual worlds. The deal is another indication that the virtual goods economy is heating up, even as the real world economy spirals downward.

The Palo Alto, Calif. company made the announcement at The Virtual Goods Summit, a packed conference in San Francisco attended by several hundred people this morning. Twofish creates a “digital resources planning solution,” sort of like enterprise resource planning (ERP) for virtual worlds. The Twofish Elements solution is an economic infrastructure that allows virtual world creators to run virtual banks, track inventory, and set up an e-commerce system.

The company essentially outsources the process of setting up the system so that the game creators can focus on building a quality virtual world. Twofish can increase profits, better engage customers and reduce fraud. Its primary competition comes from game companies that wants to do this kind of work internally, but I’ll mention a few others in a second.

The whole virtual goods movement, popularized in Asia, offers an alternative business model to online game subscriptions. Strategy Analytics says virtual goods already make up a $1.5 billion industry. We’ve covered the topic, particularly on Facebook apps, previously. That makes it a viable alternative business model, along with advertising or “try before you buy” downloadable games. Virtual goods and ad models allow game companies to offer “free to play” games. Again, those are popular in Asia and that model is migrating to the United States. Here, we have yet to see a gigantic hit.

If you’re playing a fantasy game, for instance, you might not mind paying 50 cents for a better sword so that you can take on the ogres. The Twofish technology handles the transaction in real time. The investors include Triplepoint Capital, Rustic Canyon Ventures, and Venrock.

Lee Crawford, chief executive of Twofish, is up on stage right now. A couple of his competitors, Dan Kolkowitz, head of Playspan, and Chris Donahue, of Live Gamer, are also on the same panel. All of them can create a secondary market for gamers, who sometimes want to create their own virtual items and sell them. Donahue says that Live Gamer acquired the secondary market for Sony’s online games this year.

Crawford said the company’s solution gives real-time data so game-makers can monitor just how much money is coming in from virtual goods. One of the tricky things to balance is pricing, since users may balk at high-priced items that don’t do much for them in the game.

Susan Choe, chief executive of online games company Outspark, says that you need $200,000 in revenue a month before you consider adding the secondary market, which comes with costs. Choe noted that one company on the stage promised her that a secondary market could triple the virtual goods revenues, but she isn’t quite convinced that it is happening yet.

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The Dow Jones Industrial dropped nearly 700 points in the opening minutes of trading today, as global investors continue to see no firm answer from U.S. leaders about how to solve the mess we’re in. Those investors, used to decades of U.S. confidence — confidence that we showed even in the aftermath of 9/11 — are panicked because we’ve so far shown no resolve about what to do now that the bailout package doesn’t appear to have worked as it should. Fear has taken over.

The market did recover its losses briefly after the open, but then turned south again. As I write, it’s in free fall. Just a few minutes ago, the Dow was down 3.7 percent (see image above). Now it’s down more than six percent. This is a wild ride. [Update: The Dow recovered and closed only 1.5 percent down]

At some point, we’ll hit a bottom, when savvy investors kick in and start buying stocks they consider undervalued for the long haul. But there’s just too much uncertainty right now to see where that point is. Over the last year, we’ve lost more than 40 percent of the stock market’s worth (Dow is down more than 41 percent over that period, while the S&P, a wider reflection of the overall market, is down more than 44 percent; the Nasdaq is down more than 43 perent). We’ve lost $10 trillion in market value.

President Bush sought to assure the markets, by saying the bailout package will work but just needs some time. Other economists point to continued problems, such as the wipeout of the multi-billion dollar market for preferred securities and the lack of support for failed bank Lehman Brothers’ counterparty obligations, which has undermined mutual trust between banks and traders. The debt markets thus remain locked.

Two banks, Morgan Stanley and Goldman, are reeling. Shares in Morgan Stanley dropped 24 percent lower early in today’s trading, after dropping nearly 26 percent yesterday. Mitsubishi UFJ Financial is considering an investment in the bank, and investors fear it might fall through. Goldman was down 15 percent.

In another reading, bond trader John Jansen says this is all a “giant systemic margin call and the means to meet the margin call is via sales of liquid assets. So, the wreckage floating in the street results from those sales.” Notably, he says the move by funds into private equity (where money is locked away for years) where there was more “glitz” than offered by the stock market, meant that there were fewer places to get immediate liquidity, leaving U.S. Treasuries as one of the favored places.

This reading is compatible with the series of slides shown by Silicon Valley venture firm Sequoia Capital to its portfolio companies this week. The slides, 56 in all, attempt to explain how forces such as increased productivity and low rates set by the Federal Reserve created a bubble in consumer spending, which set into play other forces that have led to a crack in the wider economy, such as a lowering of advertising growth — and a trickling down to the valley in the form of a “death spiral” for companies that don’t take tough, cost-cutting action. Screenshot of some of those slides below:

Here’s the latest action:

Stepping up the intervention? The U.S. and the United Kingdom are converging on a similar solution to save the global economy. The nations may begin working together to come up with a new plan to stave off a global economic meltdown.

Following the Dow’s fall, Asian markets reacted with panic: Japan’s Nikkei 225 index closed down 9.62 percent. Benchmark indices in other Asian countries were down 4 percent to 8 percent.

IBM sees earnings light in the darkness — Despite the sad state of the economy, IBM saw its third quarter net income rise to $2.05-a-share, 3 cents higher than analysts’ estimates, according to The New York Times. These results were announced after the market closed today. Not surprisingly, IBM’s stock is higher in after-hours trading.

New MacBook spec(ulation)s? — Cult of Mac has put together a list of feasible specs for the new MacBook set to be unveiled on Tuesday. Nothing all that wowing, mostly design and price changes.

RIM ripe for a takeover? — The maker of the BlackBerry device has seen its stock price drop dramatically over the past several months. Reuters speculates that Microsoft could be interested in buying them if the stock continues to fall.

Twitter adds replies to mobile site — Twitter’s native mobile site is still pretty lame, but at least now you can actually use the communication tool to you know, talk to people.

South Park is getting an iPhone app — Stream clips, get wallpapers, read news about the show. It all sounds pretty basic, but it looks cool. And it’s undoubtedly funny. Boing Boing has the images.

The Intel and AMD war spreads — The two chipmakers are now fighting over AMD’s plans to make the Foundry Company with the help of the Abu Dhabi government. Intel thinks such a venture could effect licensing agreements. The Bits blog has more.

Advanced Gmail IMAP controls — Gmail Labs has been pumping out new features, but now it has one that is more useful that a drunk email preventer. Advanced IMAP controls allow users to tailor which labels and boxes to send via IMAP. The Gmail Blog has more.

A new 13-inch MacBook on the Apple invite? — The invitation for Apple’s event to unveil the new MacBooks on Tuesday appears to feature an all-metallic 13-inch notebook — which currently doesn’t exist. MacRumors has more.

Investor wants Microsoft to buy Yahoo for $22-a-share — You knew this was coming. As Yahoo’s stock continues to plummet, the wolves are coming out. Consider the dead horse kicked.

The oncoming advertising recession looks likely to knock one business media source out early. A source has told Cityfile New York that Condé Nast, one of the nation’s biggest magazine publishers, may soon fold Portfolio, its still youthful business glossy.

More problematic than anything is Portfolio’s monthly format. During a financial crisis, readers want information that’s fresh that day — if possible, fresh that hour or even minute. Magazines are lagging badly, with banks collapsing and new crises arising during a single publishing cycle. As Cityfile points out, Portfolio was still examining Citi’s survival prospects while Washington Mutual and others were folding.

But Portfolio’s existence has seemed tenous since its beginning. When I was still at Business 2.0, before that magazine closed its doors, the staff passed around the May 2007 first issue of Portfolio with a certain morbid amusement. Our publication was headed for its grave, and most other business rags were struggling, but Condé Nast had decided to stick its neck out with a thick, glossy-paged monthly full of beautiful photography and insidery puff pieces about famous executives. Some called it painfully bad.

The reality disconnect seemed almost palpable, but there was also an edge of uncertainty: Maybe they were really onto something. After all, around half of those 335 pages were advertisements for various high-end goods and services.

Today, it seems that even new media publications (like us) are having to buckle down and worry about whether their advertising budget will remain stable. Portfolio, for its part, is giving away 22 percent of its issues, and only sells 15 percent of those placed on newsstands.

And for those who might suggest that magazines are only troubled because they’re run by stodgy old companies, here’s one snippet of news that apparently went unreported: 8020 Media, the startup that publishes user-generated titles, recently gave up on Everywhere, a magazine dedicated to travel photography and stories. It’s a hard business, and more magazine deaths may be on the horizon.

A lot of people have already expressed joy over the confirmation that Apple will be unveiling a bunch of new MacBook laptops at an event Tuesday in San Francisco. But to most people (not white-collar tech types), Apple computers come with one problem: They’re expensive. Given the current economic crisis, Apple may have some trouble on its hands trying to sell a premium product going into these tough times.

But the hot rumor yesterday indicated that Apple may be preparing a new price range for its laptops. The significant part is that the low-end models would supposedly start in the $800-range. If true, that’s great news considering that Apple has never really made a laptop for less than $1,000. But you almost have to wonder: Is that even enough of a drop?

Former Engadget editor Ryan Block more or less wonders the same thing when he asks if the time is really right for Apple to be launching new expensive laptops. He notes that, while the wheels for the new machines were set in motion long before Apple could have known the current economic situation, this might be the perfect time for a netbook — a cheap sub-laptop computer — rather than new MacBook Pros.

Most netbooks are well under $500, with many about half that cost. It’s probably not too likely that Apple would dip all the way down to that price range, but if it wants to keep growing its market share in the times we find ourselves in, it might want to consider that option.

People’s portfolios have been slashed. After today’s free fall of over 7 percent, the Dow Jones Industrial Average is nearing the 8,500 mark — a level it hasn’t been at since 2003. The Nasdaq, where Apple’s stock resides, is doing just as bad, at 1,645.12 — again, a level it hasn’t been at since 2003. Apple’s stock itself has a chart that even looks like a cliff just in the past two months. It’s gone from near $180-a-share in early August of this year, to $88.74-a-share today.

A sub-$1,000 laptop unveiled on Tuesday would be impressive to a lot of people, but long term, given the climate we’re in, Apple may want to go even lower. And maybe that’s the plan for the Mac Tablet computer, which probably isn’t a part of Tuesday’s event. If that’s the case, Apple needs to hurry up with those if it wants to keep up.

The stock market plunged again today, sending the main stock markets down to their to their lowest level in five years. The Dow dropped 678 points, or more than 7 percent, crashing below 9000. The Nasdaq fell 5.47 percent, and the S&P 500 fell 7.62 percent.

The continued drop has sparked increased talk by the government and experts about the need for a takeover of portions of the banking sector — in other words, a move by the U.S. Treasury to claim large ownership stakes of the big banks to help prop them up. Such socialist action is remarkable, considering many leading U.S. investors ridiculed China just a couple of years ago for Beijing’s active support of its banks. Many U.S. pundits predicted China’s bank system would collapse because of bad loans. But Chinese regulators took hard, quick action last year, slamming the brakes on new bank loans, instead of having to bail them out after they became insolvent. The Chinese may yet have problems. But now we’re being forced to take a serious look in the mirror, and we don’t like what we see.

The decline today was exacerbated by the move by Standard & Poors Rating Services, a credit rating agency, to signal a possible cut to its rating on General Motors Corp.

Consider what happened with IBM’s stock today. The company reported a robust 20 percent gain in third-quarter profit, and did something that should have had everyone buying its stock: It announced it was confirming its earning forecast for this year. But the stock still fell $1.55 to $89, as the entire market was routed at the end of the day.

Meanwhile, popular anger is likely to grow about reports of some of the excesses at places like American International Group (AIG), where executives hid a range of its risky financial products from auditors as losses mounted. Now we’re learning that the executives spent hundreds of thousands of dollars on a posh California retreat just days after getting a federal bailout of $85 billion. Now AIG has the cheek to ask for $37.8 billion more to save it, and it it is getting the money because its too big too important to let go out of business.

The market is dividing into the haves and have-nots. Mechtronix, a Montreal, Canada-based maker of multimillion dollar flight simulators, raised $39 million in private equity from Richardson Capital a couple of weeks ago. The company started looking for financing alternatives a year ago, as it was clear that the IPO market was shutting down, and the credit market was tightening. It was lucky to raise the cash and close the deal. “Right now it’s hard to say what’s going to happen,” said Xavier Herve, chief executive of Mechtronix. “It’s ridiculous to say a financial event of this magnitude won’t affect business. But I’m waiting for someone to show me crystal ball.”

|The have-nots are all those companies that weren’t lucky enough to raise money before last week. To start pitching for money from investors the first time would be very difficult indeed. Most investors are scrambling to make sure their existing investments are sound.

Well, Apple sure took their time getting those invites out. As has been speculated for several weeks now, Apple is in fact holding an event on October 14 to unveil its new line of MacBook computers. The invite, which simply reads: “The spotlight turns to notebooks,” is expected to showcase a revamp of Apple entire line of portable computers.

The invite shows what appears to be a dark metallic notebook shrouded in shadow. Dare I say, it’s made from aluminum? There has been a lot of speculation that the real revolution in these new notebook is the process by which they are made. Apple may be taking total charge of production of the MacBooks (rather than outsourcing it to companies in China and Taiwan) and building them using a new process involving lasers and water jets that carve a case out of a brick of aluminum.

Also, the fact that simply one notebook is shown on the invitation may or may not point to a unification of the entire line to a single, all-aluminum look, as has been rumored.

Yesterday, several photos started popping up online which were said to be of the new MacBook frames. It now appears that at least some of those images are the real deal, sources tell AppleInsider. The bigger rumor is that Apple would unveil price points for the new notebooks starting at $799 — that is still very much a rumor.

Naturally, a few sites (including us) said yesterday that Apple may not unveil the device on October 14 since that was less than a week away. Only once in the history of its events has Apple sent out invites with less than a week to spare. In 2005, Apple had an event that it alerted the media to only 5 days before (the same amount of time as today’s heads-up), but that was for some relatively unexciting innovations in its high-end Pro lines of a number of products. If this new event is as revolutionary as the hype is making it out to be, everyone will want to be there.

Apple caught some flack last month for allegedly telling members of the New York media to fly out to San Francisco for its event. The event, which yielded new iPods, was perceived as underwhelming by some — many of whom were hoping for new notebooks as well. Today, Apple was kind enough to give those same East Coast media members 5 days to book their flights back out to San Francisco.

Luckily, we’re already here, but God forbid we had other plans or something.

Remember that pesky Apple non-disclosure agreement (NDA) that prevented iPhone application developers from talking about their creations even after they were released? Well it’s now a little more clear why Apple relaxed those rules: The company is launching a world tour aimed at iPhone app developers and it’d be a shame if they had nothing to talk about.

The iPhone Tech Talk World Tour schedule has just been revealed on the Apple Developer Connection website. On it you’ll find a schedule for stops all around the world starting at the end of this month in San Francisco, Calif. and ending in Stockholm, Sweden in December.

Apple writes on the site:

Apple technology evangelists and engineers will soon be traveling the globe bringing iPhone development expertise to a city near you. Learn about the tools and technologies you’ll use to create great iPhone applications, then work with the experts to optimize your code, refine your user interface, and apply the knowledge you gain from the sessions to enhance the capabilities of your iPhone application.

All of that would have been basically impossible if the NDA were still in place for completed apps. Finally, we may start to see less buggy first versions of apps as developers can learn from the mistakes of previous ones.

And if you’re really good you may even gain a strut in your step like the developers in the iPhone Tech Talk World Tour logo.

The events will be free to go to, but you need to register as space is limited. You can do that on the site.

The Internet’s given musicians many new avenues for promoting their music. Maybe too many. Even with a dedicated person to market your band online, you’re bound to miss some, and who knows, that could be the one that helps you take off. That’s where ArtistData comes into play.

The information synchronization service, which launched a public beta in June, lets musicians and promoters more easily spread their information to the vast array of music-oriented and promotional sites out there. Right now, the service focuses primarily on syncing concert information across various sites, including obvious venues like MySpace, Eventful, Last.fm and Grooveshark (a new addition), but also less obvious ones like Twitter, PureVolume and AmieSt. ArtistData keeps all the information you put on one, up-to-date with the information on the others.

Some new features the service is launching today include a website widget that artists can put on their sites to easily keep all dates for things like tours in sync with other networks they’re on. iCal subscriptions and SCV Exports are also new for better desktop calendaring support and to import old data into calendars. And RSS feeds are now available to give more access to the artist information stored in their systems. All these features are free.

In terms of the service making money, ArtistData president Brenden Mulligan declined to talk about the specifics at this point, but says that they’ve come up with a “new and innovative revenue that involves helping the artists and music sites make incremental revenue.” That’s vague, but the service claims to be expanding quickly so we should know more soon if its strategy’s working or not.

It should get more interesting when it expands beyond just concert data and can do things such as sync blogs, news and perhaps even music eventually.

Google signed a deal with satellite imagery company GeoEye back in August to get exclusive images from the company’s new GeoEye-1 satellite. That satellite took off in early September and yesterday it snapped its first images 423 miles above the Earth’s surface, reports Wired. The image (above) is pretty remarkable.

The world’s highest resolution satellite puts current commercial use imagery to shame — including the photos currently used in Google Maps and Google Earth. When Google gets more images like this from GeoEye-1, it’s hard to imagine anyone wanting to use any competitor’s images.

ReadWriteWeb also put together a nice comparison picture (below).

What’s amazing is that as good as these pictures look, they could be even better. You see, the U.S. government is also using the GeoEye-1 for national security purposes. Because of that, it restricts the images companies like Google can use to 50 centimeters or worse resolution — even though the satellite is capable of 41 cm resolution. Not that a restriction that close really matters — that’s only for black and white shots — color images are limited to 1.65 meters.

GeoEye rival DigitalGlobe is Google’s current provider of satellite imagery. Rivals including Microsoft use DigitalGlobe as well. Expect them to push for an upgrade quickly when they get a load of these pictures.

For a long time, Microsoft’s game console, the Xbox, was known best for its violent sci-fi shooting games.

But the hardcore shooter games stood in the way of Microsoft’s ability to cater to the broader audiences that both Sony and Nintendo reached.

While Microsoft tries to break away from that reputation, its also trying to keep the millions of its hardcore gamers satisfied. Today, in Japan at the Tokyo Game Show, it unveiled its latest shooter game: “Halo 3: Recon.” The game will debut in the fall of 2009 and is developed by the newly independent Bungie team. It’s a new chapter in the saga that does not star “Master Chief,” the hero of the first three games. It’s a hardcore shooting game and takes place in the Halo universe.

Another game coming in 2009 is “Halo Wars,” a real-time strategy game (played from a bird’s eye view) from Ensemble Studios. The game had a troubled development history, and Ensemble is going to shut down after Halo Wars ships.

These core franchise titles will keep the pressure on Sony. Another form of pressure will come from product bundles. Microsoft said it will bundle two free games “Lego Indiana Jones” and “Kung Fu Panda” with its $299 and $399 Xbox 360 models. And it will bundle six mini Xbox Live Arcade titles with its $199 Xbox 360 Arcade console (which has no hard disk). Bundles sometimes help budget-conscious gamers to come out and buy a console, but they aren’t received as well as price cuts. (Microsoft cut prices in September on its consoles and analysts are expecting a doubling of monthly sales as a result).

Other games coming in 2009 include the much ballyhooed zombie-killing game “Resident Evil 5,” which will be out on the Sony PlayStation 3 at the same time, and “Tekken 6,” a well-known fighting franchise from Namco Bandai. Earlier this summer, Square Enix announced that “Final Fantasy XIII” would come to the Xbox 360, another first and another defection of a once exclusive Sony franchise. Square Enix is also making “Star Ocean: The Last Hope” and “The Last Remnant” for the Xbox 360.

Tekken has never been on a Microsoft console. It shows Microsoft has penetrated the deepest ranks of Japanese game developers who were once loyal only to Sony or Nintendo. While Microsoft’s Xbox 360 console has a miniscule market share in Japan, the company continues to invest in hardcore titles for the Japanese market. Q Entertainment will follow up one of its original Xbox 360 titles with “Ninety Nine Nights II,” a samurai fighting game aimed at hardcore Japanese gamers. Japan has seemed like a lost cause for Microsoft for many years, but it continues to invest for the long haul.

In the meantime, “Gears of War 2″ from Epic Games (see our interview with lead designer Cliff Blezinski) is going to have to carry the 2008 holiday season for Microsoft’s hardcore gamers. Microsoft will also release the new version of Xbox Live online game service on Nov. 19. The service will feature a new “dashboard,” or user interface, that is like flipping through a series of 3-D music albums (think Apple’s Cover Flow). Users can also create their own avatars, or online characters, who will represent the user’s online persona.

The new console software will move Microsoft much closer to its goal of making the Xbox 360 into a hub for living room entertainment and a gateway to the Internet. The Xbox Live service now has 14 million members, though Microsoft doesn’t disclose how many pay a subscription fee and how many use the free version.

The November launch will usher in Microsoft’s partnership with Netflix, which will provide 12,000 movies and TV shows for gamers to download onto their Xbox 360 hard drives on an on-demand basis. Microsoft will also release its Community Games channel on Xbox Live. That will consist of games created by users using Microsoft XNA game development tools. We’ll see if hobbyists can really create good games.

The company did not unveil a rumored add-on Blu-ray player for the Xbox 360. Other sites have reported this as fact, but Microsoft declined to comment on it. There aren’t too many surprises, at least for the holiday 2008 season. We’ll see if this is enough for Microsoft to hold its No. 2 spot behind Nintendo.

The Defense Advanced Research Projects Agency (DARPA) is the branch of the United States Department of Defense that works on crazy new technology projects for the military. Many of their projects sound more like science fiction or dystopian movie plots instead of feasible things. A new project doesn’t sound all that advanced, but it is potentially scary: Project Gandalf.

Gandalf, presumably named after the main wizard from J.R.R. Tolkein’s Lord of the Rings trilogy, is the codename for a program researching the use of radio frequency (RF) geolocation and emitter identification using specific emitter identification (SEI) for what it calls “specific signals of interest,” according to The Register.

More details of the project can be found in this PDF file. As you might expect, it’s dense, but basically, it sounds as if the government is looking for a way to use some sort of portable device to track other portable devices that emit signals — such as cellphones or radios. As the Register points out this kind of technology exists in certain things like surveillance aircrafts, but this new project seems to be intended for use by people on the ground in presumably hostile areas.

News of this project comes at an interesting time. Location-based services are quickly becoming hot items in consumers electronic technology — especially now in the United States with very consumer-friendly devices such as the iPhone 3G containing GPS chips for the first time. Location is becoming a part of social networks and is even spreading to web browsers now.

While I mainly write about the upside of location-aware services, projects like Gandalf should serve as a warning for the potential downside of such things. Imagine if you were always transmitting your location and the government could use a device to track you at all times. I think we all know that is coming eventually, whether we like it or not.

With location-based services, we make it very easy to track us, Project Gandalf is probably meant for things harder to track, as The Register notes. Hard to know what exactly that would be, but maybe something like your iPod touch (great news for those of you paranoid about having an iPod with a cellphone signal — the iPhone).

Whatever the point of the project, it’s interesting that the government is also thinking about location services just as many consumer technology companies are.

One could say that the steady stream of new iPhone applications since June has created a lot of noise within the App Store. Now there’s an app that literally lets you create noise. It’s kind of pointless, but also kind of cool and beautiful. And it’ll get some buzz simply because of who made it: The father of ambient music, Brian Eno.

The application is very simple. You start it up and it asks you if you’d like to listen or create music. Even if you choose to listen, you can add your own twist to the music. Making the music is as simple as tapping the screen, which releases a note and puts a colorful circle on the screen where you hit. If you want more noise, tap faster. You can also change the “mood” of the notes in the option menu.

The application is actually a collaboration between Eno and musician/software designer Peter Chilvers (the best name in ambient music, I think). Eno, who is also known for producing popular albums by artists like U2, Talking Heads and Coldplay, has a long history of using technology to experiment with his music, as The Apple Blog notes.

Eno describes Bloom as “an endless music machine, a music box for the 21st century.” That’s true on a certain rudimentary level, but on another it’s just another neat way to show off the iPhone’s touch capabilities and high resolution display.

Unfortunately, Bloom also broke my iPhone 3G briefly. I would advise against trying to take a screenshot of Bloom while it’s playing music. After I did that I could not quit the app — it just kept on playing. When I hit the button to lock it and turn off the screen it stopped, but when I turned it back on, Bloom was still open playing that beautiful ambient music — which had suddenly become very annoying (funny how that happens).

A hard reset of the device fixed things, but it took a few minutes to reboot. I’ll cut Eno and Chilvers some slack though — their app is brand new, and plenty of brand new apps have bugs.

Bloom is available in the App Store for $3.99. Below is a quick video I took of me playing with it in a coffee shop (sorry about the background noise).

Bloom Video from MG Siegler on Vimeo.

[Editor's note: This is an Op-Ed piece by Todd Kimmel, a principal at venture capital firm Advanced Technology Ventures. Kimmel was previously an entrepreneur-in-residence at ATV, which led him to co-found Coskata, one of the most promising cellulosic ethanol startups on the market, in 2006. Early this year, he moved back to ATV to focus on cleantech investment.]

Traditionally, summer in Silicon Valley is a slower time, but this wasn’t the case with summer 2008. According to the Cleantech Group, during Q3 2008, $2.6 billion was invested in 158 companies across North America, Europe, India, and China, with $1.75 billion going to US-based startups and, more interestingly, $1.1 billion of that going to California-based companies.

It was a busy summer. And that was just what we needed, because it’s going to be a long winter. Some investors are warning of a bubble in the cleantech market, but the economic situation in the US will undoubtedly take care of this. The IPO window is closed and likely won’t re-open until 2010.

This is not good news for anyone, except early-stage companies that plan to have their heads down for the next year or more working on proofs of concept and reducing technology risk. Those companies will be in a better position than those in need of capital to scale.

We also may see the competitive gap between new startups and established players shrink over 2009 as early-stage companies are afforded the opportunity to catch up with later-stage companies that have no choice but to wait for the IPO and debt markets to re-open.

However, the top tier of late-stage companies may have some opportunities. While some of those companies may have hoped for a liquidity event in 2009, that won’t likely happen, but it’s not the end of the world for them.

Capital-efficient companies and sector winners that can attract follow-on capital in any environment, and thus weather the next 12 to 18 months, may be able to time their development to come out emerge stronger and tougher in a market that puts a premium on growth companies. Or if you’re a later-stage company that can get to break-even with a capital infusion, you can spend 2009 building out your customer base and growing share.

Either way, in these difficult times, many companies will turn to strategics, sovereign funds, and governments that have cash reserves set aside for outsourced R&D and next-generation technologies. We’ll definitely see these three groups playing a bigger role in cleantech financing through 2009 and into 2010. Ultimately it will be a long game of survival of the fittest.

Of course, there will be a number of companies that won’t endure this downtown, and there will be a natural balancing of an incredibly active and crowded market.

There Will Be Capital

Where will cleantech financings come from in 2009? I mentioned that we’d likely see dollars flow from strategics, sovereign funds, and governments, so that will help. Plus, according to the NVCA/Thomson Reuters, US venture capital firms have raised over $85 billion since 2006, so there’s plenty of capital out there. There’s also debt financing still available in the form of capital equipment financing, which is needed at the outset to fund key equipment for many cleantech companies.

Keep in mind that the bar will be raised significantly for new and follow-on funding milestones. Demonstrating that technology works in a lab may not be enough any longer. The companies that struggle most will be mid-stage startups are still in need of considerable capital to make a full demonstration of their technology. There will be little to no project finance to support growth in 2009.

Thus, companies will succeed by being capital efficient, or employing what I call a hybrid model. Hybrid plays are companies that have the flexibility and optionality to pursue a balanced commercialization model. For example, a hybrid company may have the potential to go to market with a product if project finance or strategic support is available. If not they can employ a licensing or partnership model to make it through.

And a few creative opportunities may remain for IPOs. We may see a couple US companies go public in Europe, where there’s a higher comfort level with alternative energy plays, or on the Hong Kong Stock Exchange in an effort to be closer to the Chinese customer base. With regard to merger and acquisition activity, there may be some value buys by large US and global corporates and sovereign wealth funds, but the best companies will hold out and approach the IPO market in 2010, or at least wait for a better M&A market.

All hope is not lost, but this is definitely a time for business basics, capital efficiency, creative thinking, and strategic alliances. Entrepreneurs: batten down the hatches, weather the storm, and be ready for 2010.

For investors, there’s more room for error with the early-stage investment, and we can use the downturn to our advantage. Later-stage mistakes are much more difficult to recover from, so early can be the best antiseptic. Go early or go late, but don’t get stuck in between. And if you have to go late, be very selective with your later-stage investments.