Microsoft Looks to Israel for Innovative Boost


Israel is on the radar of the high-tech giant Microsoft, which is seeking to reassert its preeminence as a global-scale innovator.

Suffering from a slump in global PC sales, Microsoft is looking to Israel for innovation from its developers and acquisitions, as well as local startups, according to Bloomberg.

“We are trying to create assets for the company, and we recognize that we are ‘Start-Up Nation’ and we can provide innovation,” Yoram Yaacovi, general manager of the Microsoft Israel R&D Center, said in an interview in Tel Aviv, referring to the title of a book on the country’s entrepreneurial culture.

Microsoft didn’t discover Israeli technological prowess yesterday; since 1989, it has acquired seven companies and made four strategic investments in Israel, where it employs 800 people, including 500 in research and development.

The focus is on business intelligence for cloud computing, said Yaacovi. Resulting products, such as an Excel tool for the cloud that was integrated into Office 365 BI software, help give companies a better handle on the often massive inflow of data.

“Business intelligence is an area of double-digit growth” for the software maker, said Yaacovi. “We in Israel do all the cloud-based business intelligence for Microsoft. We can envision business intelligence migrating to the cloud and then we will build it in Microsoft.”

Global PC shipments fell 14 percent to 76.3 million units in the first quarter, according to Interactive Data Corp. The drop was the worst since IDC began tracking shipments in 1994.

“It is important to understand what Microsoft is seeking in Israel,” said Yaacovi. “It’s not a big market and labor isn’t cheap. What it is looking for is technology advantages and entrepreneurial spirit.” Chief Executive Officer Steve Ballmer describes Israel as Silicon Valley Junior, he added.

Microsoft invested more than $700 million in Israeli acquisitions between 2002 and 2009, according to Israel Advanced Technology Industries.

Microsoft’s Israeli purchases include internet security company Whale Communications, data-organizing specialist Zoomix Data Mastering, Ltd. and Gteko, a maker of networking and support software. The company met with more than 600 startups last year in its quest for acquisitions, Yaacovi said.