The acquisition of Israel’s 3DV Systems by Microsoft (MSFT) has been rumoured for a few weeks, but confirmation was given today at the annual press conference of Microsoft’s R&D Center in Israel, one of Microsoft’s four strategic regional development centers. The announcement comes just a few days after the Antitrust Authority approved the deal.

Project Natal, a revolutionary new way to play: no controller required. See a ball? Kick it, hit it, trap it or catch it.

Now it’s official - Microsoft (MSFT) has formally announced the acquisition of Israeli startup Zoomix, for an undisclosed amount, estimated at $20-30 million by market sources (according to Globes). Acquisition rumors were first reported about a month ago.

Following the acquisition, Zoomix’s team is set to join Microsoft’s R&D center in Israel, and Zoomix Accelerator, the company’s flagship product, will be folded in to the Microsoft SQL Server group. Zoomix operates in the Business Intelligence [BI] field, and develops technology to clear redundant data from company resources and unify original and consolidated data into highly usable structures. The company’s products, referred by President Michael Peretz as a “Firewall for Data Quality”, use artificial intelligence technology and require minimal user intervention.

VMWare (NYSE: VMW), the leading developer of virtualization solutions, has announced the acquisition of Israeli start-up B-hive Networks for an undisclosed sum. Industry experts estimate the price range at tens of millions.  Following the merger in Q3 of 2008, VMWare plans to open an R&D center in Israel, based initially on B-Hive’s facilities and team in Israel.

B-Hive develops technology that measures performance across machines in virtual networks, by monitoring the latency and health of information transfer in the data center. Interestingly, B-Hive’s Conductor was selected as finalist in “Best of VMworld”, a competition held at VMworld 2007. Conductor is currently used by Yahoo, Facebook and eBay among others.

Following the sweet exit of YaData, Microsoft (MSFT) goes at it again and this time it’s Kidaro’s turn, an Israeli developer of desktop virtualization software for enterprises. The sum of the acquisition was undisclosed, but Globes says Israeli high tech sources estimate the deal to be in the 90 to 100 million dollar range.

Kidaro was founded in 2004 by three Israeli entrepreneurs:Ran Kohavi (serves as VP of biz dev), Itzik Levy (VP of R&D) and Ran Oelgiesser (VP of marketing). Two out of the three have successfuly sold companies in the past. The company has raised $14 million to date, from backers who are happy to report an exit today: Storm Ventures, Genesis Partners and most recently Opus Capital, who joined the other two in December of 2006. The investors will receieve a 500% return on their initial investment.

Amid an upcoming recession, Eyeblaster, an Israeli company competing with Google (GOOG) and Microsoft (MSFT) on online campaign management solutions, registered with the SEC for public trading on Nasdaq. The IPO is valued around $115 million according to CNN. Shares will be listed under the ticker symbol (EYEB). Eyeblaster said it will use the proceeds to cover operation costs and for future acquisitions.

Eyeblaster is an independent provider of online campaign management solutions and services to both advertising agencies and individual advertisers. The company targets online, mobile and in-game advertising using rich media ad formats. Eyeblaster was also one of the first avertising companies to tackle video monetization, though its level of success is unclear.

The Israeli exit list for 2008 continues to grow. Microsoft (MFST) announced yesterday the acquisition of YaData (literally means “you knew” in Hebrew), a provider of advanced tools for the discovery of unique customer segments. Exact deal terms were undisclosed, but the deal is estimated to be in the $20-$30 million range according to estimates from Globes.

Could Modu be the iPhone killer?

The product looks revolutionary. The Modu Mobile is a tiny cellphone, 1.5-ounce, 2.8-inch-long, that can be inserted into multiple jackets that enhance its functionality. In other words, the modu has the basic functionality of a cell phone: antenna, cellular radio, contact list, text messaging capabilities and a battery. It is packed with a large memory stick (1 G), that carries over your personal data (contacts, photos, music and etc), onto other devices, using low priced “jackets” or “sleeves” such as car stereos, photo frames, car navigation systems, clocks, toasters, laptops, cameras and more.

Founder Dov Moran knows a thing or two about carrying data from one device to another - he was the founder of Israel’s M-Systems, the original maker of USB flash drives, that was later acquired by Sandisk (SNDK) for $1.6M. Moran invested $5M in Modu from his own capital, and was joined by Sandisk, that predicted $1 billion annual revenue in 2011. In the official press release, Dov Moran, said:

Trailing after Facebook, MySpace will announce the launch of its Developer platform today, by opening the MySpace Developer Site to app creators around the world. Applications will be available to the users one month from today. This move could level the application development arena, given the fact that MySpace is the largest social network with over 300 million registered profiles. Although Facebook developers saw meteoric growth and despite the fact that it pioneered the application space, MySpace’s platform might be the tipping point of the app Industry.

What’s the developers angle?

In the Web 2.0 Summit back in October 2007, I attended a panel titled “Facebook as a Platform”. In the panel, moderator Dave McClure asked the top app creators on Facebook to answer the a simple question: ”what percentage of your company’s efforts are now devoted to Facebook versus other social networks?” Panel members Seth Goldstein of Social Media, Ali Partovi of iLike, Keth Rabois of Slide, and Lance Tokuda of RockYou were almost unanimous. Apart from iLike, all of them reduced their Facebook efforts to less than 35% in favor of “other things” opening up, referring to MySpace and LinkedIn. Have no mistake, MySpace’s announcement is no surprise for the big players. They’ve been preparing for this moment for months.

What’s MySpace’s Angle?

MySpace had almost a year to learn from every move made by Facebook. Unlike Facebook that used to be a closed network before apps were made available, MySpace has allowed users to embed external programs (widgets) into their profile pages from the start, but it required seeking for it out of the MySpace framework. Now, MySpace plans to build a social economy around it, by allowing people to browse and install apps from within the site and more importantly let the developers cash in from the ad revenue generated through their app pages.In an interview with the New York Times, Amit Kapur, MySpace’s COO said:“They are doing a great job at Facebook. They have a really cool set of tools and a really cool offering. But we have a legacy of doing this. We were the first social network to really open up to developers, and I see this as a natural extension of that. This is really just the beginning.”

In an effort to fight fraudulent transactions and boost trust in online purchases, Paypal, the online payment service of eBay (NSDQ: EBAY), bought Israel/California based Fraud Sciences for a whooping $169 million in cash.

Fraud Sciences is has developed online risk management tools over the course of five years, creating propitiatory technology that identifies fraudulent transactions and suspicious bidders before they impact, with high rates of accuracy. The company offered its customers insurance against Internet fraud - if Fraud Sciences failed to detect the attack in time, the customer was guaranteed his money back. Not bad. For PayPal and eBay, the acquisition is expected to enhance their proprietary fraud management systems and accelerate the development of next generation fraud detection tools.

The Israeli market received a great deal of media coverage in 2007. Some journalists lamented on the momentum and promise of the Israeli start up world; some sell-side analysts “shorted” the strength of the economy for a myriad of factors. Regardless of where you stand, its helpful to know who is saying what about the conclusion of 2007 in Israel and the potential reticent in 2008, the Year of the Rat.

What the Bulls are saying

S&P upgrades Israel’s debt outlook (Ha’aretz)

Following Microsoft (MSFT) and Google (GOOG), Yahoo! (YHOO) is officially coming to Israel - with a bang. The search engine’s penetration plan has two fronts: opening an R&D center in Haifa and entering the content business through an agreement with Walla! (WALA), the second largest Israeli portal, offering news & entertainment content, email services and search, making it Yahoo’s Israeli cousin.

Following the footsteps of Google and Microsoft, Yahoo has found a new home in the Holy land. It all began in July 2006, when Google opened its first R&D center in Haifa despite the Lebanon war at the time. It was an experiment, and the Israeli facility was not only the first in its region, but also only the fourth Google R&D center out of the U.S. The Haifa experiment worked well and Google proceeded to open its offices in Tel Aviv in June of 2007 (covered on VC Cafe). Microsoft on the other hand, has set up sales and marketing offices in Ra’anana, Tel Aviv and Herzliya.

Over 20,000 new gadgets and technologies will be unveiled at CES in Las Vegas starting today, and over 2,700 companies will present over the course of the following four days.

The International CES conference is produced by the Consumer Electronics Association [CEA] and has been a prominent platform for companies producing “all things consumer electronics” to get launched / noticed / partnered up for over 40 years. This year’s conference will feature exhibitors from 30 product categories - ranging from a radio for the hearing-impaired to a wireless HDTV LCD screen.