Touch hype

The typewriter was invented in the 1830s to make word processing available for the first time outside of print production. The typewriter model evolved over the next 100 years from heavy steel contraptions to smaller and lighter plastic and electrical versions, but by the 1980s a new generation of typewriter had arrived: the personal computer or PC.

This machine revolutionised the way people stored data, introduced the idea of“software”and gave rise to the worldwide web. The only thing that was not revolutionary about the PC was its keyboard, which remained the same in style and principle as that of a typewriter, but had the addition of a hand held “mouse”. In the last 30 years computer users have typed, clicked and pressed buttons. But that is all changing according to some venture capitalists, who say a revolution of touch-screen technology is now within reach.

“We believe that the world of interaction between humans and machines is undergoing a fundamental change,” says Izhar Shay, a general partner at Israel-based venture firm Canaan Partners. Canaan and other venture capital investors including Evergreen Venture Partners recently participated in a $24 million financing round for a touch-screen technology company called N-trig. Significantly, Microsoft Corporation was lead investor.

TECHNOLOGY SPREADING
N-trig's DuoSense technology allows users to navigate their PCs by sliding their fingers across the computer screen or using a pen-like device to point or sketch. Microsoft and othermajor computing brands have endorsed DuoSense, and its technology can be found in recently released products such as Dell's Latitude laptops and Hewlett-Packard's TouchSmart screens.

F-Origin, another touch-screen provider, received $5 million in venture capital funding from California-based Keynote Ventures in June last year, while Kleiner Perkins Caufield & Byers and Apple launched a $100 million “iFund”, which only backs companies developing applications and services for the Apple iPhone and iPod touch platforms.

The technology has, in fact, been available in one form or another for several years – so why is it only just coming to market on this scale? “The Apple iPhone is the first time a product has come out without a keyboard and been a huge success,” says Bouz Dinte, a general partner at Evergreen Venture Partners. The entirely touch-screen Apple iPhone has taken both the mobile phone industry and the computing industry by storm, selling more than 11 million handsets in the last two quarters of 2008. It has all the functions of a computer including internet access, data storage and email access and has been hailed as part of a new generation of technology by media, investors and technological whizz-kids alike.

Research by Rubicon Consulting Group published last year reveals that more than half of iPhone users are under 30 years old. Venture capitalists and technology providers are hoping to capitalise on this next generation of users who value a system more intuitive and interactive than the old-school mouse and keyboard.

Rick Segal, a partner at Toronto-based JLA Ventures, which is co-managing a $150 million fund for developing BlackBerry mobile device applications, says a touchscreen mechanism is interesting only as part of an interface and not as an end in itself. “On a Blackberry or iPhone device a touch screen is an exciting feature but the touch screen alone is not something that would make or break a successful company. In fact it could be a trap or distraction with developers getting all hung up on that part of the device versus the focus being on the full application,” he says.

This is a good point, but investors like Haru Kato, a general partner at Menlo Park-based Keynote Ventures say the technology will not be limited to PCs and handheld devices. It is already being used in ticket machines and there are predictions that ATMs, vending machines – and maybe newspapers – will be operated by touch in the future.