Apple co-founder backs Internet video venture

An Internet video brainchild of three twentysomething former
University of California grad students has won big backers, including
Apple (Nasdaq:APPL - CCU - news).

The billionaire moguls are backing a tiny venture-backed company,
Hotswap.com, which has ambitious plans to feed a growing demand for
high-definition-like Internet video for everyday e-commerce uses, such
as consumer car sales, its founders said.

"I like what they're doing. It's definitely a step forward," said
Wozniak, the Silicon Valley wunderkind who formed Apple with
entrepreneur Steve Jobs in 1976.

"Woz," as he's known, said he signed on as an adviser to the company
to "give them ideas that come into my mind."

Hotswap.com emerged from graduate computer science research into
digital "compression" technology that its founders say can make common
digital camera movie clips mimic high-definition television on Web
sites.

Luke Thomas, a 21-year-old former UC Berkeley grad student and Hotswap
chairman, said the often-fuzzy videos uploaded by amateurs onto
YouTube.com and similar Web sites can be transformed by Hotswap's
technology. Hotswap has applied for patents for the technology, he
added.

"All the technology we see on the Internet is 1994 technology," said
Thomas. "You will see e-commerce take off with the advent of
high-quality video."

Formed just three months ago with the backing from the venture finance
firm Kinsey Hills Group, Hotswap.com has already won contracts with
AutoNation Inc. (NYSE:AN - news) and with Red McCombs Enterprises'
chain of auto dealerships.

Rad Weaver, McCombs' vice president of business development, said the
company has begun using video clips with Hotswap technology for its
used car listings on the Internet.

The San Antonio, Texas company sells about 40,000 new and used cars a
year and is part of the business empire of Red McCombs, 79, an
oil-and-gas magnate who started a car dealership chain in Texas and
expanded into home building, oil and other businesses before
co-founding Clear Channel, the media company, in 1972.

He has also owned sports franchises including the Minnesota Vikings,
San Antonio Spurs and Denver Nuggets.

"DYNAMIC"

"This gives the most dynamic presentation of the vehicle," said
Weaver, who said he's found no similar marketing tool for Internet
video presentation.

Digital camera filmstrips can also be easily uploaded onto Web sites.
"With their compression technology, they are able to drastically
shorten the upload time-frame, which is critical."

Weaver declined to value the contract, but said it's "material" for his company.

Thomas founded Hotswap.com with two UC Berkeley friends, Ryan Waliany
and Ken Elkabany, both 20. All were former computer science Ph.D.
students who spent most of their time in laboratories.

"When other kids were out partying, we were in our labs," said Thomas.
"In the weekends, we were in the labs. We've never taken a break from
this."

Reeling off statistics on potential market demand for the new
technology, Thomas confidently predicts: "We're going to be a
billion-dollar company."

For now, Thomas says the Berkeley-based company plans to focus on the
$370 billion-a-year used car industry, where the company expects to
win more contracts.

Thomas said his alma mater won't be making any claims to the
technology, as universities often do with budding technology.

"They definitely influenced our brains, but this was done
independently from our university," he said.