Apple co-founder backs Internet video venture

By Dane Hamilton

NEW YORK, July 27 (Reuters) - An Internet video brainchild of three twentysomething former University of California grad students has won big backers, including Apple APPL.O co-founder Steve Wozniak and Red McCombs, co-founder of Clear Channel Communications (CCU.N).

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. (AN.N) 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."