The collaborative work center could launch a wave of financial support for local businesses and inventors, as entrepreneurs, equipment providers, businesses, employees and venture capitalists join to work on new mobile-communications products.
AT&T is not alone in its efforts to capture innovative ideas locally. Sprint Nextel has planned a grand opening for its tech-development center in Burlingame on Oct. 25; Verizon expects to open a center in San Francisco in mid-2011, spokespersons for the companies said.
AT&T's Palo Alto headquarters will focus on consumer products and mobile applications, such as for Apple's iPhone and Google's Android, according to Peter Hill, vice president of ecosystem and innovation.
Using a "speed dating" model, software developers can pitch ideas in 8 to 12 minutes to company executives. Selected ideas will receive backing and assistance to get the products developed and to market quickly, spokesman John Britton said. The company hopes to review as many as 400 proposals per year.
Local venture capitalists hailed AT&T's move.
Silicon Valley venture-capital firms Kleiner Perkins Caufield and Byers and Sequoia Capital will partner with AT&T to help identify potential developers and might invest in the firms.
"This isn't something we've seen from AT&T in the past. ... It reflects a positive shift in thinking that will be a strategic advantage," Matt Murphy, partner at Menlo Park-based Kleiner Perkins Caufield and Byers, said.
Jim Goetz, general partner at Sand Hill Road venture firm Sequoia Capital, agreed.
"Through the innovation centers, AT&T is embracing the 'valley' culture. They're positioning themselves where ideas are being generated," he said.
In Palo Alto, initially more than a dozen full-time employees will work with developers on three to five projects. Fifteen to 20 temporary employees will be required for each project, Hill said.
On Wednesday, he said a pared-down version of the innovation center has been operating out of a temporary location since August. AT&T is in the process of signing a lease on a 10,000 square-foot undisclosed location in Palo Alto. The new center is scheduled to open by early 2011.
In addition to Palo Alto, AT&T will open "innovation centers" in Plano, Texas, and Tel Aviv, Israel. The three sites together will provide AT&T with a nearly 24-hour workday for development, John Donovan, AT&T's chief technology officer, said.
AT&T wants to tap into the strengths of each area: Palo Alto's focus will be on applications and consumer-products development; Plano will focus on industry-application prototypes from automotive to education services and Tel Aviv will work on back-office systems.
"The innovation centers will help us enhance collaboration and dramatically accelerate the velocity of innovation, taking ideas from concept to reality in mere months as opposed to years," Donovan said.
Silicon Valley companies Cisco Systems of San Jose and Juniper Networks of Sunnyvale plan to provide infrastructure and will collaborate in the centers, according to Britton.
Hill's background includes leading the development of three-screen applications (integration of television, personal computer and wireless devices) for AT&T and its U-verse TV.
AT&T has also created a virtual innovation center, where developers can test their products on the AT&T network. The website offers open-source product-development technologies and a way to share ideas. Developers can build, test and certify applications without having to travel to an outside facility, Hill said.