Caligari’s trueSpace software renders lifelike environments with a consumer-friendly user-interface. Presumably, this software will be integrated into Virtual Earth, and will allow users to add fine detail to specific locations. Caligari also has software for creating fly-through animations, which could come in handy as well. (Check this one out).
Microsoft already has some impressive 3-D modeling technology that it is applying to entire cities within Virtual Earth, and this will complement that. But in some ways, this is a catch-up move. Back in March, 2006, Google bought SketchUp, 3-D modeling software that can now be used to place 3-D objects inside Google Earth. Caligari, like Sketchup, I see more as a software tool for consumers to use to add their own 3-D spaces to these virtual environments.
Here are some more Caligari screen shots.