Is Twitter up to the Olympic challenge?

Twitter has an Olympic-size headache on its hands.

The microblogging site is making a push to be a bigger part of live events -- especially the London Games -- but had trouble keeping its feeds up and running on the eve of one of its biggest.

Twitter CEO Dick Costolo told The Wall Street Journal this week that the service is trying to "more closely tie the shared experience on Twitter to the actual event that is happening," essentially increasing its presence associated with the event. That goal is reflected in a partnership Twitter has formed with NBCUniversal to act as an "official narrator" of sorts for the game.

The microblogging site is hoping to attract a wider audience with the creation of a single page to corral the millions of tweets expected to be sent by athletes, fans, and TV personalities during the Olympics in London. The San Francisco-based company hopes that the partnership, which will include on-air promotion of the page by the TV network, will give it a chance to show that it can be a serious moneymaker; major brands such as General Electric and Procter & Gamble have reportedly bought ads to promote their association with the Games.

The International Olympic Committee, which has also launched an athlete-centric Twitter feed of its own, has called the London Games the "most social and tech-savvy Olympics ever." Analysts tell the Daily Mail that they expect the 100-meter men's final -- the most popular of the track events -- to set a record in terms of number of tweets per second. (The current record of 15,358 tweets per second was achieved in Euro 2012 as Spain scored its fourth goal.)

But little more than 24 hours before the opening ceremonies of the Olympics -- altogether, perhaps the biggest event of the year -- Twitter experiences twin data center failures that left millions of users tweetless for about two hours.

In an "infrastructural double-whammy," parallel systems went down at nearly the same time, defeating the purpose of having a redundant center to act as a backup. At this time, it appears Twitter is still in the dark about the outage's cause.

Mazen Rawashdeh, Twitter's vice president of engineering, made an ominous reference to the Olympics -- one that he probably didn't mean, since the Games are Twitter's chance to shine in the spotlight.

"I wish I could say that today's outage could be explained by the Olympics or even a cascading bug," Rawashdeh said in a company blog post explaining the outage. "Instead, it was due to this infrastructural double-whammy. We are investing aggressively in our systems to avoid this situation in the future."

CNET has contacted Twitter to see what extra steps it might be taking before the opening ceremonies of the Olympics in London tomorrow and will update this report when we learn more.

Well, Twitter, this is where you wanted to be. Are you up to the challenge? As the saying goes, the world is watching.

Windows 8 fear and uncertainty kicks in

Is Windows 8 really the makings of a fiasco? True or not, get ready to hear this more and more as the Windows 8 general release approaches.

Surface: one salient symbol of Microsoft's future. Is the company courting disaster?

(Credit: Microsoft)

Windows 8 FUD is starting to hit the fan.

That would be fear, uncertainty, and doubt. As in, "I think that Windows 8 is kind of a catastrophe for everybody in the PC space."

That was said yesterday by Gabe Newell, a former Microsoft employee and managing director of Valve Software, which makes games such as Half-Life and created the Steam gaming platform for Windows and Apple's OS X.

Newell's company is now moving Steam to Linux. Thus the comment, "we're trying to make sure that Linux thrives" from Newell (in the same story linked above) before his Windows 8 critique.

You could almost mistake all of the fuss for the fall presidential election, not the general release of Windows 8. "Windows 8 is treason! Linux will win the future!" (or substitute Android or OS X for Linux).

That said, Microsoft is in a hard place.

One, PC makers are no doubt reconsidering -- either casually or seriously -- their commitment to Windows because of the Microsoft-branded Surface tablet due to arrive around the same time as Windows 8 (more on that below).

Two, there is a growing chorus of critics that despise the Metro interface. (I'm not one of them.)

Three, Metro and the Windows Store -- that is, the way users will install apps -- could make Windows less open, as IDC analyst Jay Chou pointed out to me today.

And Microsoft didn't help matters when it stated in its annual report filed today with Securities and Exchange Commission that "our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."

No way around it, that's a prickly statement when it's coming directly from Microsoft.

So, will the FUD stick? It will probably get worse as we get closer to the general release. When Microsoft takes a hard turn to a new operating system, pundits pounce and users revolt (just read some of the comments attached to the Building Windows 8 blogs).

What makes it different this time is the Surface factor and Microsoft's need, apparently, to adopt Apple's and Google's strategies, as Venkatesh Rao writes in a Forbes blog.

Google "is winning using Microsoft's original winning...strategy" (by using an open OS layer of the stack, commodity hardware), he writes. "Google is out-Microsofting Microsoft."

Zuckerberg to Wall Street: No need to unfriend us yet

Wall Street analysts wanted more details than Facebook's top team would share. Management's response: Trust us.

Mark Zuckerberg with COO Sheryl Sandberg

(Credit: Dan Farber)

On Facebook's conference call with analysts today, CEO Mark Zuckerberg and his top lieutenants repeatedly stressed that they plan to take their time rolling out more ads on mobile devices to avoid angering users.

And in doing so, they are angering Wall Street.

After Facebook posted unspectacular results for its second quarter -- its first report as a public company -- management offered few details about what to expect in coming months.

The absence of specificity came as a disappointment to Facebook watchers. Citigroup's Mark Mahaney said that while the results shouldn't be viewed either "as dramatically good or bad," he said that key questions remained -- in particular, the future of Facebook's mobile monetization as well as the future of Facebook's user engagement.

But the little that Facebook did say proved unsettling. While Facebook continues to grow its user base and average revenue per user (ARPU), most of that growth is outside the U.S., where the company makes far less money on each user than it does in North America. Another worry for investors: COO David Ebersman said that ad impressions are down overall, largely because more users are accessing Facebook on mobile devices.

The result was brutal: Facebook stock, which fell more than 8 percent in regular trading, skidded another 11 percent after hours, leaving a share of Facebook at just below $24 a share. That's a roughly 37 percent drop from the $38 dollars a share offering price set for its May IPO.

Such is the bind that the newly-public Facebook has put itself in. Investors -- burned by the company's ugly IPO and subsequent lousy stock performance -- wanted a clear road map pointing where Facebook is going as it tries to squeeze more money out of its 955 million users.

Not surprisingly, Zuckerberg wasn't playing along. For Facebook watchers, he offered more evidence that this was a CEO marching to his own drummer, more interested in product than on pleasing the short-term focus of myriad Wall Street suits.

"I don't have any more plans that I'm going to share with you about our product road map," the 28-year-old CEO and founder said during the call.

What followed was almost kabuki-like. Again and again, analysts wanted to know more about Facebook's efforts making money from mobile. The answer, given in different ways from Zuckerberg -- as well as COO Sheryl Sandberg and Ebersman -- was that Facebook was making progress but that it's being methodical and taking its time to make sure it gets it right.

"We're not TV. We're not search. We're a new medium," Sandberg said at one point, a colorful quote that may not mollify the skeptics who just want to see stronger growth.

In the near-term, Facebook is counting on the power of social ads on mobile phones, called Sponsored Stories. These are ads that show up on News Feeds of a brand's fans and their friends.

Sponsored Stories in the News Feed are the "cornerstone of our mobile strategy," said Sandberg, who pointed out that they're also the most relevant for advertisers.

And on paper, at least, the potential is huge. Facebook disclosed that around 543 million people use its mobile services and that those folks are 20 percent more likely than desktop users to be active consumers of various services on the site. What's more, there is evidence that socialads are more effective than desktop ads, but, as the execs pointed out, it is still early. Facebook only began letting advertisers buy mobile-only sponsored stories in June.

Here was an area where Sandberg did share some numbers not in the press release. By the end of June, she said, sponsored stories in News Feeds were generating more than $1 million a day, with half of that coming from mobile. But while she said that Facebook planned a bigger push behind sponsored stories in 2012, nobody should expect an overnight success.

"We're still in the early days of building our monetization engine," she said.

With about $10.2 billion in its vaults, Facebook can afford to take the long view. Even as the pressure steps up in coming months.

Apple's iPhone margins hit 58 percent, nearly double iPad's

The company posts gross margins of between 49 percent and 58 percent on U.S. iPhone sales, compared to 23 percent to 32 percent for its iPad, according to a court filing.

Although Apple's iPad stole the show in the company's latest earnings report, its iPhone is the breadwinner.

Between April 2010 and March 2012, Apple was able to secure gross margins of 49 percent to 58 percent on U.S. iPhone sales, according to Reuters, which obtained the data from court documents unsealed yesterday and filed in the U.S. District Court for the Northern District of California. Apple's iPad, on the other hand, generated gross margins of 23 percent to 32 percent between October 2010 and March 2012.

Apple does not provide gross margin figures on individual products, deciding instead to share it on a companywide level. However, the company has revealed many more details about its business in court filings, including how it generates such healthy profits.

Google shows ISPs how to build a superfast network

As some broadband providers grumble about the cost of network upgrades and threaten data caps on subscribers, Google shows them, through its Kansas City Google Fiber project, how to offer subscribers 1Gbps broadband service at an affordable price.

Google is showing the cable companies and telecommunications providers how a broadband network should be built.

On Thursday, the company took the wraps off its new Google Fiber and Google Fiber TV services, which through a fiber connection directly to the home, delivers broadband speeds of 1Gbps on both the upload and download links. It also announced its new Google Fiber TV service that offers a vast array of high quality HD video content broadcast to TVs and is also available on demand.

The services that Google is delivering to lucky residents of Kansas City, Mo., and Kansas City, Kansas, is leaps and bounds above what they can get currently through providers, such as AT&T's U-verse service or Time Warner Cable. But it's also much more advanced than what the average American is able to access from any cable operator or telco broadband provider in the country. And Google is offering it at prices that beat the local and even national competition.

In fact, Google will be delivering speeds that are more than 100 times faster than most broadband users get today. And on the TV side, the company has included enhancements, such as doubling the number of TV shows that can be recorded by a DVR at one time, plus it offers more than 500 hours of storage for very high quality HD video.

Google hasn't said yet whether it will deploy a fiber network in any other cities. The company is focused on Kansas right now. But it's clear that the deployment is strategic for Google. Even though most users today don't need Internet access at 1Gbps, Google is showing what's possible. And the company hopes that applications and uses for the ultra fast network will evolve to fill the pipe.

But the network itself is also a way to show the rest of the broadband industry how they should be building their own networks to offer much faster speeds, which in the long run benefits Google's advertising and search businesses. And it offers Google data that it can use to nudge cable operators and phone companies to be more aggressive in upgrading networks and offering services at lower prices.

"This is a strategic business for Google," Kevin Lo, general manager for Google Access, said in a phone interview from Kansas City. "And on a national level, this is about innovation and access to an abundance of technology. There is a bottleneck right now in residential access where people are only getting speeds of 5 Mbps."

And even though he didn't directly say it, he made the point that the Google Fiber network can be seen as a challenge to what broadband providers have offered in the past.

"The last time we doubled the speed of broadband a whole new market evolved and spurred tremendous growth in the Internet," he said. "We don't want incremental change. Offering you a 10 Mbps service and edging it to 50 Mbps and then 100 Mbps, that's not what drives real innovation. We need to do something in a big way that will take a material step in performance."

What Google can teach broadband operators
Google's chief financial officer, Patrick Pichette, described during the presentation introducing Google Fiber how computing power thanks to Moore's Law has grown through the years doubling every 18 months. And he showed how the cost of network storage has fallen dramatically, paving the way for cloud-based services such as the ones offered by Google. But network access speeds have remained relatively flat over the past several years. The result has been only incremental changes in the speed of services that are offered to consumers.

"We saw a doubling of speeds for Internet access in the early years as we went from 14 kbps to 28 kbps," said. "But then after the cable modem showed up, we've seen little progress in access."

Pichette also pointed out that even though speeds have only increased incrementally on a per megabit basis, Americans are still paying more for Internet access than consumers in other countries.

And this is where Google is also showing existing operators a thing or two. Google is offering 100 times faster speeds on a service that is less than half the cost of the fastest Internet services available in the country today.

The 1Gbps broadband-only service is only $70 and also includes 1 Terabyte of data storage. This compares to Verizon's Fios service, which charges $205 for a 300 Mbps service with 65 Mbps uploads. Like Google, Verizon also delivers its broadband service over a fiber connection linked directly to the home. But unlike Google it doesn't offer these faster speeds with symmetrical bandwidth speeds.

When packaged with its TV service, Google's services are also priced affordably. And they beat the offerings from local competitors, such as Time Warner Cable. For $120 a month, Kansas City residents can get the 1Gbps broadband service and the Google Fiber TV service plus 1 Terabyte of data in Google's cloud storage service Google Drive.Google is even throwing in the $200 Google Android Nexus 7 tablet at no additional cost, so that users can use the Android App to control the TV service and even watch TV on their tablet.

And Google is giving away basic broadband service with speeds up to 5Mbps downstream and 1Mbps upstream for free for the next seven years, so long as users pay the $300 cost of hooking the fiber up to their home.

Time Warner Cable, Google's biggest competitor in this market, offers a 50 Mbps Internet service for an introductory price of $80 a month. And its total package with TV service and home phone service included is $200 a month.