Google aims to provide broadband in 34 more cities

SAN FRANCISCO – Google is planning to offer high-speed Internet service in 34 more cities scattered across eight states in the company’s boldest challenge yet to cable and telecommunications providers.

The ambitious expansion announced Wednesday targets Arizona, California, Georgia, Tennessee, North Carolina, Oregon, Texas and Utah. The markets span some of the largest cities in the U.S. They include: Atlanta, San Jose, Calif., Phoenix; San Antonio; Portland, Ore. and Salt Lake City. The company also hopes to bring the Internet service, called “Google Fiber,” to its hometown of Mountain View, Calif.

The blueprint is tentative because Google Inc. needs to work out logistics with government leaders in the communities where it hopes to build the networks needed to deliver its service. The company hopes to provide updates by the end of the year.

The plans are the clearest sign yet that Google, already the Internet’s most powerful Internet company, intends to become a bigger player in providing access to the Internet, too.

Google’s ownership of some the Internet’s most lucrative advertising networks and heavily trafficked services such its YouTube video site gives the company a powerful incentive to make it more affordable and enjoyable to spend time online. The company is hoping it can make more money from ads and other services if faster connections and a proliferation of computing devices can make the Internet even more addictive than it already is for tens of millions of people.

With Google Fiber, people can surf the Internet at a speed of one gigabit per second, up to 100 times faster than existing broadband services. Prices for the service are comparable or below what most households already pay.

Launched as an experimental project in 2010, Google Fiber is only available in three cities so far: Kansas City, Kan.; Kansas City, Mo. and Provo, Utah. It’s coming to Austin, Texas, sometime this year.

The service charges about $70 per month for just high-speed Internet service in the two Kansas City markets. A package that bundles the Internet service with more than 100 high-definition television channels costs about $120 per month.

Google’s expansion would provide more competition to existing broadband carriers, including cable giant Comcast Corp., which last week announced plans to buy another major Internet service provider in Time Warner Cable Inc. Google said the announcement of its expansion isn’t tied to Comcast’s proposed takeover of Time Warner Cable, a deal already facing resistance from consumer rights groups worried that the combination will drive up prices for broadband cable TV.

If Google realizes its goal, the company will provide high-speed Internet service in these cities: Phoenix, Scottsdale and Tempe, Ariz.; San Jose, Santa Clara, Sunnyvale, Mountain View and Palo Alto, Calif.; Atlanta, Avondale Estates, Brookhaven, College Park, Decatur, East Point, Hapeville, Sandy Springs and Smyrna, Ga.; Nashville, Tenn.; Charlotte, Carrboro, Cary, Chapel Hill, Durham, Garner, Morrisville and Raleigh, N.C.; Portland, Beaverton, Hillsboro, Gresham, Lake Oswego and Tigard, Ore.; San Antonio; and Salt Lake City.

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Facebook bets $19 Billion on WhatsApp

NEW YORK — Facebook is placing a $19 billion bet on reaching its next billion mobile users with the acquisition of WhatsApp, a popular messaging service that lets people send texts, photos and videos on their smartphones.

The $19 billion deal is by far Facebook’s largest and bigger than any that Google, Microsoft or Apple have ever done. But it is likely to raise worries that Facebook and other technology companies are starting to become overzealous in their pursuit of promising new products and services, said Anthony Michael Sabino, a St. John’s University business professor.

“This could be seen as a microcosm of a bubble,” Sabino said. “I expect there to be a lot of skepticism about this deal. People are going to look at this and say, ‘Uh-oh, did they pay way too much for this?”

Facebook, for its part, is taking the long view. WhatsApp has 450 million monthly users, 70 percent of whom use it every day. The service is adding a million new users a day. There are 19 billion messages sent and 34 billion received via WhatsApp each day, in addition to 600 million photos and 100 million video messages.

At this rate, Facebook CEO Mark Zuckerberg is confident the app will reach a billion users. Services that reach that milestone, Zuckerberg said in a statement, “are all incredibly valuable.”

It’s an elite group to be sure — one that includes Google (which owns YouTube), Facebook itself and little else.

Facebook said Wednesday that it’s paying $12 billion in stock and $4 billion in cash for WhatsApp. In addition, the app’s founders and employees — 55 in all — will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.

The transaction translates to roughly 11 percent of Facebook’s market value. In comparison, Google’s biggest deal was its $12.5 billion purchase of Motorola Mobility, while Microsoft’s largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.

Facebook’s $1 billion Instagram deal seems like a bargain in retrospect. Capturing mobile users — and young people — was a big reason behind Facebook’s 2012 purchase of the photo-sharing app. Even its reported $3 billion offer for disappearing-message app Snapchat pales in comparison. Snapchat spurned the bid.

The deal stunned Gartner analyst Brian Blau. “I am not surprised they went after WhatsApp, but the amount is staggering,” he said.

The world’s biggest social networking company likely prizes WhatsApp for its audience of teenagers and young adults who are increasingly using the service to engage in online conversations outside of Facebook, which has evolved into a more mainstream hangout inhabited by their parents, grandparents and even their bosses at work.

WhatsApp also has a broad global audience.

Zuckerberg said the service “doesn’t get as much attention in the U.S. as it deserves because its community started off growing in Europe, India and Latin America. But WhatsApp is a very important and valuable worldwide communication network. In fact, WhatsApp is the only widely used app we’ve ever seen that has more engagement and a higher percent of people using it daily than Facebook itself.”

Blau said Facebook’s purchase is a bet on the future. “They know they have to expand their business lines. WhatsApp is in the business of collecting people’s conversations, so Facebook is going to get some great data,” he noted.

In that regard, the acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members, including teenagers, interested. The company is developing a “multi-app” strategy, creating its own applications that exist outside of Facebook and acquiring others. It released a news reader app called Paper earlier this month, and has its own messaging app called Facebook Messenger.

“Facebook seems to be in acknowledgement that people are using a lot of different apps to communicate,” said eMarketer analyst Debra Aho Williamson. “In order to continue to reach audiences, younger in particular, it needs to have a broader strategy...not put all its eggs in one basket.”

Facebook said it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about $715.3 million nearly two years ago.

At $19 billion, Facebook is paying $42 per WhatsApp user in the deal.

For Facebook, WhatsApp’s huge user base, fast growth pace and popularity is worth the money.

“We want to provide the best tools to share with different sized groups and in different contexts and to develop more mobile experiences beyond just the main Facebook app, like Instagram and Messenger,” Zuckerberg said in a conference call. “This is where we see a lot of new growth as well as a great opportunity to better serve our whole community.”

WhatsApp, a messaging service for smartphones, lets users chat with their phone contacts, both one-on-one and in groups. The service allows people to send texts, photos, videos and voice recordings over the Internet. It also lets users communicate with people overseas without incurring charges for pricey international texts and phone calls. It’s free to use for the first year and costs $1 per year after that. It has no ads.

“It’ll be tempting to read this as a sign Facebook is scared of losing teens,” said Forrester analyst Nate Elliot in an emailed note. “And yes, the company does have to work hard to keep young users engaged. But the reality is, Facebook always works hard to keep all its users engaged, no matter their age. Facebook is tireless in its efforts to keep users coming back.”

Asked about the demographics of WhatsApp’s users, Facebook finance chief David Ebersman said that, “if you look at the kind of penetration that WhatsApp has achieved, it sort of goes without saying that they have good penetration across all demographics, we would imagine.

That said, “it’s not a service that asks you to tell them your age when you sign up,” he added.

Facebook’s shares fell $1.82, or 2.7 percent, to $66.24 in after-hours trading Wednesday after the deal was announced. Earlier in the day, the stock hit a 52-week high of $69.08.

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Musk talked to Apple, but said acquisition of Tesla 'unlikely'

Tesla's CEO kills rumors that Apple is looking to snap up the electric carmaker.

Tesla CEO Elon Musk.

(Credit: CBS)

After speculation spread across the Web this week about Apple possibly courting Elon Musk to acquire Tesla, the electric car company CEO dispelled the myth on Wednesday.

In an interview with Bloomberg Television, Musk confirmed that he did meet with Apple and "had conversations" but that he "can't comment on whether those revolved around any kind of acquisition."

On Sunday, the San Francisco Chronicle reported that Musk met with Apple's chief of mergers and acquisitions and possibly CEO Tim Cook last spring. The newspaper floated the idea of a high-level merger between the two companies.

Bloomberg asked Musk on Wednesday whether Tesla was for sale and he responded that it's "unlikely" because the company is trying to stay focused on creating a "compelling mass market electric car." He said that if another company came to him with like-minded ideas, he might "entertain those discussions," but that he doesn't "currently see any scenario that would improve that probability."

After it was reported on Sunday that Musk met with Apple, some speculated that the meeting was about integrating Apple's iOS software technologies into Tesla's all-electric automobiles -- much like what the iPhone-maker has done with Audi, General Motors, Ford, Hyundai, and others.

Musk told Bloomberg that he could see some sort of Android or iOS app integration for Tesla cars, but that was secondary to the company's focus.

"That's somewhat peripheral to the fundamental goal of Tesla, which is to accelerate the electric car revolution, to make it happen," he said.

Tesla reported stellar fourth quarter earnings on Wednesday with revenue at $610.9 million, up from $294.4 million a year ago. And, the company is on track to deliver 35,000 Model S vehicles in 2014, which is up 55 percent from 2013.

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Samsung skewers Apple's iPad Air pencil ad

Remember the iPad Air ad featuring the pencil? That's just the starting point for another new Samsung ad that laughs at Apple.

(Credit: Screenshot by CNET)

This isn't going to stop, is it?

Samsung is going to relentlessly tweak Apple's slightly tired-looking cheek until everyone in the playground is laughing.

In another new ad that chuckles at Apple's allegedly retrograde nature, Samsung -- or rather its California-based creative types -- decides to take the well-known iPad Air ad featuring a pencil and suck the air out of it.

Should you have somehow forgotten this Apple ad, it's the one in which an iPad Air is said -- by Walter White of "Breaking Bad" -- to be thinner than a pencil (video below).

So now Samsung wants to suggest this argument is thinner than the iPad Air.

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Apple iTunes Festival slated for SXSW

The company will host a five-night event at the show, featuring performances by Coldplay, Imagine Dragons, Keith Urban, and many others.

Apple will be heading to the SXSW next month, marking the first time the company will create an iTunes Festival event in the US.

Starting on March 11 and running through March 15, Apple will host five live iTunes Festival events at SXSW. The company plans to have several popular artists perform, including Coldplay, Imagine Dragons, Keith Urban, and others. Apple says that it will make announcements on new additions to the festival in the coming weeks.

Apple has been holding iTunes Festivals in London for some time. So far, over 400 artists have performed at the festivals and Apple has attracted over 430,000 people to the events. The performances are then made available for purchase in the iTunes Store.

According to Apple, all five SXSW iTunes Festival nights, set to happen at the Moody Theater in Austin, Texas, will be streamed for free through its iTunes Store. Those who want to view the concerts can watch on their iOS device or Apple TV.

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