Facebook friend tally is associated with differences in brain structure

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It remains unclear whether the brain differences are a cause or effect of being well connected on Facebook. Photograph: Linda Nylind/Guardian

The brains of people with large numbers of Facebook friends are different from those of people with fewer online connections, say neuroscientists.

The researchers at University College London found that users with the greatest number of friends on the social networking site had more grey matter in brain regions linked to social skills. The finding suggests that either social networking changes these brain regions, or that people born with these kinds of brains behave differently on websites like Facebook.

In August, Baroness Susan Greenfield, former director of the Royal Institution, made the controversial suggestion that greater use of digital technology might be responsible for increases in the number of people diagnosed with autistic spectrum disorders. The researchers said their work did not directly answer such questions but helped show how future studies could be designed to do so.

"Social networks are ubiquitous in human society," said study leader Prof Geraint Rees, director of the Institute of Cognitive Neuroscience at UCL, whose study was published on Wednesday in the journal Proceedings of the Royal Society B.

"A key question for debate in contemporary societies with online social networks is do people use them in the same way or are they enabling a completely different type of communication and interaction that was never before possible?" said Rees. "People get worried about whether that is in some way affecting or changing our brains or the ways we interact with the world."

He said it was impossible to tell whether the findings meant some people's brains are hard-wired for social networking or whether having a large number of friends on Facebook changes brain structure. "What we're attempting to do is get an empirical handle using the types of data we can generate to try and start that process rolling."

Prof Rees added that future brain scan studies looking at changes to brain structures over time might help unravel whether the brain changes were a cause or effect of having more online social links.

His team carried out magnetic resonance imaging (MRI) brain scans on 165 volunteers who also answered questions about how many Facebook and "real-world" friends they had. They identified three brain regions in which grey matter density was greatest in those with the most Facebook friends, but was not linked to the number of real-world friends they had: the superior temporal sulcus and the middle temporal gyrus, which have previously been associated with the ability to perceive social cues from facial expressions, and the entorhinal cortex, which is linked to memory for things like faces and names.

The density of grey matter in another brain region, the amygdala, correlated with numbers of both real-world and Facebook acquaintances.

Comparing different primate species, researchers have previously demonstrated a correlation between the volume of the neocortex, the part of the brain largely responsible for higher functions like language and thought, and social group size.

Anthropologist Prof Robin Dunbar, of the University of Oxford, has proposed that the number of people with whom humans can maintain stable relationships is limited by the size of our neocortex to an average of around 150. The concept later became known as "Dunbar's number".

He recently led research showing correlations between the size of real-world social groups and the density of grey matter in similar brain regions to those identified in the new study.

"It has been demonstrated that across primate species there is a relationship between neocortex volume generally and frontal neocortex volume in particular and social group size," said Prof Dunbar. "This work and our study are some of the first attempts to show this holds within species as well as between species.

"The interesting question left unanswered is whether this is set in stone and those bits of your brain are hard-wired and determined by your genes, or whether if you bring people up in the right kind of social environment, those bits of the brain grow and therefore the number of people they can maintain as friends in adulthood increases."

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Duke Nukem Forever ad banned from pre-11pm TV

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A TV ad for a computer game featuring a naked woman pole dancing and two girls in school uniforms about to kiss in a nightclub has been banned from being aired before 11pm.

The animated TV ad, for the computer game Duke Nukem Forever, also features a full-frontal view of a thong-wearing woman with pixellated patches covering her breasts and bottom and action scenes including aircraft firing guns over a blazing city.

Two versions of the advert – developed by computer game company Take Two Interactive – had been given the green light for clearance to run after 7.30pm and 9.30pm.

Nevertheless, the Advertising Standards Authority (ASA) received 34 complaints from viewers, who all saw the ad after 9pm and said that it was "offensive and irresponsible because it was sexist, violent, overly explicit and included imagery which was likely to harm children and vulnerable people".

Take Two Interactive said that the game was a "cartoonish" take on the ultra-realistic first-person shooter games that dominate the market.

The company added that the sexual content was shown in an "exaggerated, non-realistic way" to send up the main character who was a "1980s, muscle-bound, ultra-macho figure of fun".

All the game footage used in the TV ad was classified as R18 by the British Board of Film Classification and was typical of the type of imagery common in "mass-market entertainment such as TV, film or music videos", according Take Two Interactive.

In regard to the scenes of violence, the ASA admitted that the ad was not overly graphic for broadcast after 9pm. However, the ad watchdog said that the scenes showing "women's naked bodies and their very sexual movements and gyrations were overly sexually explicit" for airing at 9pm.

The ASA said that the images of the two girls about to kiss "appeared to link teenage girls with sexually provocative behaviour".

In addition, the strip club scenes were "overly explicit", according to the ASA, and the ad was irresponsible and should be broadcast only after 11pm.

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Letters: Kindle gives me my international edition

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While on holiday in France, I thought I would subscribe to a free two-week trial of the your Kindle edition – I've never looked back. I have since travelled extensively, including to China, and have continued to read the Guardian daily in a reliable and readable format, saving the problem of finding a newsagent selling foreign newspapers. Each day the Guardian is downloaded via 3G to my Kindle – a great advantage over the web edition. Using a computer to access the Guardian relies on finding a low-cost and fast internet connection. One can read the Kindle Guardian version in an open-air cafe, on the train, plane or beach. Although I get the paper edition at home, I do find the Kindle edition more convenient when commuting. I certainly won't mourn the loss of the international edition (Open door, 17 October).
Dr Martin Wilkinson
Sutton Coldfield, West Midlands

• One of the pleasures of life in Spain has always been reading the Observer or Guardian while sitting in a sunny cafe and enjoying a cafe con leche. Sadly, this innocent pleasure has been wiped out in the interests of saving money and moving towards digital media. The reality on the ground is that an expensive and poor internet service from Telefonica makes it impossible for many older Brits to access online newspapers, even if they have the technical savvy. The Tory papers don't seem to have stopped their international versions, so our local shops are piled high with copies of the Mail, Express, Telegraph, Sun etc. My Spanish newsagent agreed with a shrug, "solamente periódico de derecha" – he only sells rightwing newspapers.
James Ward
Alicante, Spain

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Mango shows Microsoft still has the taste for smartphone success

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Steve Jobs famously criticised Microsoft for having no taste and no culture. Windows Phone 7.5, the latest version of Microsoft's operating system for mobile phones, is a revolutionary product for its parent company because it has both in spades. The worry is that Microsoft has delivered this lovely creation a little too late.

As a piece of visual design, the operating system also known as Mango makes the iPhone's bubble-inspired home screen graphics look tired and out of date. The style is pared back, letting the content, drawn in from the myriad of online sources that now figure in our daily lives, do the talking. Applications each inhabit a simple red square, or "live tile" on a black screen. When customised they earn their name and truly come to life, which is where the culture comes in.

The level to which a select group of the best social media platforms – Facebook, Twitter, LinkedIn – have been woven into the functions on Mango goes well beyond what was available on its predecessor (Windows Phone 7), and arguably well beyond what Apple's iPhone and Google's Android can offer.

Punch in your Facebook and Twitter coordinates, and the software merges them with your address book to create a profile for each contact, with their latest photos, status updates and tweets. Pin that person's tile to your home screen, and each update feeds into the little square.

The most recent photos taken on your phone are also displayed in their own double sized tile. And the home screen can, unlike many other operating systems, display multiple tiles from a single application – one for each item you are bidding for on Ebay, or the weather in a handful of cities.

The messaging has caught up with iPhone. A conversation that might begin on Facebook chat but then moves to text messaging or Windows Live Messenger – the Microsoft instant messaging service – now appears on screen in a single thread.

Where the operating system does fail to impress is with voice recognition. Mango incorporates it, for example to compose an email. But "Want you meet camera" is not a very usable approximation of "Want to meet tomorrow".

Voice commands are not just a diverting new trick. They are the future for smartphones. Using virtual keypads on a tiny touch screen is life sapping, and impossible to do while walking. But the trusty buttons of a qwerty keyboard are just not sexy enough to be added to the iPhone. So Apple is doing its level best to get us using Siri, its own voice service, which has surprised users with its accuracy. Microsoft has some catching up to do here.

And it will make every effort to catch up. The software behemoth is not just fighting for a nice sideline, it is fighting for control of the mass market computer. As mobile connected devices become cleverer and are touched by millions more fingers than have ever typed on a PC keyboard, the importance of the laptop or desktop computer will fade and with it Microsoft's influence.

There is a long battle ahead. Research firm IDC says Windows operating systems were on just 2% of phones sold worldwide in the first half of this year, down from 13% in 2008. Back then, Android's share was 0%. In three years it has become the best seller, with 42%. BlackBerry is still significant, and Apple's iOS is at 19%.

The first Nokia handsets to use Windows will be unveiled in London next week. Nokia still sells more "feature" phones than anyone else, but it sold just 15% of smartphones in the summer, down from 33% in 2010. Its decision to abandon Symbian left it unable to compete for most of this year. The alliance with Microsoft is clearly make or break, and their target as they attempt to rise up the ranks will be Android.

Research In Motion, maker of BlackBerry, will continue to chase its corporate market. Apple will remain the premium brand for now. Which will leave Microsoft and Google slugging it out for dominance of the cheaper, mass market handsets.

Where Google may have the edge is control over handset design. It is buying Motorola, possibly just for the patents needed to protect Android against litigation, or possibly to create better phones. Nokia and Microsoft are merely in an alliance, but they have size, marketing firepower, relationships with networks and experience on their side. Nokia won its battle for dominance of the mass market against Motorola at the end of the 1990s, and still sells more basic feature phones than anyone else. Microsoft knows a lot more about selling operating systems than Google, albeit on PCs. Its creator may be a fading force, but Mango shows Microsoft still has the taste for success.

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Tech Weekly podcast: BlackBerry blackout, Siri scrutinised

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Aleks Krotoski is joined by Charles Arthur and Dan Catt for this week's special studio-based podcast, as the team take a break from their busy live schedule. With a little more time, they have the chance to look back over the last few weeks of stories – from the launch of the iPhone 4S and the death of Apple's Steve Jobs – and consider the business impact of the BlackBerry's service disruption, the loss of computing legend Dennis Ritchie, and what lies ahead for the UK's digital enterprise cluster.

Charles speaks to RIM chief Stephen Bates about the organisation's misfortunes – and the financial cost to the company of compensating millions of BlackBerry users for the loss of their service – and to Wikipedia's Jimmy Wales about the strengths of the UK's digital scene. Aleks speaks to the iPhone 4S, giving the speech recognition software a run for its money.

Don't forget to...

• Comment below
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Crowdsourced navigation accelerates with Waze, Skobbler and Navfree

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AppId is over the quota

Remember the days when GPS satellite navigation apps were one of the most expensive categories of mobile apps? Some still have premium prices: apps from TomTom, Garmin, CoPilot and Navigon still sell for between £29.99 and £39.99, although these companies have experimented with lower prices too.

They're facing competition from a new breed of free navigation apps with an emphasis on social features and crowdsourced data. One of them, Waze, has just raised $30m (£19.1m) to launch its popular app in China and develop new features for its seven million users. Another, Skobbler, has seen its GPS Navigation 2 app downloaded more than one million times in its first week of release.

Waze is an interesting company, headquartered in Israel but with a key office in the US too. The $30m funding round came from Hong Kong investor Li Ka Shing and venture capital firm Kleiner Perkins Caufield & Byers, whose partner (and technology maven) Mary Meeker will be joining as a strategic advisor and board observer as part of the funding.

Waze draws data on roads and traffic by analysing collective data from its users, while also enabling them to actively submit reports on accidents, police traps and other blockages. The company has shown off its crowdsourced data with YouTube videos like this one for Los Angeles:

It says that it's big in the US, France, Italy and Israel, but has also seen strong growth in Spain, Malaysia, Mexico and Brazil in recent months. The company now has seven million users across its iOS and Android apps.

Skobbler isn't quite at that level yet, but GPS Navigation 2 has roared up App Store charts around the world since its release in early October, with the one million downloads building on the company's 1.5 million-strong user base for its first satnav app.

The app draws on the OpenStreetMap project for regular updates to its maps, as does another of the most popular free satnav apps: Navfree. Navfree's parent company Navmii announced in mid-September that it had more than 3.2 million users, with 1.5 million of those using the Navfree UK application alone.

Both stress the fact that as they attract more users, so the quality of the data for their maps improves, to the point where it's good enough to make people think twice about buying one of the more expensive competitors.

The rise of these apps has certainly posed questions for the traditional satellite navigation companies, who have themselves been making the transition from in-car devices to smartphone apps. The business model for the crowdsourced and/or social apps remains fluid, though: potentially ads, potentially in-app purchases of premium features, but... well, it's mainly still potential.

The big threat for these companies, though, is if navigation evolves into a standard feature in smartphones provided by the handset maker and/or software provider.

Google Maps Navigation already offers formidable competition on Android, and few people would bet against Apple bringing navigation in-house for iOS at some point – perhaps as part of a bigger revamp for its mapping features in iOS 6.

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Occupy protests mapped around the world

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Where are the Occupy protests taking place in the world after the camps in Wall Street and Madrid? See the full list of places we have found so far - and help us collect more
• Explore the list - and help us add more
The map below shows events for which there is at least one independent verification, based on readers suggestions and Guardian research. It's possible we're missing details - go to the full list to add or change events

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Yahoo profits down but shares pick up as figures beat estimates

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Yahoo's figures were not as bad as investors had feared. Photograph: Justin Sullivan/Getty Images

Troubled internet giant Yahoo announced a 26% fall in earnings on Tuesday as it published its first results since firing chief executive Carol Bartz.

The company announced that earnings had dropped to $1.07bn, from $1.12bn a year ago, but the figure was not as bad as investors had feared and the firm's shares rose in after-hours trading.

Yahoo posted a profit of $293.3m, or 23¢ a share, down from $396.1m, or 29¢ a share, a year earlier. Analysts surveyed by Thomson Reuters had predicted a per-share earnings of 17¢.

The company is still one of the biggest draws on the internet. Yahoo said it expects revenue of $1.13bn to $1.24bn in the next three months, excluding traffic-acquisition costs.

Bartz was ousted in September after her plans to turn the company around failed to take off. The company has failed to keep pace with advertising growth at rivals Google and Facebook. The outgoing chief emailed staff telling them of her dismissal, and later told Fortune magazine Yahoo had "fucked me over".

After Bartz's dismissal, the firm announced a strategic review. Bankers have been appointed to sound out potential buyers.

Among those who have declared an interest or are reported to be looking Yahoo over are Microsoft, which launched a $44.6bn hostile bid for Yahoo in 2008. Yahoo, which is now valued at $20bn, is also being targeted by Jack Ma, chief executive of Chinese internet company Alibaba, which is 40% owned by Yahoo.

Interim chief executive Tim Morse said he would not comment on the state of the strategic review. "The board is actively looking at the full range of options available to return the company to a path of robust growth and industry-leading innovation," Morse said in a conference call. "The board also has said that when it has something to announce, it will do so.

"That will take time. It will not be today, and not on this call."

Yahoo continues to lose visitors to its rivals. According to market analyst ComScore, Yahoo accounted for 9.9% of the time spent by US web surfers online in September, while Google had 10.2% and Facebook had 14.7%.

Yahoo reported that its display ads business was flat at $449m compared to a year ago. Yahoo's share of display ads – a key indicator of the company's health for analysts – is set to decline this year, according to Emarketer. Emarketer is predicting Yahoo's share of banner ads will be 13.1% this year in the US, down from 14.4% last year. Facebook's share will climb to 16.3%, up from 12.2%. And Google should have 9.3%, an increase from 8.6%.

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Sony suspends 93,000 online accounts after break-in attempt

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AppId is over the quota
Many gamers were angry that Sony took several days to acknowledge and report April's hack. Photograph: Thomas Peter/Reuters

Up to 93,000 accounts have been compromised in a fresh attack on Sony's online servers, following an attack earlier this year that saw the company's PlayStation Network taken offline.

According to the official PlayStation blog, attempts were made to access data held on the Sony Entertainment Network, PlayStation Network and Sony Online Entertainment services using a "massive" set of sign-in IDs and passwords.

The company's chief information security officer, Philip Reitinger, said in a statement on the blog that a majority of the passwords did not work and that customer credit card information was not at risk. The company has temporarily suspended 93,000 accounts.

Reitinger was quick to shift responsibility for the break-in to third-party sites or servers. "These attempts appear to include a large amount of data obtained from one or more compromised lists from other companies, sites or other sources," he said.

"In this case, given that the data tested against our network consisted of sign-in ID-password pairs, and that the overwhelming majority of the pairs resulted in failed matching attempts, it is likely the data came from another source and not from our networks. We have taken steps to mitigate the activity."

In April, Sony was forced to take its PlayStation Network service offline for several weeks after a hacking attack accessed the account details of up to 70 million PS3 owners.

The chief executive, Howard Stringer, offered a personal apology to gamers after the scandal, but many were angry that Sony's security was compromised so extensively and that it took the company several days to acknowledge and report that a hack had taken place. A month later, the hacking group Lulzsec claimed to have obtained the personal information of more than 1 million users from Sony Pictures websites.

On this occasion, Sony appears to have notified customers almost immediately, and this is a much smaller, less sophisticated intrusion. Reitinger claimed that accounts compromised in the latest attack would be monitored for unauthorised access and that affected customers would be emailed and asked to change their log-in details. The accounts have currently been disabled.

Reitinger, a former US homeland security official who was installed as Sony's information security chief in the wake of the April hacking controversy, ended his statement by reminding customers to choose unique, hard-to-guess passwords and "always look for unusual activity in your account".

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Chatterbox: Wednesday

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AppId is over the quota

Morning chaps.

Fitba

Saints1 - West Ham 0. I don't regret not going. Not one bit... Still, we're 5 points clear now, and I am well happy. Reading away on Saturday, and it's on TV, so just as a warning to the Manc Meat people, I may disappear for a bit at 17.20.

Given that I didn't go last night, I watched City-Villareal. Fuck me they were lucky. Very poor, felt sorry for Villareal, as they deserved much more.

Souls

Gaping Dragon died a death, I also stole the bugger's tail, but can barely wield it. Went to Blight Town. I didn't like it. A combination of stupidity (walking off the edge of the ledge as soon as you open the door), badly luck (getting stuck on the scenery down at the very bottom where the fire-breathing flying thins dwell) and hubris saw me lose many, many souls. Still, I've got a nice way through it I think. I can get down to the very bottom without too much difficulty, hoping that the boss isn't too much further away from where I continually die.

Before going to Blight Town I went across the little bridge down in New London Ruins. I was murdered by some ghosts. What is this place? Also, is there a back way in to Blight Town from the Valley of Drakes? I remember right at the start being in a place that looks similar and had the big sword wielding dung monsters in it.

Bought a new Pyromancy spell, Flash Sweat. Seems a bit rubbish. Also picked a spell up from the big shrimp-like thing in Blight Town. Not equipped it yet though.

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Breaking news: it's all about the letter G

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AppId is over the quota
Have you seen this tile?

Why are there so many news stories featuring the letter G? Yesterday, the huge security firm G4S announced plans to buy a cleaning and catering outfit called ISS. Assuming the deal goes through, the company will become the second-largest private employer in the world (after Walmart) and hopes to create 5,000 British jobs a year.

Then there was the Good Governance Group – or G3, as it is better known. G3, it turned out, had been one of the sponsors behind Adam Werritty's international gallivanting. Shortly before that, a large water main had burst in the centre of Glasgow, cutting off the supply to hundreds of homes (and threatening thousands more) in the G5, G41, G42, G43 and G44 postcodes.

So it was no surprise to hear yesterday that the World Scrabble Championships in Poland had been shocked by the discovery of – that's right – a missing letter G. After losing a match by one point, Thai player Chollapat Itthi-Aree insisted that his English opponent Ed Martin should be strip-searched to see if he had hidden the tile somewhere intimate. Whether he had, or whether the G had just slipped quietly through a wormhole in space, we will never know. The judges' preference was to let the matter rest.

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US investigates Google tax strategies

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Google's headquarters in California. Photograph: David Paul Morris/Getty Images

US tax authorities are investigating the strategies used by Google to cut its tax bill by about $1bn (£635m) a year by funnelling profits from the US and Europe to subsidiaries with low tax rates.

The Internal Revenue Service has requested information from Google about its offshore deals following three acquisitions including its purchase of YouTube in 2006, according to Bloomberg.

Sources said it was "bringing more than typical scrutiny" to techniques known as the "Double Irish" and "Dutch Sandwich", which move revenues through units in Ireland, the Netherlands, and Bermuda.

The complex revenue shuffle is legal and is used by countless US multi-nationals. However, the tactic cost the US treasury an estimated $90bn in tax revenues in 2008, according to Kimberly Clausing, an economics professor at Reed College.

Over three years Google is estimated to have saved $3.1bn in tax revenues using a subsidiary located in Bermuda where the corporate tax rate is zero.

A Google spokesperson said there was nothing unusual about the audit. "We are considered a large case company, which means we are under a continuous audit by the IRS so of course they would be reviewing our treatment of all acquisitions."

In 2009, the most recent year for which records are available, the Bermuda subsidiary collected €4.34bn (£3.9bn) in royalties from a Google unit in the Netherlands, according to a Dutch corporate filing.

The search engine giant is using Ireland as a conduit for European revenues but in turn the Irish subsidiary is being charged royalties for its intellectual property – use of the brand and technology such as Google's algorithms.

The 2009 Google Ireland Ltd accounts show the company turned over €7.9bn in Europe for the year ending 2009 and a profit of just €45m after "administrative expenses" of €5.467bn were stripped out.

Administrative expenses largely refer to royalties (or a licence fee) Google pays its Bermuda HQ for the right to operate.

Notes to the accounts show "administrative expenses" rose significantly between 2008 and 2009 – by €794m – because of increases in headcount, sales and marketing and the "royalties paid as a result of increases in recorded turnover".

The IRS has already approved a major part of Google's strategy. In 2006, the agency signed off on a 2003 intracompany transaction that moved foreign rights to its search technology to an Irish subsidiary managed in Bermuda called Google Ireland Holdings.

That deal – known as a "buy in" in tax parlance – meant subsequent profit overseas based on those copyrights has been attributed to foreign subsidiaries rather than to Google in the US where the technology was developed.

A Google spokesperson told the Guardian: "We have an obligation to our shareholders to set up a tax-efficient structure, and our present structure is compliant with the tax rules in all the countries where we operate. We make a very substantial contribution to local and national taxation and provide employment for over a thousand people in the UK. We also generate significant revenues for other companies, and last year gave more than $6bn to our AdSense publisher partners, including newspapers and broadcasters across the world."

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Apple sales rise – but fail to soar

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AppId is over the quota
The Apple store in Covent Garden saw hundreds queuing up for the new iPhone 4S. Photograph: Oli Scarff/Getty Images

Apple's revenues rose to another quarterly record of $28.27bn – up 39% – and profits rose 54% to $6.62bn, figures reveal.

But weak iPhone sales compared with the previous quarter and comparatively slow sequential growth of iPad tablet sales left analysts asking if it had missed out by not releasing a new smartphone sooner.

Tim Cook, Apple chief executive since Steve Jobs's death earlier this month, said however that the company was "thrilled with the very strong finish of an outstanding fiscal 2011". He added that "customer response to the iPhone 4S has been fantastic" and that his team "remain really enthusiastic about our product pipeline".

Apple shares fell by 5.8%, or $24.33, in after-hours trading, losing a week of gains and taking it to below $400.

The company sold 17.1m iPhones in the quarter, a 21% growth over the year before, but a drop from the 20m the previous quarter, which made it the world's largest smartphone business. That title may now be handed to its bitter rival, Samsung,, which is expected to have shipped more than 20m smartphones in that period.

Peter Oppenheimer, Apple's chief financial officer, blamed the dip on the comparison with the iPhone 4's release a year before, and "speculation" ahead of the release of the iPhone 4S in October.

Cook forecast however that in the coming quarter "we will set an all-time record" for iPhone sales, as analysts expressed concerns about it meeting manufacturing targets.

"Expectations for this company were red-hot, that is why we downgraded it," said BGC Partners analyst Colin Gillis, who lowered his rating on the shares days before. "The reality is their business is not an annuity. They have to sell their quarter's worth of revenue every 90 days.

"They had a big upgrade cycle with the iPhone, the numbers came in weak. They need to set records every time they report to keep up the momentum."

But Apple forecast that it will have a huge $37bn quarter as it will be adding an extra week on to the Christmas quarter - something that it does every six years to bring its fiscal years into line with the calendar. Cook said the company was making "strong progress" in China: "I've never seen a country with as many people rising into the middle class aspiring to own the products that Apple makes."

Apple also sold 11.1m iPads, representing 166% year-on-year growth, but sequentially it showed only slow growth from the 9.2m sold the previous quarter.

The Macintosh computer line had its best-ever quarter, selling 4.9m machines worldwide, pushing it above 5% of PCs shipped for the quarter for the first time in decades. Analysts however had been expecting higher figures, forecasting revenues of more than $30bn.

Cook takes over during a critical juncture for the company, which is battling a fast-rising Google in the mobile arena while fending off consumer electronics giants such as Samsung and Amazon in the hardware field.

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Facebook CTO Bret Taylor talks mobile web, apps and Apple negotiations

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AppId is over the quota

Facebook's launch of its mobile applications platform has been an exercise in diplomacy. It plays nice with the iOS ecosystem, pointing people to native App Store apps and Apple's own in-app payments system, while also promoting mobile web apps and the Facebook Credits currency on other devices.

A significant expansion of Facebook's apps platform, deftly executed. No wonder it was a long time coming: rumours about "Project Spartan" had been circulating for months before the official announcement on 10 October.

"It's a pretty cool launch for us," says Facebook's chief technology officer Bret Taylor.

"It really addresses some of the areas I've heard a lot of concerns about from mobile developers, and it plays to our strengths. For startups, it's very difficult to get their apps discovered. They have a honeymoon period in the app stores where they might be in a top 10 list and get a lot of downloads, but once that honeymoon period is over, discovery is very difficult. By integrating with these social channels in mobile, they can get discovered in really organic ways."

The mobile platform went live alongside the launch of Facebook's native iPad app, but for now, the social network isn't talking about how things have gone. Facebook will hold an event towards the end of next week and release some stats.

Taylor describes the challenges of taking Facebook's applications platform mobile well, though, highlighting the need to get apps working across various devices and operating systems.

"iPhone is extremely popular, but so are Android phones. Windows Phone has made a lot of inroads, and a lot of people use BlackBerry devices. Developing for mobile is a relatively nuanced and complex thing for a lot of developers, particularly in the context of social applications. If someone invites a friend to play a game with them, they don't necessarily know what handset they have."

From that point of view, Facebook's solution is elegant. People tapping on application alerts in their newsfeed on iPhone and iPad will be directed to a native iOS app if it exists – Words With Friends is the example cited by Taylor – while people on other devices will be pointed to the HTML5 mobile web versions. The social network is clearly encouraging developers towards creating both native and HTML5 versions of their apps.

"350 million people are using our mobile apps every month, and that's split 50-50 between mobile web and native apps," says Taylor. "We expect that a lot of the developers that really integrate deeply with these mobile features will have a similar mix… When we talk to developers, they don't want to pick just one platform and live or die by that. They want to reach their customers however they want to be reached. It's not really an either/or discussion."

That extends to mobile versus web as well as mobile web versus native mobile app. Increasingly, apps and services are looking to spread across every platform possible: web, mobile, TV, cars and whatever other devices they can run on.

Taylor talks about his own usage of personalised radio service Pandora in this context: listening on his computer at work, on his iPhone while driving home and then via his TiVo set-top box at home.

"Those are some of the most compelling services, when you're talking about mobile as not just something about your phone, but really about the proliferation of devices, and wanting your application to be accessible on all of them," he says. "We hope that we can be the social discovery engine that drives growth across all of these devices."

Facebook has just launched three new elements on its developer website focused on HTML5: a Resource Centre to help people build, test and deploy their apps; an HTML5-focused blog; and a developer group to foster discussion around the area.

One of the key challenges for developers making HTML5 mobile web apps has been making money from them, so Facebook's decision to make its Facebook Credits virtual currency part of its mobile expansion is a significant one.

Taylor warns that it's early days, though, saying that Facebook's team is working "very intensively" on making the payments system as simple as possible on mobile. The social network has made Facebook Credits mandatory for games running on its website, but mobile has required more diplomacy, deferring to Apple in not allowing developers to take payments using the currency from iOS users.

Negotiating with the likes of Apple will be ever more sensitive and important for Facebook's ambitions going forward – Fortune has a very good feature on how the two companies, along with Google and Amazon, are likely to compete in 2012. How challenging is it to find co-operation and collaboration against this backdrop?

"There is certainly a lot of competition in the mobile platforms space, but we have really effective relationships with a lot of those mobile platform owners," says Taylor. "It's complementary. We worked a lot with Apple on this release to improve discovery for iOS applications, and we're actively working to get this working really effectively on Android too."

Rumours of a "Facebook Phone" or fully-fledged smartphone OS have remained just that: rumours. That means Facebook is still able to present itself as "not a mobile platform ourselves, but a social discovery and engagement platform" in Taylor's words.

For now, at least, its promotion of HTML5 and the mobile web as a viable space for applications is aligned with the improvement in the browser capabilities on iOS, Android, Windows Phone and BlackBerry. "That's the great benefit of all this competition: everyone's products are getting really good," says Taylor.

"There is so much innovation in the browser space both on mobile and desktop. HTML5 and the other technologies it represents really exist now because of that competition. Apple, Microsoft, Google and a whole bunch of other companies are investing so much in the browser, and it's so good for the web. Most of our developers are hoping the mobile web becomes a viable platform for their applications."

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BlackBerry users in line for $100 worth of free apps in compensation

AppId is over the quota
AppId is over the quota
A BlackBerry user in Canada last week as millions of customers across the world found their services disrupted. Photograph: Adrian Wyld/AP

Millions of people whose BlackBerry smartphones were affected by last week's outages will be compensated with $100 (£63) worth of apps from the company's app store.

BlackBerry maker Research in Motion (RIM) said yesterday that each of the affected customers would be able to download the apps – including the games The Sims 3 and Bejeweled – from Wednesday, as the company attempts to restore its damaged reputation.

Millions of BlackBerry owners from the Middle East to the US were unable to send emails, browse the web or use BlackBerry Messenger last week after a problem at RIM's network centre in Slough sent a ripple effect worldwide.

Those affected will be able to download the premium apps from the BlackBerry App World until 31 December as "an expression of appreciation for their patience", RIM said.

Mike Lazaridis, co-chief executive of RIM, said: "We are grateful to our loyal BlackBerry customers for their patience. We have apologised to our customers and we will work tirelessly to restore their confidence.

"We are taking immediate and aggressive steps to help prevent something like this from happening again."

RIM will also offer customers a one-month extension to technical support contracts. Enterprise customers and those who do not have a technical support contract will be offered a month's free helpline support.

The form of compensation may go some way to winning over customers who vented their anger at the Canada-based phone-maker last week. Comments on the BlackBerry blog CrackBerry appeared to welcome the offer. "Finally! They listened to us, thanks RIM! And thanks to CrackBerry for accommodating our complaint," said kelom.

The compensation package is likely to be costly for RIM if millions of customers take advantage of the offer. But those who download more apps may be more likely to stay with the platform – an important step as RIM tries to stave off defections to Google's Android, Apple's iPhone and the expected Windows Phone devices from Nokia. It has been losing customers in the US – and while it has grown its customer base, those are precisely the areas that were worst affected by the outage.

Analysts had previously forecast that RIM could be in line for a $100m payout to up to 70 million customers worldwide, based on a $5-a-month fee for the BlackBerry services.

"The total amount RIM should pay to refund its customers would be about $12m a day," Malik Saadi, an analyst at Informa, calculated last week. "This amount does not take into account liability fees for loss of data or any related legal issues. This could mean RIM paying over $100m, and this amount could escalate for every subsequent day the service is out of action."

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How Apple eclipsed Microsoft

AppId is over the quota
AppId is over the quota
Steve Jobs would have been proud. Apple sold over 17.1m iPhones over the last quarter and posted record profits. Photograph: Beck Diefenbach/Reuters

Apple is now bigger than Microsoft, its old rival. Not just in market capitalisation but also in quarterly revenue and profits. Its enormous, ruthlessly efficient and capitalises on its strengths - its brand and marketing, and uses them to promote top class hardware and software packaged as brilliantly designed and easy to use products.

And now it is looking to China: "I've never seen a country with so many people rising into the middle class who aspire to own products that we make," Apple's chief executive Tim Cook said. He has his eyes on the fresh possibilities of the hundreds of millions of people there in a way that no other western company has: he doesn't just want to sell them phones, he wants to sell them iPads and Macs too. If China clicks– and the fact that some Chinese cities had fake Apple stores which were so good they were indistinguishable from the real thing – then Apple has space for years of growth.

Apple began its comeback with the iPod, released on 23 October 2001. It wasn't the first digital music player but was easily the best in class (due to a clever choice of the hard drive – a first from Toshiba, for which Apple secured an exclusive contract) and the fact that it had previously developed a superfast connection system for video, called FireWire, which it adapted to transfer songs.

The iPod's ease of use easily won over consumers. Apple revolutionised the music player and digital music download market. Then came the iPhone, where Apple wasn't first with a touchscreen, yet did it far better than previous efforts by companies such as Nokia and LG, which sniffed at Steve Jobs's presentation but have since sunk into loss.

Apple hasn't been able to dominate the smartphone market, but it's noticeable that Google's Android mimics the iPhone system (but didn't before its launch: it used a keyboard-based system that looked more like a BlackBerry). Given that Android dominates the smartphone market, running on over 40% of handsets now being sold, compared to Apple's 18% or so, one could say that the "Apple interface" dominates.

Then of course there is the iPad. Apple spent nearly ten years, on and off, developing it; Steve Jobs thought that Bill Gates's announcement in 2001 of a Windows tablet was intriguing, but the design team led by Jonathan Ive couldn't make something with a touch screen that was a real pleasure to use. So it was shelved but the experience of touchscreens was then put to use to develop the iPhone. The iPad was the next step, and while Apple is again - just as with the iPod - not the first in the market, it has completely dominated it. It holds the Guinness world record for being the fastest-selling gadget ever. The iPad's market share is 75% and will retain its lead till 2014.

"I still believe that the tablet market will be bigger than the PC market," Cook said after the results.

Apple has a tiny share of the PC market – it just edged past 5% this quarter compared to the 95% of Windows. Is Apple ever going to reverse that? No, never. Its share is growing minutely and has done so for over five years. Apple's increase, though small, has affected PC sales.

Apple's strength is the diversity of its range of products: phones, computers, tablets and it sells music, TV shows and films. It also sells huge numbers of mobile apps and simple hardware like mice and trackpads and keyboards. The company has colossal amounts of cash - about $70bn (£44.5bn), of which about half is outside the US (and would be subject to heavy taxes if it were repatriated). So it uses that cash to buy favourable terms and equip factories for its suppliers; in return it gets special treatment. It's the same method it used with the iPod, but now done with hundreds of millions of dollars unlike what it could offer a decade ago.

The iPod sales are falling year-on-year. Apple is mainly focussing now on its iPod Touch, in effect an iPhone without the phone. About 100 million have been sold. Many of these will be able to use the new iMessage service, which can send messages to other iPhone or iPad users over the internet. It's like an entry-level version of the iPhone (and a challenge to RIM's BlackBerry Messenger.

The only thing Apple doesn't do is manufacture hardware. But Cook, who was hired by Jobs in 1997 has gradually changed that. Apple gives hardware contract to companies in China and Taiwan. Its most serious rival in hardware is Samsung, the South Korean conglomerate with whom it is fighting a series of court battles over patents on mobiles, smartphones and tablets. Samsung also has a new flagship Android phone, just released, but without the immediate UK availability of the iPhone 4S. And yet ironically, Apple is also Samsung's biggest customer. They need each other.

The other key rival is Amazon, which sells more content than Apple, but also does hardware through its Kindle, and especially the low-cost Fire tablet. Where Apple profits on the hardware, Amazon profits on the content, siting them at opposite ends of the same market.

And then there is iCloud. Both Google and Microsoft have been pushing to take cloud computing to the next level. But Apple's iCloud service already has 20 million users, making it one of the biggest players in the sector. However, unlike Microsoft and Google, its aim is to use it to sell hardware, rather than software or services.

But for a really clear example of Apple's efficiency, consider a figure that's normally ignored: its inventory (the hardware that's sitting around in warehouses).

At the end of the quarter, Apple, despite its colossal turnover, had just under three days' worth of stock under its ownership. Far less than Nokia(35 days) or BlackBerry-maker RIM (45 days).

Short inventories are generally a good sign in a hardware company: they indicate good supply chain management and product planning. Steve Jobs hired Tim Cook to tighten up Apple's then-sloppy inventory management. He has got it down from weeks to days. Ideally, he wants it to be hours. But Apple's growth has defeated that ambition. It's not a bad one to miss, though.

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Dennis Ritchie: the other man inside your iPhone

AppId is over the quota
AppId is over the quota
Dennis Ritchie (standing) with Ken Thompson at work in 1972. Photograph: nushackers.org

It's funny how fickle fame can be. One week Steve Jobs dies and his death tops the news agendas in dozens of countries. Just over a week later, Dennis Ritchie dies and nobody – except for a few geeks – notices. And yet his work touched the lives of far more people than anything Steve Jobs ever did. In fact if you're reading this online then the chances are that the router which connects you to the internet is running a descendant of the software that Ritchie and his colleague Ken Thompson created in 1969.

The software in question is an operating system called Unix and the record of how it achieved its current unacknowledged dominance is one of the great untold stories of our time. It emerged from Bell Labs – the R&D facility of AT&T, the lightly regulated monopoly that ran the US telehone network for generations. Dennis Ritchie and Ken Thompson were two ferociously bright Bell programmers who had been assigned to work with MIT on the design of an impossibly complex multi-user operating system called Multics. In the end, the plug was pulled on the project, with the result that Bell Labs found itself with two pissed-off hackers on its books. Ritchie and Thompson badly needed a new operating system to provide an environment for their own programming, had hoped that Multics would provide it and had greatly enjoyed working on the project. Back in the lab they decided that they would just have to build the operating system themselves. So in a fantastic burst of creativity (and without asking anyone's permission) they wrote Unics (as a counterpart to Multics). Inevitably the 'cs' became 'x' and Unix was born.

Thus did AT&T find itself the astonished proprietor of a uniquely powerful and innovative operating system. The problem was that it couldn't sell it, because under the Consent Decree that gave it the telephone monopoly AT&T was not allowed to be in the computer business. So the researchers in Bell Labs did what geeks do – they gave it away to their peers in university research labs, under a licence that permitted the recipients to modify and improve it. In doing this Ritchie and Thompson unwittingly launched the academic discipline of computer science, because university departments were suddenly able to give their students software that was not only powerful (and malleable) but also free. The result was that virtually every computer science student in the world became a Unix geek in the course of his or her education. Unix was to computer science what the Bible is to divinity students. The difference was that geeks were free to modify and improve their bible – which is what Bill Joy and his fellow students at Berkeley did when they created their own version of Unix, codenamed BSD (for Berkeley Software Distribution) – of which more in a moment.

In due course, AT&T escaped the shackles of the Consent Decree and started to assert proprietary rights over Unix. This spurred an MIT programmer named Richard Stallman to embark on a project to change the world. He founded the free software movement, invented a clever way of using copyright law to preserve the freedom of programmers to modify software, and embarked on the GNU project to create a functional clone of Unix that would be free of proprietary constraints. (GNU stands for "Gnu's not Unix" which is the kind of recursive joke only programmers enjoy.) Stallman, who is one of the great figures of our time, built most of the software tools needed for his great project, but before he could write the kernel of the operating system a Finnish hacker named Linus Torvalds did it – and released it in 1991 as Linux.

The rest, as they say, is history. Linux became one of the greatest collaborative ventures the world has seen (second only to Wikipedia), in which geographically dispersed programmers collaborate over the internet to debug, improve, extend and enhance a complex operating system that is not only remarkably stable and reliable but is also free. Because it's free and malleable, every manufacturer in the world who needs a stable and flexible operating system to run an electronic device tends to use Linux – which is how your TV's set-top box and your broadband router and maybe also your smartphone comes to be a Linux box. The same goes for the millions of PCs that make up Google's server farms. In that sense, we are all now Linux (and, by inference, Unix) users.

The neatest twist of all, however, involves Apple. OS X – the operating system that now powers every Apple product – is actually built on the Berkeley distribution of Unix, so if you hack into your iPhone what you'll find is BSD 4.2. You could say, therefore, that what Apple really did was to give Unix a pretty face. I've often wondered what Dennis Ritchie would have made of that. Now that he's gone, we'll never know. What we do know, though, is that we owe him more than we realised.

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