Rancho Palos Verdes, California (CNN) — Twitter is going beyond 140 characters by adding a photo-sharing service.

The social network is rolling out an image-hosting feature to users over the next couple of weeks, CEO Dick Costolo announced Wednesday at the All Things Digital conference here.

Users will be able to upload photos through Twitter’s website to start, with desktop and mobile applications coming later, Costolo said.

To construct the service’s backbone, Twitter partnered with Photobucket, which already hosts more than 8 billion photos and videos. The Twitter service will accept only still images.

The company is also in talks with cellular carriers to enable people to tweet photos using a phone’s picture-messaging system, Twitter said in a statement.

The new photo feature coincides with changes to Twitter’s search function. Results pages will now include popular photos and videos alongside text. The videos will be pulled from websites such as YouTube and Vimeo.

Several third-party photo services, such as Twitpic and Yfrog, have specifically targeted Twitter users. Costolo said Twitter created its own service to make the process easier for less tech-savvy people.

“We just need to remove the friction from adding photos into Twitter,” he said.

But Twitter’s recent moves to compete with the companies that build products for its service has created some ill will. Developers say they feel uneasy about Twitter acquiring makers of related software, such as TweetDeck, and then threatening to change the rules so as to potentially lock out certain types of apps.

“Anything we do is going to have some overlap with what they do,” Costolo said of Twitter’s 600,000 developers. “All we can do is be straightforward about where we’re headed.”

Costolo suggested that software makers displaced by Twitter’s new photo service should focus on other businesses. Yfrog, for example, has “an amazing hosting business,” he said.

Twitpic, a popular Twitter image-hosting website, has come under some scrutiny for selling the rights to photos uploaded by some of its users. Twitter’s policy outlines that the company will not try to claim ownership of images uploaded to the service, Costolo said.

He also said Twitter’s foray into photo sharing is not aimed at Facebook, the world’s largest host of online photos. Twitter’s is about sharing pictures as they happen and will not let users arrange images into photo albums, he said.

Twitter has 500 employees, but Costolo declined to say how many people actively use its service. Facebook, meanwhile, has about four times as many employees and more than 600 million active users.

A survey competed this month by the Pew Research Center says 13% of U.S. adults with Web access use Twitter.

Photobucket didn’t immediately return a request for comment.

That’s not a typo, BILLION – read below.

Microsoft has bought Skype for $8.5 billion, in an all-cash deal. The deal closed a few hours ago. The Wall Street Journal confirmed the news after it was first reported yesterday. The announcement is likely to come out later today or tomorrow morning, according to several reports. Steve Ballmer, CEO of Microsoft, is said to be a big champion of the deal, the largest in the history of the company. Ballmer and Skype CEO Tony Bates will host a press conference in a few hours.

Skype has been up for sale for some time, thanks to some very antsy investors. My sources indicated both eBay and Silver Lake Partners have been getting nervous about the delayed initial public offering and have been pushing for a sale of Skype. Facebook and Google were said to be earlier dance partners for Skype, and Microsoft was a late entrant and is now close to walking away with the prize.

It won’t surprise me if Microsoft comes in for major heat on this decision to buy Skype — and the software company could always botch this purchase, as it often does when it buys a company. The Skype team is also full of hired guns who are likely to move on to the next opportunity rather than dealing with the famed Microsoft bureaucracy.

I also don’t believe Facebook and Google were serious buyers. Google, with its Google Voice offering, doesn’t really need Skype. In essence, I feel Microsoft was bidding against itself. Even then, I personally think this is a bet worth taking, especially for a company that has been left out in the cold for so long.

• Skype gives Microsoft a  boost in the enterprise collaboration market, thanks to Skype’s voice, video and sharing capabilities, especially when competing with Cisco and Google.
• It gives Microsoft a working relationship with carriers, many of them looking to partner with Skype as they start to transition to LTE-based networks.
• It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.
• However, the biggest reason for Microsoft to buy Skype is Windows Phone 7 (Mobile OS) and Nokia. The software giant needs a competitive offering to Google Voice and Apple’s emerging communication platform, Facetime.

Guess Who’s the Big Winner

The biggest winner of this deal could actually be Facebook. The Palo Alto, Calif.-based social networking giant had little or no chance of buying Skype. Had it been public, it would have been a different story. With Microsoft, it gets the best of both worlds: It gets access to Skype assets (Microsoft is an investor in Facebook) and it gets to keep Skype away from Google.

Facebook needs Skype badly. Among other things, it needs to use Skype’s peer-to-peer network to offer video and voice services to the users of Facebook Chat. If the company had to use conventional methods and offer voice and video service to its 600 million plus customers, the cost and overhead of operating the infrastructure would be prohibitive.

Facebook can also help Skype get more customers for its SkypeOut service, and it can have folks use Facebook Credits to pay for Skype minutes. Skype and Facebook are working on a joint announcement, and you can expect it shortly.

Why Did Skype Want To Sell?

Skype had filed for an IPO, was going to do about a billion dollars in revenues, and was on its way to becoming profitable. So why sell? Silver Lake and eBay were both getting impatient and wanted to lock in their profits. Some sources also believe Skype’s revenues had stalled.

The company had bet heavily on is video sharing service. The premium version of video calling and sharing was a way for Skype to increase its average revenue per user and move into the enterprise market. However, given Skype’s DNA is that of a consumer Internet company, the challenges aren’t a surprise.

So Who Made What?

• Using the $8.5 billion price as the likely sale price, eBay gets $2.55 billion for its 30-percent stake in Skype. So in the end, eBay did make money on the Skype deal.
  The Skype Founders

• Niklas Zennström and Janus Friis, the co-founders, with their 14-percent stake, take home about $1.19 billion. Damn, these guys know how to double-dip!
• Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB) own 56 percent of the company, and that stake is worth $4.76 billion.
• Andreessen Horowitz had three percent of the deal and made $205 million profit on their $50 million initial investment.

Via Gigaom

File this under the “What?” department for us over here at M.KAP… definitely an interesting read:

Apple has been turning in hot quarter after hot quarter, blowing away expectations. Apple’s mobile operating system, iOS, the platform underlying iPhones, iPods, and iPads, seems to be taking over the world.

Apple’s humongous success has made it the most valuable tech company in the world. The market value of the former tech alpha dog, Microsoft, meanwhile, has shriveled.

But let’s keep things in perspective!

For all of its mind-blowing success, sales of Apple’s computing products are still just a fraction of Microsoft’s Windows 7 licenses.

As you can see in the chart below, since Microsoft launched Windows 7, Apple has sold ~150 million iPhones, iPads, iPod Touches, and Macs. Microsoft, meanwhile, has sold ~350 million Windows 7 licenses.

(But, as a commenter notes below, there was a time when Microsoft owned 95% of the computing market, and today it’s probably just 50% when you factor in Android phones.)

Read more: http://www.businessinsider.com/chart-of-the-day-windows-7-licenses-vs-ios-units-2011-4#ixzz1LJl6NzxN

NEW YORK (CNNMoney) — Netflix knocked over a new milestone Monday: It now has more subscribers than the largest cable TV operator in the U.S.

Netflix’s global subscriber base grew almost 70% over the past year, to 23.6 million users. With that audience, it dethroned Comcast (CMCSA,Fortune 500) as the country’s biggest provider of subscription video content. More than 7% of Americans now subscribe to Netflix.

Those details came out Monday in Netflix’s (NFLX) first-quarter report, in which the company reported earnings of of $60.2 million, or $1.11 a share. That’s up from $32 million, or 59 cents a share, a year ago.

Revenue rose 46% to $719 million. Both figures topped Wall Street estimates, but shares fell 2.5% in after-hours trade on light forecasts for the second quarter.

Netflix said it expects earnings of 93 cents to $1.15 a share for the second quarter, lower than analysts’ forecasts.

When you’re a giant, growth gets harder.

“Looking forward, our prior period comps for net adds are going to get tougher,” Netflix said in its release. “While we expect our net adds the rest of this year to continue to exceed those of the prior year, it won’t be at a pace of nearly 2X like in Q1.”

The release also noted the emergence of new, competing services Hulu Plus Amazon (AMZN, Fortune 500) Prime.

More content: Netflix is hoping to combat increased competition with more unique content. Last month, the company announced it had boughtits first original show: “House of Cards,” featuring Kevin Spacey.

“This represents slightly greater creative risk than we’ve taken in the past, but we think it’s reasonable given the popularity of the original BBC show,” Netflix said Monday in a “letter to shareholders” released alongside its earnings report.

Netflix will consider the buy a success “if ‘House of Cards’ is popular enough on Netflix so that the fee we’ve paid is in line with that of other equally popular content on Netflix at the time,” Hastings wrote in the letter.

The company said it hopes to “license two or three similar, but smaller deals” in the future.

Netflix has also brokered deals with networks and studios. In its earnings release, the company admitted its recent deal with CBS “includes only a few on-air shows at present” — but it also makes Netflix the only online subscription service to offer shows from all four broadcast networks.

International concerns: Netflix launched in Canada late last year, and it ended the first quarter of 2011 with about 800,000 Canadian subscribers — lower than the company had forecast.

“We are still learning the seasonality curve and nuances specific to Canada,” Netflix said in its release.

The company had previously said it expected $50 million in operating losses in the second half of the year for the international sector. Now, it forecasts $50 to $70 million in losses — “which we are comfortable with given the size of the opportunity.”