Bits Blog: IBM Plans Big Spending for the Cloud

Bits Blog: Intel Plans to Cut 5,000 Jobs in 2014

Bits Blog: IBM’s Big Plans for Cloud Computing

U.S. Plans Global Network of Free Online Courses

The learning hubs represent a new stage in the evolution of massive open online courses, or MOOCs, and address two issues: the lack of reliable Internet access in some countries, and the growing conviction that students do better if they can discuss course materials, and meet at least occasionally with a teacher or facilitator.

“Our mission is education for everyone, and we’ve seen that when we can bring a community of learners together with a facilitator or teacher who can engage the students, it enhances the learning experience and increases the completion rate,” said Lila Ibrahim, the president of Coursera. “It will vary with the location and the organization we’re working with, but we want to bring in some teacher or facilitator who can be the glue for the class.”

Early this year, using courses from Coursera and other online providers, the State Department ran a pilot program, asking embassies and consulates and others in places funded by the United States to open space where people could take free online courses in priority fields, including science and technology subjects, Americana and entrepreneurship.

“Some of them took it above and beyond, and decided to host facilitated discussions with the courses,” said Meghann Curtis, the State Department’s deputy assistant secretary for academic programs. “Over the summer, when we looked at the success stories, we identified facilitated discussions as something that seemed to work.”

Coursera is joining forces with the State Department’s MOOC Camp Initiative, now operating in 40 countries — about half using Coursera courses, and the other half courses from such providers as edX and Open Yale, whose courses are also available free on the Internet. But beyond having its courses used, Coursera is taking an active role in the project.

“We have a list of MOOCs from different providers that we suggest, but Coursera has had a unique interest in working with us to collect the data to understand the learning outcomes from facilitated discussions, and has given us additional materials to give out to the facilitators,” Ms. Curtis said.

The classes are small, some with only 15 students and none with the hundreds or thousands of students who enroll online.

In a pilot program in Bolivia, Korea and Indonesia, Ms. Ibrahim said, the completion rate for those in classes that met for discussion once a week — and provided access to career services, another part of the pilot — was 40 percent, compared with only 10 percent of those who worked online only.

For the State Department, Ms. Curtis said, the appeal of the MOOCs is that they can be used to reach students anywhere, exposing them to American universities and college-level discussion, and perhaps spurring a desire to study in the United States.

Instruction in the classes is in English, she said, and neither the facilitators nor the MOOC providers are getting paid. Many facilitators are foreign service officers, retired teachers, or those who had a Fulbright or other travel grant.

Both Coursera, the largest MOOC provider, and edX, the nonprofit Harvard-MIT venture that is the second largest, began two years ago by offering wholly online courses, but are now working with universities to offer blended, or hybrid, courses. Both are also working with a growing number of overseas partners. including universities in Australia, Switzerland, China and elsewhere, sometimes with courses offered in languages other than English.

In October edX announced that it would be working with the French higher education minister to offer online courses in France, and that its platform had also been chosen to power China’s new online learning portal, Xuetangx. EdX is also working with the International Monetary Fund to offer training.

Coursera, which now has 100 university partners, has developed a network of translators who are making the materials in some courses available in Arabic, Chinese, Japanese, Kazakh, Portuguese, Russian, Turkish and Ukrainian.

Increasingly, though, American MOOC providers are facing competition from a growing crop of foreign MOOC providers, such as Germany’s Iversity and Brazil’s Veduca.

Along with the State Department, Coursera’s partners for the learning hubs include the University of Trinidad and Tobago, Overcoming Faith Academy Kenya, Digital October, Bluebells School International and Lady Sriram College, Learning Links Foundation and Tapthetech.org.

DealBook: Twitter Discloses Its I.P.O. Plans

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Verizon Backing Off Plans for Wireless Home Phones

After Hurricane Sandy, Verizon asked state regulators in New York for permission to substitute Voice Link, a home phone service that carries calls on a cellular network, for what it refers to as “plain old telephone service.” The first place in the state it tried broad use of Voice Link was on the west end of Fire Island, a resort community on the Atlantic Ocean that incurred heavy damage in the late October storm.

Verizon had hoped to use Fire Island as an example of how Voice Link could be installed in other areas of the state where its network of copper wires was damaged by storms or deemed too costly to repair or maintain. The regulators said they would monitor the results and decide later this year.

But Verizon did not wait for the final results. It conceded defeat this week and said it would start laying fiber-optic cable that would restore home phone service and Internet access.

Edward P. Romaine, the supervisor of the town of Brookhaven, said he was “delighted” that Verizon had been “forced into” offering an alternative to Voice Link. “I dare say there are very few residents of Fire Island that would prefer Voice Link,” he said.

The company also withdrew its request to the state Public Service Commission for permission to use Voice Link as a permanent substitute for traditional home phone service elsewhere in the state.

“What we’re basically telling the commission is we’re not going to pursue the stuff that we were pursuing,” said Tom Maguire, Verizon’s senior vice president for national operations support. “We’re going to go back to the day before Sandy.”

The Voice Link experiment was watched closely by consumer advocates because it was seen as a test of the obligations that traditional phone-service providers have to their customers. The advocates fear that acceptance of Voice Link will give Verizon an incentive to neglect its copper lines, which are expensive to maintain.

Verizon and AT&T have told federal and state regulators that the demise of “plain old” phone service is inevitable, as more Americans rely on cellphones and demand faster Internet connections than copper wires can provide.

Indeed, Verizon is not abandoning Voice Link. The company intends to continue offering it as a substitute for traditional service in Mantoloking, N.J., and other communities that have been hit hard by storms.

Some Mantoloking residents have complained about Verizon’s decision not to restore their old phone lines after Hurricane Sandy wreaked havoc there. But the company said that people in Mantoloking, unlike the residents of Fire Island, have an alternative: they can get phone service and Internet access from Comcast, the local cable provider.

That answer did not satisfy Stefanie A. Brand, the director for the Division of Rate Counsel in New Jersey. A representative of utility consumers, Ms. Brand said Mantoloking residents should not have to buy a bundled service from the cable company to get home phone service that is not wireless.

“Verizon is the provider of last resort in New Jersey,” Ms. Brand said, “so they have to offer customers a basic telephone service option, and there is no telephone service option available to the customers in Mantoloking.”

AARP has called on the Federal Communications Commission and New Jersey’s Board of Public Utilities to investigate Verizon’s use of Voice Link in Mantoloking. The organization argued that dependable, regulated phone service is a “lifeline” for residents, especially older ones, when a storm like Hurricane Sandy hits.

Jim Dieterle, the state director for AARP in New Jersey, called Voice Link a “third-rate” alternative. He said state officials should not accept less than what Verizon is doing on Fire Island. “Why would they do one thing in New York and then not in New Jersey? We’re not second-class citizens,” he said. “I don’t think our governor would appreciate being treated in a less admirable way.”

Cisco Plans to Cut 4,000 Jobs, as It Posts Profit Gain

Cisco’s Warning: On “Nightly Business Report,” Jon Fortt of CNBC weighed in on Cisco Systems, whose chief executive on an earnings call announced a reduction of about 5 percent of its staff, despite strong revenue.

As Revenue Exceeds Estimates, Groupon Plans $300 Million Share Buyback

The company, which also announced a $300 million share repurchase program on Wednesday, reported a better-than-expected 7 percent jump in second-quarter revenue to $608.7 million, as sales in the United States and Canada climbed 45 percent.

Lefkofsky, who was named interim CEO in February, has pushed on with his mobile-centric strategy since fellow founder Andrew Mason was replaced in February. The former CEO had presided over a precipitous share price decline to below $5 from its $20 debut in 2011.

The stock, which has gained 80 percent in 2013, rose to $10.35 in after-hours trade on Wednesday, its highest since July 2012.

"I think the news about installing Lefkofsky played a big part," said Tom White, an analyst at Macquarie Research. "Investors have been very impressed by the progress he's made since being made interim head and improving metrics particularly in the North America business."

With its core daily deals business model in steep decline, Groupon in recent months has re-invented itself as a more traditional e-commerce business that sells long-term deals, particularly through its smartphone app.

Lefkofsky and other executives told Wall Street analysts on Wednesday that emailed deals, once the linchpin of Groupon's sales strategy, now only accounted for 40 percent of its quarterly revenue. Instead, Groupon's customers were increasingly logging into the site to search for goods they were actively seeking, they said.

"It was only a few short years ago when email was all of the business," Chief Financial Officer Jason Child said. "The good news for us is we see our most active cohort of customers engaging with the marketplace most often. They're browsing, they're searching, they're going in and typing in keywords."

The difference, Lefkofsky added, was that Groupon was transforming from a "demand-generation business to a demand-fulfillment business."

But company management warned it would take several quarters for Groupon to complete its shift in direction and fully enter and compete in an intensely competitive and crowded e-commerce marketplace dominated by giants like Amazon Inc and eBay Inc.

For Groupon to succeed, Lefkofsky said it needed to focus on refining its algorithms to present goods relevant to a user's interests, while also improving its product suite for sellers, which includes rewards tracking programs and credit card processing tools.

BY THE NUMBERS

Groupon's gross billings, or the total value of purchased goods and services - of which the company takes a cut - rose 30 percent in North America, outpacing a 10 percent expansion rate overall.

About 50 percent of its North American transactions came through smartphones and tablets, versus 30 percent a year ago, the company said.

Groupon's success with mobile adoption has been viewed with particular favor on Wall Street. Groupon shares jumped 11 percent on June 14 when Deutsche Bank analysts upgraded the stock, attributing their optimism to the company's progress on the mobile front.

Groupon's revenue in the United States and Canada in the second quarter grew 45 percent, offsetting a 24 percent slide in Europe, the Middle East and Africa (EMEA) and a 26 percent fall everywhere else.

Child told Reuters on Wednesday that while Groupon's international performance has been weak, the company's investment in shoring up its European operations will pay off soon.

"North America continues to see strong growth and we made good progress in EMEA which flipped to positive gross billings growth," Child said. Gross billings in EMEA grew 4 percent in the second quarter. "We're now shifting our focus to the rest of the world."

The Chicago-based company reported quarterly revenue of$608.7 million compared with $568.3 million a year ago. Analysts on average expected $606.2 million in revenue, according to Thomson Reuters I/B/E/S.

It posted a second quarter net loss of $7.6 million, or 1 cent per share, compared with a year ago profit of $28.4 million, or 4 cents a share.

Excluding one-time items, it earned 2 cents a share, level with analysts' expectations.

(Reporting by Gerry Shih; Editing by Carol Bishopric)

Bits Blog: Motorola Plans to Make Smartphone in Texas

Spencer Platt/Getty Images Dennis Woodside, chief executive of Motorola Mobility.

2:07 p.m. | Updated to add more detail about the workers hired at the factory in Texas.

Just like Apple, Google has caught the “Made in America” bug. Motorola Mobility, the handset maker acquired by Google, says its next phone, called Moto X, will be manufactured in the United States.

Speaking at the All Things D conference in Southern California on Wednesday, Dennis Woodside, the head of Motorola, said that the company would build its first new flagship phone under Google ownership at a factory outside Fort Worth. He said that the Texas location would allow Motorola to “iterate and innovate much faster.”

Google has tried making hardware in the United States before. Last year, it planned to assemble the Nexus Q, a home media player, in California. But the company postponed the device after it received poor reviews and then quietly killed it.

Mr. Woodside said Motorola and Google were taking over an old Nokia manufacturing plant that had employed 16,000 workers when it was last in use 15 years ago. He said around 2,000 employees would be hired to work at the 500,000-square-foot building. The plant will be up and running by August, he said.

The new workers will be employed by Flextronics, a manufacturing company Motorola hires for its work worldwide. They will be hired by August in jobs ranging from entry level roles to engineering, said Danielle McNally, a Motorola spokeswoman. The new jobs are “different and separate” from the more than 4,000 positions that Motorola eliminated last year, she said.

Mr. Woodside acknowledged that while the Moto X will be built in the United States, not all of its parts would necessarily come from American manufacturers.

“The components will come all over the world,” he said. Display parts will be built in South Korea, for example, and processors will be made in Taiwan, he said.

Google executives have given clues about what a Motorola phone would do. It would have batteries that last longer than a day, they have said, would not break when dropped and would include features like a better camera, artificial intelligence and sensors that recognize people’s voices in a room, for example.

“Think about your device — battery life is a problem, if a kid spills a drink on your tablet screen it shouldn’t die, if you drop your phone it shouldn’t shatter,” Larry Page, the chief executive of Google, told analysts last month. “There’s real potential to invent new and better experiences, ones that are much faster and more intuitive. So having just seen Motorola’s upcoming products myself, I’m really excited about the potential there.”

Mr. Woodside said Wednesday, though, that phones with unbreakable screens would not be included in this year’s Motorola phones.

Mr. Woodside said the Moto X phone was in his pocket — but coyly shook his head when asked to show it off.

Claire Cain Miller contributed reporting.

Amazon, Bracing for Strikes in Germany, Plans to Hire Engineers

Werner Vogels, the chief technology officer at Amazon, said the company chose Germany because it was the largest market in Europe and because Berlin was a good source of qualified software engineers and application developers.

Mr. Vogels said Amazon’s sales of cloud-computing were accelerating in Europe, as technology managers sought to cut costs and were increasingly reassured that sensitive corporate data could stay secure in remote data centers.

“All I can say is we are very happy with the development of cloud-computing sales in Europe,” Mr. Vogels said during an interview at the cloud-computing conference in Berlin, which was attended by 935 software developers.

The engineers would work with a team at Amazon’s European headquarters in Dublin but be based in Berlin and Dresden.

At the same time, the U.S. tech giant is girding for possible strikes by workers at two of its largest distribution centers in Europe.

Amazon employees in Bad Hersfeld who belong to ver.di, a German trade union, voted Monday to authorize a strike. Mechthild Middeke, a ver.di spokeswoman organizing workers at the Bad Hersfeld plant, said 97.6 percent of ver.di workers at the facility had voted to strike.

The employees want Amazon to sign a collective bargaining agreement used by some local employers, which ver.di says could increase the annual pay and benefits of Amazon workers as much as a third. Amazon has refused to sign the agreement, arguing that the U.S. company pays workers at levels comparable to other local online retailers, Ms. Middeke said.

Ver.di wants Amazon to pay the roughly 9,000 workers at its eight logistics centers in the country as “retailing” workers under German law, which would qualify them for the higher pay. Amazon says the workers are “logistics” employees, who on average earn €9.30, or $12.10, an hour in their first year of service and more than €10 an hour thereafter.

“We will do everything possible should there be strikes to make sure that our customers in Germany are served,” said Christine Höger, a spokeswoman for Amazon Germany in Munich. Ms. Höger said that Amazon paid its logistics employees more than comparable German businesses pay for logistics workers.

Ver.di members at Amazon’s distribution center in Leipzig voted last month to strike. Dates for the strikes have not been set, Ms. Middeke, the union representative, said. She declined to say if her union represented a majority of workers at either Amazon facility.

“A work stoppage will take place in the near future,” Ms. Middeke said.

Ms. Höger said Amazon had attempted to reach agreement with ver.di representatives, but had made little progress.

“We had several informal talks with ver.di over the past few weeks,” Ms. Höger said during an interview. “While we are willing to continue our conversation, we also see too little common ground for negotiations at the moment.”

Heribert Jöris, the managing director of Handelsverband Deutschland, the main association representing employers in the German retailing industry, said he estimated the chances of a strike at Amazon’s facilities as “very high.”

The employers’ association in January canceled a nationwide collective bargaining agreement covering workers at 100,000 retailing businesses, saying it wanted changes in compensation and work practices that date from the 1950s.

Employers and unions are expecting to begin negotiations on a new contract within weeks. Ver.di this year organized a strike by workers at Zara, the clothing retailer, and has threatened work stoppages at Globus, a discount chain, Mr. Jöris said. But in neither case have employers agreed to new wage pacts, he added.

“I’m pretty sure there will be strikes now,” Mr. Jöris said. “But that doesn’t mean the strikes will be successful.”

Mr. Vogels, a Dutchman who is based in Seattle, declined to comment on the labor situation at Amazon’s retailing operations in Germany.

The new engineers would be hired by a division of Amazon, Amazon Web Services, over the next 12 months. The developers would work for a new subsidiary, Amazon Development Center Germany, which would make applications and other software tools for customers of Amazon’s cloud-computing business.

Amazon offers its European business customers like Royal Dutch Shell; Kempinski Hotels, a chain based in Geneva; and Unilever the option of storing their data in computing centers that it runs inside the European Union to satisfy a law that requires business to handle the data of E.U. citizens within the 27-nation bloc.

Jeremy Ward, a senior vice president for information technology at the Kempinski chain, which is majority owned by the sovereign wealth fund of Thailand, is in the middle of a five-year project to shift its corporate computer functions to Amazon’s cloud.

Mr. Ward said Kempinski was on track to cut its annual I.T. costs by 40 percent as it moved functions like an internal employee telephone directory, training videos and corporate news, currently run by 143 Kempinski servers, into the cloud.

“I think increasingly businesses are dropping their preconceived notions and are beginning to take advantage of the savings in the cloud,” Mr. Ward said in an interview at the conference.

Bits Blog: Samsung Plans Mini-Stores in Best Buys

Allison Joyce/Getty Images A hands-on experience with the Samsung Galaxy S 4 smartphone.

Samsung Electronics is giving Apple some of its own medicine. The company will set up mini-stores this summer inside Best Buys across the United States.

Samsung on Thursday said it would open 1,400 of the stores by the end of June. Called a Samsung Experience Shop, each store will be an entire section at Best Buy devoted to showcasing Samsung smartphones, tablets, cameras, laptops, televisions and accessories. It will also include customer support for Samsung products, similar to the Genius Bar at Apple stores.

Samsung is the biggest maker of phones in the world. But Apple’s iPhone is still the top-selling mobile device in the United States.

Nonetheless, Samsung says the launch of its Best Buy stores is not about competing with Apple, but rather to provide consumers with what they want. “At the heart of who we are, this is about responding to consumer needs and requests and ensure they’re delighted and empowered and happy with their choice of Samsung as a brand,” Ketrina Dunagan, vice president for retail marketing, said in an interview.

Apple has about 400 bricks-and-mortar retail stores around the world. Apple also has mini-stores in Best Buy locations and partnerships with other big retailers like Walmart and Target; its iPhones and iPads are prominently displayed in carriers’ retail stores.

Samsung’s devices, too, are heavily promoted with big signs and booths inside carriers’ stores, and in July, the company opened a retail store in Vancouver. It remains to be seen whether the company will continue to roll out its own stores. Ms. Dunagan said opening stores inside Best Buys was a quicker way to broaden the company’s footprint in retail.

Other electronics makers like HTC, Motorola and BlackBerry do not have as strong a retail presence, and they mostly rely on wireless carriers selling their phones.

Samsung has had a partnership with Best Buy for a long time. The main difference now is that instead of having its products scattered throughout Best Buy stores, they will all be in one place. In the mini-stores, Best Buy employees will be trained to educate shoppers on Samsung devices and walk them through purchase and activation. In stores with more space, there will be demonstrations showing how Samsung devices can share content across multiple screens. In the customer support section, shoppers can ask Best Buy employees what they can do when something goes wrong with a Samsung device, as when the screen breaks.

Of course, Samsung must pay Best Buy to put its products in the spotlight in so many stores. Ms. Dunagan declined to comment on how much because the details of the partnership are confidential.

This post has been revised to reflect the following correction:

Correction: April 4, 2013

An earlier version of this post included an outdated name for the manufacturer of BlackBerry smartphones. The company now calls itself BlackBerry as well, no longer Research in Motion.

Bits: A Start-Up Plans to Digitize Your Postal Mail

One glaring omission in the list of services that have been transformed by the Internet: postal mail.

A start-up, Outbox, is trying to change that by digitizing your mail. For $5 a month, you can skip trips to the mailbox and sorting and recycling your mail, and instead view and organize all your correspondence on an app and do away with junk mail with the swipe of a finger.

The Postal Service is particularly vulnerable, mired in debt, ending Saturday delivery and desperate for change.

Outbox is starting small. It has been operating in Austin, Tex., where the company is based, and this week expanded to San Francisco.

“From anywhere, anytime, you have exposure to your postal mail for the first time, in really a way that the postal network should be constructed in the 21st century,” said Will Davis, co-founder of Outbox, who calls the Postal Service the original social network.

With the app, going through your mail becomes easier and more convenient. Your letters and envelopes are picked up from your mailbox and scanned so they’re accessible on a pretty app. You can unsubscribe from junk mail, file mail in virtual folders to look up later and form to-do lists for responding to time-sensitive mail.

E-mail is broken, Mr. Davis and his co-founder, Evan Baehr, said, which is one reason that only about one-fifth of people choose to receive bills electronically. That is why they built an app for users to interact with postal mail separately from their in-boxes.

If there is a piece of mail you want physically, whether it’s the J. Crew catalog or a hand-drawn card from your niece, you can ask Outbox to deliver it. Otherwise, Outbox shreds and recycles it.

It all sounds very elegant for the user, but things get much more complicated from the company’s perspective. Outbox spent months interviewing 100 families about their habits and desires regarding mail.

Identity theft can occur when thieves dig through recycling bins and steal paper mail. So how can you protect yourself when you are paying someone to fetch your mail and open it? Outbox’s founders said the company carefully screens employees, even doing credit checks to make sure they do not have a motive to steal a customer’s identity, and has a $1 million insurance policy to protect customers if its safeguards don’t work. Digitized mail is on a secure site and paper mail is shredded.

For now, Outbox sends employees call “unpostmen” door-to-door to physically gather your mail and take it to a warehouse. (If your mailbox has a lock, you send them a photo of your key and they re-create it, a technical feat of its own.)

The idea of sending people door-to-door seems impossible to expand nationally. That is why Outbox is starting in dense cities, the founders said, and doing pickups just three days a week.

Its master plan is to partner with companies that send mail, like retailers and cable companies, or with the Postal Service. Then, catalogs, bills and other mail could be sent directly to Outbox.

In rural places where Outbox can’t afford to operate, people would at least have much less mail in their mailboxes because most would be digital, Mr. Davis said.

Mr. Davis and Mr. Baehr met at Harvard Business School and worked in Washington, where they said they developed the urge to try to solve big bureaucratic problems more quickly than bureaucracies do.

They talked to the Postal Service before starting, they said, but it moved too slowly for them.

Escape Plan’s New DLC: The Underground

Escape Plan came to PlayStation Vita very early in its lifecycle, and we loved it. We learned it would get DLC back in April, and indeed it has, in the form of Bakuki’s Lair and The Asylum.

And today, IGN can confirm that Escape Plan’s third DLC pack – The Underground – will be coming to PlayStation Network this Tuesday, July 31st. It will cost $1.99 for its first two weeks on the market, and will jump up to $4.99 thereafter.

The Underground again puts players in the role of the lovable Lil and Laarg, the petite and obese character tandem at the heart of Escape Plan’s comical plot. Evil mastermind Bakuki is still on their respective tails, this time chasing them through a railroad station. The same mechanics are at play here, requiring gamers to manipulate the environment around them using the front and back touch bad, the gyroscope and analog sticks to get both characters to safety.

Players can expect 21 new stages in The Underground, complete with four new Trophies and four additional (and entirely optional) costumes for Lil and Laarg. There’s also new sonic accompaniment. Better yet, the DLC goes live at the same time as a new patch designed to make some minor upgrades, including the ability to use the Vita’s circle button in lieu of the “pinching” action necessary to make Lil… well… pass gas. And Lil will be doing a whole lot of that during The Underground’s new levels.

The four stages I saw – Underground Bash, Mind the Tap, Tube Shocks and Loose Caboose – ran a gamut of puzzles Escape Plan veterans will mostly be familiar with. There are, however, some new interactive objects that gamers will need to work their way around, over, below and through.

Escape Plan continues to be one of Vita’s strongest games – and certainly its most endearing title – and it’s great to see Sony still supporting it.

Uber, an App That Summons a Car, Plans a Cheaper Service

In San Francisco and New York on Wednesday, Uber will start to give customers the option of choosing a hybrid car at a price that it says will be 10 to 25 percent more than a taxi. That compares with the 40 to 100 percent premium that customers pay for a black town car.

“This is the first big step Uber is taking to go to the masses,” said Travis Kalanick, the company’s chief executive.

Uber, which has raised $43 million from investors since 2011, is one of several start-ups, including Cabulous and Taxi Magic, that are trying to profit by connecting drivers and passengers more efficiently.

Its software tries to predict areas where rides are likely to be in high demand at different times of day. This information appears on a driver’s smartphone so that he can know where to linger and, ideally, pick up customers within minutes of a request for a ride. Uber does not itself provide the cars; it works up with existing for-hire car services that piggyback on its technology and give it a cut of fares.

Uber can come in handy in cities or neighborhoods where cabs are hard to flag down on the street. But cities often have decades-old regulations regarding car services acting as taxis, and officials in some cities, including Washington, say they are concerned about Uber confusing riders or breaking the rules.

Of course, Uber’s convenience comes with a cost. People are paying not just for the service, but also the gas used by the big sedans. That’s where hybrid vehicles will help bring down the price: drivers will spend less time and money fueling up.

The company plans to expand its offering of hybrid cars to other cities in the coming months. Uber is now operating in about a dozen cities, including Los Angeles, Chicago, Boston, San Diego, Paris and London.

When people use the Uber app in San Francisco and New York, they will be able to choose between a town car and a hybrid. In most cities, the company is also adding the option to hire an S.U.V. for larger groups. Rates will vary from city to city, but in general hybrids will cost 30 to 40 percent less than Uber’s black town cars, according to Scott Munro, an operations manager at Uber.

In San Francisco, for example, the hybrid cars will cost $5 for the base fee, and then $3.25 a mile after that. By contrast, the town cars cost $8 for the base fee and then $4.95 a mile. Taxis in San Francisco cost $3.16 a mile including a tip of 15 percent.

Despite its higher fares, Uber has grown significantly. The company declined to disclose precise numbers, but Mr. Kalanick said it had recorded 20 to 30 percent revenue growth from month to month over the last year, and that there were thousands of cars using Uber’s technology. In San Francisco, 400 drivers are signed up with Uber, and that number is growing all the time, Mr. Munro said.

The company convinced its car-service partners to buy a total of 50 hybrids just for customers coming through Uber — a sign that drivers are making money with the start-up.

Mohamed Mandour, a partner of Uber who owns a car service called Nada Limo in San Francisco, bought a Toyota Prius hybrid for the new program. He said his passengers were interested in taking the hybrid cars, even though they are less roomy and luxurious, because of the lower fares.

Mr. Mandour said that when he drove cabs for nine years, he would make only about $300 on a busy 10-hour shift. But when he worked with Uber, the amount he earned jumped to more than $700 on a good day, he said. “I hope the new idea will work, because then we’ll be taking over the whole Bay Area,” Mr. Mandour said.

The cab commission of the District of Columbia is less thrilled: it is in the midst of a legal tussle with Uber. Ron M. Linton, chairman of the commission, said Uber had begun operating in the city without its approval.

He said that under the commission’s rules, there are limousines, which set a price with passengers in advance, and there are cabs, which have meters that charge by time or distance. He said Uber was breaking the rules by trying to be both. Uber calculates fares by time and distance, and then bills the customers’ credit card.

The commission’s inspectors have been citing Uber’s car-service partners for infractions, Mr. Linton said. The commission is proposing to change the district’s taxi laws to strengthen regulation of sedans like the ones that Uber’s partners use. Mr. Linton said this would allow it to protect consumers from issues like extra fees that they don’t understand.

“There’s room for limos, for taxis and this new concept for sedans,” he said. “We’re trying to make it work for everybody, but we need cooperation. We can’t deal with an organization that sticks its thumb up our nose.”

Mr. Kalanick of Uber said its operations in Washington were completely legal, and that the commission was citing rules that don’t exist. He said the commission wanted to regulate sedans more tightly so that it could control their fares, which would prevent Uber from eventually undercutting cabs.

“They want to keep our prices from going down, which is a very unusual price-fixing scheme,” Mr. Kalanick said. “Essentially they’re trying to protect taxis from competition, from having any viable alternative.”

New York doesn’t seem to have a problem with Uber. Allan Fromberg, a spokesman for the city’s taxi and limousine commission, said that as long as services like Uber conformed to the city’s rules, “we are highly supportive of ways to use technology to enhance service to the riding public.”

In Boston, Uber is shaking things up in other ways. Starting Wednesday, customers there will have the option to request stretch limos. And soon they will be able to summon an ice cream truck.

“You’d have ice cream on demand,” Mr. Kalanick said. “It’s kind of fun. That’s part of how we roll.”

Jenna Wortham contributed reporting.

This article has been revised to reflect the following correction:

Correction: July 3, 2012

An article on Monday about Uber, a company whose app lets users summon a car service, misstated a point made in an e-mail from Allan Fromberg, a spokesman for New York City’s taxi and limousine commission. He wrote that the city supported such services as long as they followed its rules; he did not say that Uber was following them.