All Things Digital

Well, Notflix is Netflix once more. The company finally resolved the technology problem that crippled its ability to mail DVDs to members for most of this week. As of this morning, all Netflix (NFLX) distribution centers are operating normally, and the backlog of DVDs that should have been shipped earlier is finding its way into the mail. “If a member should have been shipped a disc Tuesday, Wednesday or Thursday, with rare exception it will ship today (Friday),” the company explained. “As a result, millions of our members will receive DVDs on Saturday, in time (we hope) for some weekend movie enjoyment.”

To make amends for the outage, Netflix plans to apply a 15 percent credit to billing statements of members whose DVD shipments were delayed.

A welcome turn of events after an ugly week that saw Netflix customers losing their patience and the company losing an estimated $1.8 to $3.6 million in revenue each day because of the disruption.

Netflix’s March 2008 outage is back, this time in wide theatrical release. A serious disruption to the company’s distribution systems has prevented it from mailing DVDs to many of its customers for the better part of this week. “Our engineers continue to work around the clock to restore normal operations,” Netflix said in a post to the company blog today. “In the meantime, we’re notifying affected customers via personal email and we’ve posted a notice on the Netflix Web site. We’re as frustrated about this as you are.”

I’d imagine so, if not more. The outage is an ugly blow to the Netflix (NFLX) brand and to its bottom line as well. Citi analyst Tony Wible estimates that the company is losing roughly $1.8 million to $3.6 million in revenue a day. And the reimbursement credits it’s promised to affected subscribers are certain to prove costly as well. Said Wible, “Assuming only one-third [of the company's subscriber base] is affected for one-to-two days, [Netflix] stands to forfeit nearly $1.8 million to $3.6 million in revenues (using a $13.36 average revenue per user), or roughly $0.007 to $0.015 in earnings per share.”

A costly misstep given Netflix’s Thursday afternoon shipping update:

We hope to bring the rest of our facilities back online overnight and be shipping from all of our distribution centers on Friday. But the issues we’ve faced over the last several days have been significant and there’s no guarantee at this point that our shipping operations will be fully restored by tomorrow.”

The S3 service is great but this just proves you can’t rely on it, this is a major issue especially since it’s been down for so long. Way to go Amazon.”

–a post on Amazon’s Simple Storage Service forum

Amazon’s Simple Storage Service (S3) suffered a “massive” outage this morning, impacting a number of businesses that rely on the cloud-based storage service. Twitter, Tumblr and AdaptiveBlue were among the more widely known services to be affected, although there were many others. “Amazing how many of the services I use are reliant on S3,” venture capitalist Fred Wilson Twittered this morning. “Stuff is broken everywhere this morning.”

Amazon (AMZN) was able to resolve the issue in a matter of hours, but its failure to inform its customers of the outage and its efforts to correct it drew some harsh criticism from users. “Amazon’s response was substandard in this case,” said one. “I should, minimally, see a message on the front page at aws.amazon.com when there’s a complete outage. Instead, I had to come into the forums to make sure it’s not just my stuff. Like others here, I have a massive number of files (probably about 125,000 audio files, around 1TB of storage) that are for various music libraries. So I have customers with sites that are only partially functional, and nothing to tell them. That’s unacceptable. And I know you can do better. I’m not looking for details of the outage, just an acknowledgment (again, front page of aws) and ETA.”

Said another: “It’s AmazING the fact of having no info on what’s happening. Absolutely unacceptable. Come on, people on this forum are all tech guys, so we understand that bad things happen from time to time. However, you MUST be transparent with your customers and give them details on what’s going on (yes, we want to know exactly what’s happening and not a standard response like ‘The issue is resolved’). In fact, it is not. So please, scale these complaints to the right person and post the technical explanation of the issue as soon as possible.”

What’s most surprising about today’s Skype outage is not its 12- to 24-hour duration, but the fact that it’s the first such outage we’ve seen in years. In its relatively brief history, Skype has rarely gone offline. The service’s last reported outage occurred in October 2005.

So while today’s event is certainly annoying for fans of the widely used VOIP (voice over Internet protocol) service, it’s likely not indicative of some lurking infrastructure problem. “This is the most significant outage for the service in years, yet we already foresee scores of headlines trumpeting the flaws of VOIP communications based on this outage alone,” writes Ken Fisher at Ars Technica. “That’s unfortunate because we think Skype network performance has been spectacular on average, given that it’s free and heavily used. In fact, it would appear that the Skype P2P network is indeed in fine shape, it’s just that the authentication system (which authenticates but also provides location services for routing purposes) is hosed.”