Jobs shakes up Apple management over MobileMe debacle

Apple may need public beta testing to avoid a repeat, says analyst

Apple Inc. CEO Steve Jobs has given MobileMe to the executive who heads iTunes, part of a shakeup over the synchronization service's public problems since its launch last month, according to a memo sent to company employees earlier this week.

In the e-mail sent to workers on Monday, Jobs acknowledged that the launch of MobileMe "was not our finest hour," saying it "was simply not up to Apple's standards." He also noted that the service, which debuted on July 11 along with the iPhone 3G and the new App Store, needed more testing and should have been rolled out in phases.

The secretive CEO also said he had revised Apple's table of organization.

"We are taking many steps to learn from this experience so that we can grow MobileMe into a service that our customers will love," Jobs said in the e-mail, which was first reported by the technology site Ars Technica and has also been obtained by MacWorld, a Computerworld sister publication. "One step that I can share with you today is that the MobileMe team will now report to Eddy Cue, who will lead all of our internet services -- iTunes, the App Store and, starting today, MobileMe."

Cue will have the title of vice president of Internet services and will report directly to Jobs.

Previously, MobileMe had been led by Rob Schoeben, Apple's vice president of applications marketing, who was in charge of the service's predecessor, .Mac, as well as some of its biggest applications, including iLife, iWork and Aperture.

"That was probably the most important step, internally as well as externally -- to say, 'We screwed up,'" said Mike McGuire, a Gartner Inc. analyst.

McGuire, who closely follows Apple's media moves, particularly its iTunes online music mart, was bullish on Cue's track record. "In their postevent examination, they identified that there was at least some problems with [former leadership] at MobileMe," said McGuire. "Eddy has shown with iTunes over the years that he's very good at running a 24/7 worldwide distribution point. He's got some serious chops, and the appointment is interesting."

More intriguing, said McGuire, is the conundrum Apple will face if it's serious about ensuring that it not repeat a MobileMe-like debacle. "I think Apple may have to consider [broadly] beta testing with services 'in the cloud' like MobileMe," he said.

It may not want to, however, even though Jobs admitted that MobileMe "clearly needed more time and testing" in the internal e-mail. "For Apple, both strategically and tactically, a lot of the sizzle would get shown in a beta," noted McGuire. "That would take a certain tool out of their kit: their ability to maintain secrecy around a product launch."

In McGuire's analysis, Apple reaps big benefits by not disclosing information about products before they're available. The buzz that precedes a launch, he said, is usually exceeded only by the excitement when the details become clear. "People say, 'This is even better than all the rumors,'" said McGuire. "That's been a real valuable asset to them."

But to respond to calls -- both from users and possibly from within Apple -- that it had better test before it delivers products, Apple may be forced to give up that asset, particularly as it tries to expand its consumer-centric base to small businesses or larger companies.

Apple was pitching MobileMe not just to consumers, but also to small businesses, said McGuire. It initially used the "Exchange for the rest of us" slogan to promote the synchronization service but has since dropped it. The reference to Exchange was meant to evoke Microsoft Corp.'s mail server, which is used by bigger businesses but rarely by small firms to deliver e-mail and sync messages, contacts and calendar appointments with users in the field.

"This has to get fixed, and fixed quickly," said McGuire of the MobileMe mess.

MobileMe stumbled even before it got off the ground. The transition from .Mac, which was supposed to take only a few hours, instead dragged on for a full day, raising the ire of users locked out of their accounts. Days later, customers complained about slower-than-expected synchronization, which Apple answered with an apology and a 30-day service extension to all users. Then on July 18, an Apple server went south, taking down the e-mail accounts of about 1% of MobileMe's subscribers. The outage lasted 11 days before service was fully restored.

McGuire said he wasn't confident that Apple would take the step to test future products, "cloud" services especially, in a more public manner. "They won't do this on hardware or the [operating system], but maybe on these Internet-related services [they will]," he said.

"I give it less than a 50-50 chance of happening," McGuire said. "But I think they'll start considering it carefully."

Jobs wrapped up his e-mail to Apple employees, not with a specific promise to test, but with a general mea culpa and a call to action.

"The MobileMe launch clearly demonstrates that we have more to learn about Internet services," Jobs said. "And learn we will. The vision of MobileMe is both exciting and ambitious, and we will press on to make it a service we are all proud of by the end of this year."

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