Networking, Supply Chain Issues Dull Apple's Shine

In an internal company e-mail obtained by several media outlets in early August, Apple CEO Steve Jobs fessed up to the problems surrounding the company's summer product blitz. "It was a mistake to launch MobileMe at the same time as iPhone 3G, iPhone 2.0 software and the App Store," Jobs wrote in the e-mail, which was obtained by Macworld .

"We all had more than enough to do," he added, "and MobileMe could have been delayed without consequence."

MobileMe's initial problems during the launch on Friday, July 11, the subsequent 11-day outage that roiled Apple's rabid customer base and another service outage on Monday, Aug. 11, have generated even more pressure and public ire on the company: That's because of iPhone 3G out-of-stocks and activation nightmares in the U.S. and abroad during the iPhone 3G's launch and concurrent 2.0 software upgrade.

There are more than technical issues involved in Apple's recent customer service problems. The company's business practices, and the way it develops and unveils products are key factors. Analysts, including Ken Dulaney, a vice president at Gartner who closely follows Apple and the iPhone, contend that Apple's policy of limited beta testing and intense product secrecy, while helping to generate public interest also may hurt the company in the long run. "If they opened it up a bit more, I don't think it would hurt them, and it would give them a lot better quality assurance," he says. "They just can't control everything, and they're losing valuable input that they could get from lots of people."

But Job's mea culpa (however it eventually came out in public) was a shrewd business move atypical of most CEOs, notes Dulaney.

"It's OK to have problems as long as you admit to them and fix them. In fact, if you admit to them and fix them, it turns out to be an effect that creates more intense loyalty than you would expect," he says. "I've seen a number of issues [with Apple] that would stop other vendors in their tracks, and people are willing to give Apple a break there."

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