Dear Tim Cook, Apple CEO:
Now that you are essentially betting Apple on iOS 5 and a whole family of iPhones, iPods, iPads and Macs that run it, you've just been handed a great case study by your Canadian rival, Research in Motion. For three days, BlackBerry customers worldwide couldn't access e-mails. This, the company said, was due to a server problem in England.
Since Wednesday, you have opened Apple's global network to current customers and new ones to obtain your new OS, update old products and sign up for a variety of new services, including storage of 1,000 photos at a time and text messages to people within the Apple system. There have been too many complaints about iCloud problems, download woes, lacks of text message and difficulties in upgrading to the new iOS 5.
You and your predecessor, Steve Jobs, built the world's most valuable company with great products and by making them sticky, or keeping customers hooked. Research in Motion, founded by two very fine enterpreneurs, created a fabulous enterprise mail service, hooked the corporate market and won a place in the English language with the word CrackBerry.
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There's a chance RIM may forever have lost credibility with its 70 million customers due to a three-day snafu. You at Apple can't afford that. Here's what you should learn from it:
Build in redundancy. And more redundancy. Apple claims as many as 250 million customers, maybe more, in 35 years. In many ways, you are more of a service provider than a product company, a move that started with things like iTunes. iPhone customers usually obtain service through a carrier, for sure, but it's your servers that are supporting them, as well as many of the services you provide.
If Apple isn't using its own computer servers, ganged up and distributed worldwide, you have backbone support from another provider or a specialist like Cisco Systems. Apple has never shed much light but whatever supports the company, be prepared for ever more traffic. Even the biggest networks experience demand surges, the occasional power failure and mess-up. Most on-line services advise customers of certain service downtimes. What are yours?
Own up to a problem immediately. RIM, in Waterloo, Ontario, was silent too long when problems first started showing up in Europe and the Middle East when its Slough, England servers failed. Then e-mails from Africa and then North America started backing up. It took three days for RIM to start posting messages and finally hold a media conference.
You would think all companies would learn from Johnson & Johnson's famous Tylenol recall experience: own up to a problem immediately. J&J won instant kudos. RIM, which is under threat of a bust-up initiated by activist shareholders, didn't need this problem at all.
Change the stone wall around Apple erected by Steve Jobs. Part of the Apple culture is the close tabs the company keeps on information, treating visitors to your Cupertino, Calif., headquarters well but always suspiciously.
Now that you're one of the big boys, with a market capitalization of $376.5 billion --- more than IBM, Hewlett-Packard, Oracle or Google --- you or another top officer needs to be a Mr. or Ms. Outside, publicly available and candid about problems. You've just seen how RIM's Mike Lazaridis has acknowledged he'll have to deal with big customers and potential rebates. One of his customers is Barack Obama. (He is also an iPad2 user).
Your iPhone 4 sales accounted for nearly 20 percent of the second-quarter market alone and sales of iPhone 4S will be hot, especially because you've apparently sold out the launch models. So designate someone to be out front when an inevitable problem arises.
RIM shares Thursday are down another 2.5 percent, bringing the loss this year to a staggering 59.7 percent. Apple shares are up another 1.2 percent bringing the total gain this year to a very hearty 26.1 percent.
Reputations built over 15 years can be lost in three days, Tim. Use the skills with your Fuqua MBA to make sure a BlackBerry-like crimp never happens to Apple.