What Microsoft Should Learn from iPhone 3G?

There are reasons why Microsoft is investing so much time and money building out its data center infrastructure. Web services require scale. Apple's rough MobileMe launch delayed delivery of iPhone 2.0 software, and slow iPhone activations indicate that Apple's infrastructure couldn't carry the load.

Microsoft has been there. From 2004 to 2006, Microsoft launched, many times in beta, a string of troubled new Web services. I say troubled, because services were wobbly or unavailable during their first couple days. But over the last 18 months, Microsoft has done remarkably better making new Web services available, with emphasis on availability.

Web services are the foundation for iPhone. First, there is the activation process that literally collapsed under the heavy load on Friday morning. Several times during the first few hours after iPhone 3G launched, 8 a.m. PDT—or three hours after East Coast sales started—some customer came out of the Apple store complaining, "AT&T activation servers are down." The last I checked, however, they were iTunes activation servers. I can't say who manages the infrastructure, but it wasn't ready for the load.

I got near the store entrance around noon on Friday. One of the first people inside was still waiting for activation. A couple of Apple Store employees discussed the baffling activation delay. I saw a number of people leave without phones because they couldn't activate. Several of them loudly complained to other people that were waiting in line.

I believe, when Apple does its final analysis of launch day, a different culprit will be blamed for slow sales-to-activation processes: carrier churn (industry jargon). By my informal survey of buyers at the Fashion Valley Apple Store in San Diego on Friday, and the Apple UTC store in La Jolla on Saturday, most people were switching carriers. Their purchase required additional steps; a credit check, number porting and a completed phone call before leaving the store.

The second iPhone services component: software distribution. Apple definitely had troubles with the iPhone 2.0 update. I heard numerous complaints on Friday—some on Saturday—about troubles downloading the software. Apple gets a "C" for iPhone 2.0 delivery. By contrast, the iTunes App Store fared much, much better. I downloaded applications to a computer and iPhone without any trouble. The App Store has been consistently responsive and with brisk downloads. Apple gets an "A" for App Store.

MobileMe is the other important services component. I fail the MobileMe launch, with a "D-" grade. The operational service gets an "A"—well, for today anyway. The wobbles would appear to be behind Me. Apple was supposed to begin the .Mac (media access control) to MobileMe transition at 6 p.m. PDT on Wednesday night, but it was delayed for two hours. The transition was supposed to take just six hours. But by Thursday morning, Apple had craftily changed its status notice to indicate a rolling transition starting at 8 p.m. PDT on Wednesday.

Rolling is right. MobileMe rolled from availability to partial availability to no availability through most of Thursday, and there were even a few rolls on Friday. Microsoft gives most of its Web services away for free. MobileMe costs 99 bucks. Hey, paying customers deserve better than this.

But I've got to say, the working service really delivers. The push e-mail, including mailbox sync, made my iPhone a lot more useful. I'm looking forward to a full week's use of the service. And I'm tempted, really tempted, to see if I could do all my blogging, e-mail and IM for a week on either an updated iPhone 2G or new 3G. Meaning: no PC.

I expect that there will be some snickering and gloating e-mails circulating around Microsoft about Apple's woes. Apple deserves a few kicks for the gaffes. But Microsoft employees shouldn't be smug, either. Web services are hard, and Live Mesh could easily buckle when Microsoft flips on the switch; if Microsoft isn't prepared.