MobileMe, Downtime, and Customer Loyalty update from August 2008

It's easy to look at the ongoing troubles at MobileMe as a customer service disaster for Apple. The short version: the retooled hosting service (formerly .Mac) has had serious reliability problems since it inexplicably launched amid the iPhone 3G hoopla, which Steve Jobs has since acknowledged was a mistake.

Today Apple has issued MobileMe users a 60-day credit to compensate them for the poor performance. "The transition from .Mac to MobileMe was rockier than we had hoped," Apple says. "While we are making a lot of improvements, the MobileMe service is still not up to our standards."

Uptime is job one in the data center business. This is the kind of thing big companies like Apple should get right. Having said that, customers of low-end hosting services can be stickier than you expect, particularly when they have loyalty to a brand (as is the case for many Apple customers). Why do I say this? Because there's a test case available in the experience of DreamHost.

Over the past two years DreamHost has consistently tested the patience and loyalty of its customers with a series of outages and miscues. That includes lengthy customer downtime in 2006 (which prompted the famous Hindenberg post on the DreamHost blog), one typing error that knocked thousands of customers offline, and another that overbilled customers by $7.5 million.

The result: DreamHost has continued to grow, and now hosts more than 730,000 domains. DreamHost's Josh Jones later reported that the biggest account losses weren't associated with downtime, but the billing fiasco: