"In many ways, Mobile Me isn't that good! By making it free, they will gain a lot of users, and therefore gain resources from Apple to make it better."
So, to summarize: the product currently sucks. By dropping the division's revenue to zero, while simultaneously encouraging more users to see a cruddy product that (let's be honest) represents Apple in a poor light, it'll be easier to convince Apple to throw more money at the product.
I think he just successfully argued against his thesis.
Organizationally it is a mindshare problem. Every successful tech company faces this. Windows Mobile was always the 'little brother' of Windows and Office, and could never get the kind of resources and talent needed to win in that space. Google Reader is arguably an example of such a team at Google. Mobile Me is a little brother to Mobile / Mac sales.
If your users expand to the full set of all iPhone and Mac users... then your mindshare and resources internally expand. And you can finally improve the product.
Certain aspects of Mobile Me need work, like iDisk. Other aspects work well, like email and Mobile Me sync.
I'm saying that Apple should make Mobile Me free, and put more resources behind it to make it better. They should focus on increasing its adoption, and making it a core piece of their mobile platform.
As opposed to trying to monetize from it directly.
He didn't argue against his thesis. When economies of scale are that of Apple's, it can make sense for a partiular devision to lose money if it inreases the bottom line overall for the company. I could see an Apple cloud increasing the likelihood that people will buy more Apple hardware if it just syncs up when you plug it in. Lets face it, setting up the Google cloud on the iPhone with Google Sync isn't something that your non-techie can pull off easily.
Thinking in terms of profit per division for companies the size of Apple, while prudent, isn't looking at the big picture.
Apple views themselves as a hardware company and they'll give away software if it boosts hardware sales. iTunes is an obvious example. I could definitely imagine a scenario where Apple makes MobileMe free for iPhone users.
I hate iTunes. Even when I'm using my wife's Mac. It makes everything I want to do difficult. Seriously, Apple needs to learn from Valve and Steam.
Recently I picked up an Apple TV. My wife was having problems ripping movies for the kids (much safer than letting the DVDs get trashed) and then getting them to run through the media centers on one of the consoles. So, I went and got an Apple TV.
Apple TV is mostly nice, but it has it's warts. First, the syncing is horrid. I have issues syncing while Apple TV plays movies. It can't, or at least, I can't find a way to do it. So, if someone is watching something, and it needs to Sync, NOOOOO. I've had this problem with my iPod, with Sync being the harbinger of death.
Anyways. The next issue is movie files that disappear. I've synced videos, played those videos, and then the videos have disappeared, or just stopped working. Or iTunes will tell me it's synced, and it won't show up on the Apple TV.
Seriously, Apple, Google, Microsoft, and others really need to start working together. The Internet works far better than any crap they've put out. Grrr... frustration, nerd rage!!!!
I love iTunes. It has all my music in a scriptable database with a wonderfully configurable front end. I've never understood the hostility that's developed over it, other than possibly sour grapes Windows users forced to use it because of their iPods. Before iTunes, I used WinAmp, which was garbage. Maybe there are better programs now, although I can't imagine what else I'd want to do that iTunes doesn't make easy for me.
It all comes down to different ways of doing things. Some people like to manage their music more manually, copying over mp3 files to a folder. I am in this category, because I like complete control, and some of the things itunes does seems to be confusing. Also, I don't see the need of having mp3 files on a hdd, then stores on my iphone, then also stored in the itunes music folder. I don't need 3 copies of a music file. This is one part that frustrates me. Another frustration was silence between tracks, which itunes did not used to support.
However, I completely understand why most poeple like itunes, because most people aren't like this, and itunes provides a very simple interface for them to do it.
Saying that, the Windows version of itunes has not been as good as the mac version. And even on the mac, it seems to pause when copying over lots of large mp3 tracks, although this has gotten a lot better in the recent release.
iTunes is a poor media manager, mostly because it's focused on become a DRM System. Just think about what it really does, what it really syncs. iTunes handles applications, of all things. If you remain with Apple's ecosystem, everything will be fine. Go outside that, and everything starts to break down.
I used to be a Mac user and always hated iTunes. It always felt like it was fighting me and trying to force me to do things its way rather than my way. Asking it, for example, to play music stored on a remote samba share tended to make it copy the music to my hard drive rather than, you know, play the music.
Unlike Mobile Me, which is a key product that partially enables one of their most profitable lines of business, Apple launched AppleTV while overtly and specifically saying that it was an expirimental business that they weren't fully commited to.
"In many ways, Mobile Me isn't that good" - hence Apple will gain nothing from making a bad product free. Their captive audience right now are Mac users, and it's a far easier sell.
So, to summarize: the product currently sucks. By dropping the division's revenue to zero, while simultaneously encouraging more users to see a cruddy product that (let's be honest) represents Apple in a poor light, it'll be easier to convince Apple to throw more money at the product.
I think he just successfully argued against his thesis.