Apple's Hopes that "Rock" Will Restore its Roll

Sam Gustin says: The summer of 2008 should have been an uninterrupted success for Apple. On its first weekend, the company sold one million iPhones; its Mac line continues to gain market share; and it recently surpassed search giant Google's market capitalization. The company was on a roll. But a number of events have caused more than a few eyebrows to be raised -- public relations stumbles, service problems with the iPhone 3G, and persistent questions about chief executive Steve Jobs' health.

By its own standards, Apple has had something of a rough summer, which is why the company needs a strong showing at Tuesday's "Let's Rock" event in San Francisco. But does Jobs -- whose appearance will be closely scrutinized -- have enough tricks up his sleeve to restore Apple's shine?

Initially, the iPhone 3G was greeted with something near rapture, but customers have been frustrated by technical glitches, from being forced to spend hours in line as retailers were unable to activate their phones to a sloppy launch of MobileMe (prompting a mea culpa memo from Jobs, who called the launch "not our finest hour").

And now Apple is being sued -- once they got their phones activated, many iPhone users complained about service quality and dropped calls. Apple faces no less than two lawsuits over shoddy service, the latest accusing it and AT&T of selling more iPhones than the network can accommodate. In Britain, a government advertising regulator actually banned an iPhone television ad for misleading the public, after consumers complained that the phone's Web surfing performance didn't match what the company promised.

In isolation, any one of these issues would have been a minor speed bump for a company that is widely considered to be the gold standard for tech innovation, product design and performance. But taken together, they prompted some people to ask whether Apple had taken its eye off the ball, and allowed its execution to slip. "It's time for Apple to stop screwing around and start paying attention to product quality," wrote uber tech blogger Michael Arrington.

Then there is Steve Jobs' health -- probably the last issue the image-conscious Apple wants to address. Ever since Jobs appeared gaunt at the June iPhone 3G launch, speculation over his condition has been a frequent topic of conversation among Apple watchers. Given Jobs' instrumental role in Apple's revival and success over the last decade, many observers clamored for the company to be more forthcoming about his health. But Apple remained mum. Just when the chatter appeared to have died down, Bloomberg News mistakenly sent Jobs' obituary out on its newswire, adding another round of fuel to the fire.

Jobs' condition is a very sensitive matter, considering the company and its founder are often identified as one and the same. It's hard to fault the company for wanting to keep it private, assuming the health fears are overblown. But combined with the botched iPhone and MobileMe launches, the health imbroglio has helped foster a feeling of unease about the company -- a kind of amorphous sense that all is not well in Cupertino.

On Tuesday, Apple has an excellent opportunity to change the subject from its summer travails and refocus attention on what it does best, which is create world-beating products. The company is widely expected to unveil updates to its iPod nano, Touch, and Shuffle lines, as well as a new version of iTunes. But will that be enough to restore Apple's lustre?

Many Apple watchers have been lowering expectations for the event. In a note to clients, Shaw Wu, an analyst at American Technology Research, urged people not to get their hopes up. "While there is always room for surprise, it seems this event may be somewhat underwhelming versus previous expectations and events," Wu wrote. Those reduced expectations have hit Apple's stock price, Wu said, which has fallen about 10 percent over the last month.

CNBC's Jim Goldman captured a vague sense of ennui regarding the event when he wrote, "This time around, it seems to me that Apple is laboring to manufacture the magic."

As a company, Apple is a master at playing the expectations game, and it has definitely trumpeted Tuesday's event. A healthy-looking Jobs will go a long way toward allaying fears about his condition, but many believe the Apple chief executive needs to pull a doozy out from his bag of tricks -- The Beatles on iTunes, anyone? -- in order to make a clean break from what was, in many ways, a summer the company would very much like to put behind it.