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Summary:

Sunday’s special meeting of Apple employees was about Apple’s “Joint Venture,” a new service Apple will reportedly unveil Wednesday that will provide extensive Mac service coverage on up to five machines to small businesses for $499 a year. Sounds good, but some stand to lose out.

apple-support

Sunday’s special meeting of Apple employees was about Apple’s “Joint Venture,” a new service Apple will reportedly unveil Wednesday that will provide extensive Mac service coverage on up to five machines to small businesses for $499 a year. If you’re in the business of providing Apple products, services or content to your customers, this and other developments are making one thing very clear: Those aren’t really your customer;, they’re Apple’s.

Before there were Apple Retail stores and the App Stores, Apple relied on third-party vendors to sell and support Apple products. Sure, some folks bought directly from Apple, and there was a support line, but for the most part, third parties provided complete after-sales customer care, and most importantly, acted as representatives of the Apple brand. Apple couldn’t be everywhere and do everything, and vendors filled in the gaps, helping make Apple the well-respected company it is today.

Once Apple retail came on the scene, third-party resellers struggled. Many went out of business or had to consolidate because their supplier was suddenly also their competitor. Obviously, that’s not an ideal situation, but it has worked well enough for about 10 years now. Yet in the past year, Apple’s relationship with third-party sales and support outlets has moved from uncomfortable coexistence to downright hostility.

Resellers

Apple’s decision to kill off boxed versions of software like MobileMe, and presumably Lion (the developer preview is distributed via the App Store) cuts off the ability of resellers to provide these products to customers themselves. Predicting that iWork ‘12 and all future Apple software products will be App Store-only too is hardly a stretch. Profits on computers are usually pretty small for resellers, while software has much bigger margins. (It’s just a box with a disc or code after all.) It’s also likely that Apple’s most profitable product (from a margin standpoint), AppleCare, will also eventually be sold only online. These changes could easily push a number of struggling resellers off the cliff, even while they drive Apple’s revenue share up and keep costs to consumers down.

Developers

By selling software via the App Store, Apple gains an exclusive relationship with the user, leaving the developer out in the cold. Not only does Apple potentially get a higher percent of profit than when it sells a physical box, but it also gets to benefit from customer information.  Developers still have to maintain the support costs of their product, yet don’t have nearly as much access to customer data. They can’t easily cross-promote products, upsell, or even solicit feedback for new features.

Furthermore, new applications that “push the envelope” of user experience or features will likely get marginalized since App Store apps are only allowed to use certain approved Apple development techniques. We see this everyday with the iPhone, but at least on that platform it was like that from day one. As a longtime Mac user, it’s not a “feature” I’m keen to see make the leap to OS X.

Service Providers

Apple’s new Joint Venture program looks to be a support and service division similar to Best Buy’s Geek Squad. I wrote about it last year when Apple was awarded the trademark. For $499, business customers get prioritized access to Geniuses, along with workshops and loaner machines. On-site support is not directly mentioned, but is likely. Also, Apple is now using OnForce, and moving away from recommending independent third-party support via the Apple Consultants Network (ACN). The OnForce platform acts as an intermediary between end-user and technician, and technicians may not reveal their full contact information nor contact the customer directly when using the system.

For the record, I am a service provider for OnForce and a member of the ACN (see disclosure), so Apple’s decision to cut out the middle man affects me directly. If Apple stops referring third-party service providers like myself, many of my colleagues will go out of business just as many resellers did. When this happens, your main source for service for your Apple devices will have to be Apple Retail stores and if you don’t happen to live near one, you’ll be out of luck. And of course, as an exclusive provider, price and wait times for repair will be whatever Apple decides. High prices along with long wait times and considerable treks to Apple stores isn’t good for consumers, or ultimately Apple’s brand. Apple’s Joint Venture program promises much, but when some have priority access to a Genius, what happens to those who didn’t pay the $499?

One company, even one as powerful as Apple, cannot be all things to all people and will eventually spread itself too thin. If you don’t live near an Apple store or if you want an application or service provider not approved by Apple, the future isn’t bright. We’re moving one step closer to the day when “jailbreaking” the Mac OS becomes a necessity for users who prefer Apple’s more open past. In fact, I can easily imagine Steve Jobs responding to these concerns in his typically terse manner:

“These are our customers, not yours.”

- Sent from my iPad 2

Disclosure: Dave Greenbaum owns his own consulting business that supports Macs and PCs. He is an Apple Certified Support Professional, a service provider for OnForce, and a member of the Apple Consultants Network. Apple clearly states that membership of the ACN does not imply not offer any direct business relationship with the company.

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  1. Within less than four blocks of each other, there’s a longstanding Apple reseller and a sparkly new Apple Store in a busier area of my neighborhood. I live almost directly inbetween the two.

    When the location was announced, I felt that the indie put a brave face on things by saying their existence was complementary, but maybe it wasn’t bluster; every time I pass by, the store is still well-trafficked.

    To be sure, this feels like yet another Apple power grab. In your shoes, I’d be upset, but anecdotally… it may not be a problem.

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    1. The change doesn’t impact me as I focus on the small office/home office and residential markets. I am concerned that ultimately the consumer suffers when competition and innovation is stifled

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      1. Dave, consumers suffer when they can’t get support for thieir computers. This will make the process more frictionless. You are still free to compete with apples service.

        I don’t agree with your line of reasoning at all. The best thing Apple can do for itself and for you is get more small offices using Macs. It was because of Apple’s obsessive focus on their customers in the 90s and early 00s that they have survived and thrived as a company, and you still have a platform to support at all.

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  2. Wow this is good news for businesses running mac machines.

    I really hope these are the right specs for the iPad 2, http://techheavy.com/2011/01/rumor-ipad-2-to-have-1-2ghz-dual-core-cpu-dual-core-gpu-etc/ if so I will be a happy camper for sure!

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  3. Unfortunately, what you describes seems part of a larger pattern. I’ve been an Apple watcher for over twenty years. Apple’s always been a little obsessed with control and somewhat indifferent to those outside Apple who aid its success. But the problem seems to have worsened in the last two or three years.

    Like disaster, great success brings out one’s real character, although in this case that someone is a corporate culture. As the billions pile up in its cash reserves, “We don’t need you” and “We owe you nothing” seems to be the subliminal message coming out of Cupertino. That fits with studies that show that the poor often give a greater portion of their income than the rich. A richer Apple is becoming a more uncaring Apple.

    The most obvious illustration of that is the confusion surrounding what apps are going to be cut off, particularly popular apps like NetFlix, Kindle, and DropBox. Those apps make the iPhone/iPad platform more attractive, but they also compete with Apple’s own schemes.

    Apple seems to be saying: “We’ll let you pioneer something new, but when it becomes profitable and we decide to get into doing it, we’ll either toss you out or demand a 30% slice of every penny you make.” That is, to the extent that Apple is saying anything. Until it acts and expels a competing app, Apple seems to prefer to spread FUD–fear, uncertainty and doubt about other people’s products, leaving developers uncertain about what they should do.

    Some deny the change. Yesterday, a friend who’s a iPhone developer told me that his company wasn’t worried about their apps getting excluded, that they had a special relationship with Apple. I felt like say, “Yes, and Readability’s relationship was even more special. Their code went into Safari. That didn’t do them any good.”

    Years ago, I worked nights in a hospital taking care of children who were often dying of cancer. I was amazed by kids, some only four or five years old, who went out of their way to be kind to those around them. I didn’t grasp why until I realized their motivation. They saw that those little acts of kindness as all the good they would accomplish in their short lives.

    Steve Jobs is in a similar situation. But I can’t help but wonder if his out-of-our-sight response has been the different and if that response isn’t shaping Apple’s corporate culture in unhealthy ways. Kind isn’t the first thing anyone thinks when Apple comes to mind today. Terms like “greed” are being heard more and more, while other terms like “arbitrary” and “unpredictable” seem almost certainly true.

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    1. Great comment!

      I agree things seem different than a few years before. If I had to pick a moment when it changed — January 2007 when Apple dropped “computer” from it’s name

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  4. I think there will always be room for consultants/VARs that have something to add. Apple doesn’t sell all products necessary to run a business network (even a small one) so VARs have an ability to go above/beyond what Apple does and provide a total solution and support. Same goes with video production equipment, etc… There will always be room people who have consulting expertise above and beyond what an Apple store can provide directly. The new Apple store system doesn’t specifically mention on site support, so that is also an area where 3rd party providers can work. And even if Apple does provide on-site, there is always room for other consultants to provide more comprehensive on-site, or guaranteed response time, etc.. Plus 3rd party consultants can combine Mac and PC support, or Mac and network support. Something Apple won’t likely do.

    Essentially, this move will likely push consultants up-market, into more expertise heavy, or specific content areas. Consultants will be forced to offer something that “geniuses” can’t. For the consultants that can hang, this may allow them to charge more for their services.

    The ACN network has really also been a mixed bag. There have been some excellent consultants and some not so excellent ones. Its hard for the customer to figure out which is which. Perhaps, like with the “App Store”, the new system of consultant referrals will allow Apple to curate which consultants get recommended for the specific support tasks this service will cover. Of course, if the ACN network and Apple certifications were meaningful, this problem should have taken care of itself under the old system.

    Perhaps, also like the App store, rising tides will float all boats. I don’t know the details of the agreement for the new system, but maybe if Apple provides an easy and standardized way to for customers to access consultants through the Apple retail stores, it will serve to increase the volume of consultant referrals and generate more business for them than the current system. Perhaps the consultants can use these leads to offer more services as later down the line.
    Essentially, this move will likely push consultants up-market, into more expertise heavy, or specific areas. Consultants will be forced to offer something that “geniuses” can’t. For the consultants that can hang, this will may allow them to charge more for their services.

    The ACN network has really also been a mixed bag. There have been some excellent consultants and some really awful ones. Its hard for the customer to figure out which is which. Perhaps, like with the “App Store”, the new system of consultant referrals will allow Apple to curate which consultants get recommended for the specific support tasks this service will cover. Of course, if the ACN network and Apple certifications were meaningful, this problem should have taken care of itself under the old system.

    Perhaps, also like the App store, rising tides will also float all boats. I don’t know the details of the agreement for the new system, but maybe if Apple provides an easy and standardized way to for customers to access consultants through the Apple retail stores, it will serve to increase the volume of consultant referrals and generate more business for them than the current system. Perhaps the consultants can use these leads to offer more services as well.

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    1. EDIT: Wow, content copy/past FAIL. Here is the content formatted correctly.

      I think there will always be room for consultants/VARs that have something to add. Apple doesn’t sell all products necessary to run a business network (even a small one) so VARs have an ability to go above/beyond what Apple does and provide a total solution and support. Same goes with video production equipment, etc… There will always be room people who have consulting expertise above and beyond what an Apple store can provide directly. The new Apple store system doesn’t specifically mention on site support, so that is also an area where 3rd party providers can work. And even if Apple does provide on-site, there is always room for other consultants to provide more comprehensive on-site, or guaranteed response time, etc.. Plus 3rd party consultants can combine Mac and PC support, or Mac and network support. Something Apple won’t likely do.

      Essentially, this move will likely push consultants up-market, into more expertise heavy, or specific content areas. Consultants will be forced to offer something that “geniuses” can’t. For the consultants that can hang, this may allow them to charge more for their services.

      The ACN network has really also been a mixed bag. There have been some excellent consultants and some not so excellent ones. Its hard for the customer to figure out which is which. Perhaps, like with the “App Store”, the new system of consultant referrals will allow Apple to curate which consultants get recommended for the specific support tasks this service will cover. Of course, if the ACN network and Apple certifications were meaningful, this problem should have taken care of itself under the old system.

      Perhaps, also like the App store, rising tides will float all boats. I don’t know the details of the agreement for the new system, but maybe if Apple provides an easy and standardized way to for customers to access consultants through the Apple retail stores, it will serve to increase the volume of consultant referrals and generate more business for them than the current system. Perhaps the consultants can use these leads to offer more services as later down the line.

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    2. Gravatar nailed it: a rising tide lifts all boats.

      This article comes off as more than a little wrongheaded. From a customer perspective this is an unmitigated good.

      From the narrow perspective of a consultant, adding a small business support plan will encourage additional business uptake and increase your customer base.

      In iOS, the decision to implement an app store created a revolutionary platform with unprecedented consumer uptake. How any iOS developers out there do you think are pining for the old days?

      To be blunt, Apple doesn’t owe you anything. They owe their customers everything. Your business model is to fill in the gaps in the solutions Apple provides. Apple’s model is to eliminate the gaps — because customers tend to like that.

      That doesnt mean I don’t wish you the best though. Good luck.

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      1. Your view is correct to a point, But many Mac owners , myself included live a very long way from a mac store. I have a specialist that is 5o miles away The nearest Mac store is over 125 miles Away. Do I really want a 250 round trip for service?

        And what about the many who don’t have available broadband? Have you ever attempted to download a 200MB update on dial-up? Watching grass grow is faster.

        So I refuse to honor Apple’s greed by using the new App store. There are many alternates to Apples software which I can and do use. If the OS becomes download only, I’ll stick to OS6 or switch to Linux or Win 7. Apple has made it very easy to run either of them on a Mac just as Apples new focus on greed has made it very easy to look for alternates

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      2. I understand. But I would think that your specialist ought to do just fine, Joint Venture or not, because of the exact geographical constraints you describe.

        Re: your other point, if I have got you right, you’re worried about the effect of the Mac App store on traditional distribution of boxed software, because it’s faster for you to buy it than to download it. I get that, except, I don’t believe there is anything keeping developers who submit to the App Store from selling their products via the traditional route, so I don’t see why you wouldn’t be ok there, too.

        Re: OS X alternatives: Linux is great. I use it all the time. It also really synergizes well with OS X, much better than Windows.

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      3. I just realized, you were talking about the article’s presumption that Lion will be distributed by download. You realize that’s totally unsubstantiated, right? I think there are still plenty of good reasons for selling an old-fashioned DVD, customers like you being one, and being able to restore from disc another, and evidence seems to suggest Apple realizes this too.

        All of Apple’s software remains sold in physical form, even the software like Aperture that is also sold in the App Store. Re: the one exception — MobileMe — smart money is that it was pulled because Apple will announce it as a free product tomorrow. Even if that rumors proves false, if you’re in a remote area and rely on dialup, a cloud service like MobileMe is probably not what you’re looking for anyway.

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  5. [...] your small business can fork over the annual fees for Joint Venture, Dave Greenbaum over at GigaOm raises a good point: If you’re not near an Apple store, which would be your main source for [...]

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  6. As Apple drives everyone else out of business they will raise prices and control the market. Soon everything Apple will have to go via the mothership. They want to control everything concerning any of their equipment. It is 1984 again, but this time its Apple.

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    1. This is exactly where I think Apple is headed, too. It’s maddening and more than a little disappointing.

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  7. I am an OF tech also. I won’t be running any Apple w/o’s for On Force. They want to charge us for the certs and no one knows what those w/o’s will pay. Doesn’t make any econimic sense to me. OF is having major problems with their techs because of policy changes that they are forcing down our throats. Good luck Apple..On Force was not a wise choice.

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