Joint Venture a Disaster for Some ACN Members

By John Hazard

Members of the Apple Consultants Network (ACN)have a name for Joint Venture, the $499 SMB service offering Apple unveiled two weeks ago. ACN members call it the J.V. squad, short for junior varsity and a knock on the program’s capabilities.

Members describe Apple’s Genius Bar employees, the likely foundation of a Joint Venture staff, as "teenagers," with minimal training in Apple products and simple integration and virtually no experience in small business environments.   

"Do you want to go to a store to learn how to dance from someone who learned how to dance just three weeks ago or do you want to learn from someone who has been dancing for 20 years," asked Dean Shavit, co-owner of MOST: Mac OS Training, Troubleshooting, and Technical Support, http://www.macworkshops.com/most/support.html an Apple service provider and ACN http://consultants.apple.com/ member in Chicago.

"They’re young, they turnover frequently and they’re trained to sell Apple products and solutions in the store. They haven’t run small businesses, they haven’t been inside small business and it sounds like they’re not going to go into small businesses to see how they work, and what they do. I think it is impossible for them to make informed suggestions about what solution to adapt... It’s more ambitious than anything Apple retail has ever tried before."

It’s undoubtedly the most antagonistic. As far as channel partners and members of the ACN are concerned, Joint Venture is an attack on their livelihood. For many of them serving small businesses, it will put them out of business, ACN members said.

"I would use the term "disastrous," to describe what it will do to Apple’s relationship with ACN," said Dave Greenbaum, owner of Doctor Dave, a Mac and PC service provider in Lawrence Kansas. "It will sour the relationship between Apple and the consultants who recommend products. Until few months ago we were complimentary -- we sent our customers to buy products at [Apple] retail; they recommended us to do on-site and continuous support, integration and maintenance."

Joint Venture is expected to supersede that relationship.

For $499 a year, Joint Venture customers will get phone access to dedicated support staff at Apple's headquarters for up to five systems, according to the Joint Venture program Website. Subscribers also receive priority treatment for repairs at the "Genius Bars" at Apple's Stores and loaner computers for repairs that go beyond 24 hours.

Apple has offered few details and no executives have spoken publicly about the program. ACN members said Apple has had no contact with its ACN members regarding Joint Venture and the vendor did not reply to requests to comment for this story. Most hypothesize the service contracts are a loss-leader of sorts designed to deepen the Apple Store’s relationship with customer.

"We tell a customer to go buy 5 iMacs, I will set up network and then I might not recommend Time Capsule. I might Cisco or Buffalo," Greenbaum said. Now that Apple owns that relationship, what do you think they will recommend? And if the customer says they want another vendor’s hardware? 'I’m sorry, we don’t integrate that. You can pay another service provider to do that, or use the $499 you already paid us and just buy the Apple product."

The simple setup and maintenance offered by Joint Venture are the bread-and-butter business of a large segment of the ACN channel, and for those providers, it likely means the end of their business or at least the business they knew, both Shavit and Greenbaum said.

Many in that class of ACN provider are former Apple Store employees and not a far cry from the J.V. squad themselves, Shavit said.

"Many of them realized they were offering this advice for free at the store, why not go out on my own. Others are service providers who just saw low hanging fruit offering those simple setup and repair services," he said. "Both have made a living out of using the Apple Store as their first-line of lead generation. Those who relied on that low-hanging fruit will starve. It’s being plucked by Apple and rightfully so."

Apple is taking their business, that’s a certainty, he said. The ACN members in that position need to change their business model, "they need to step up to the varsity team, or go out of business." Greenbaum and Shavit put themselves in a different class of service provider, those who do their own lead-generation and rely on more seasoned customers with mixed environments and offer best-of breed solutions. ACN members in that group will likely see some attrition of their most infrequent customers with simple system needs.

In fact, both members speculated that Apple may be setting up a two-tier system whereby Joint Venture provides setup and maintenance for first-time service customers ("green customers," Shavit said) and more advanced customers will still gravitate to ACNs who offer those services.

Apple Puts Itself in the "Gun Sites"

In taking on business service, Apple may be going a bridge too far.

"They’re putting themselves right in the gun sites," Shavit said. "You can return product that didn’t work out. You can’t take back advice about a server set up caused you to lose data, lost productivity. They’re opening themselves up to a liability.

"I can just imagine an Apple Genius telling someone 'plug everything into airport and all should work’ and two days later the customer is in there 'what did you do to me? I’ve been down for two days, not billing anyone.’" he said. "That kind of lost productivity, that could doom Joint Venture."

By its nature, Joint Venture, won’t be able to offer best-of-breed solutions most businesses require and will struggle to service mixed-use environments.

"I imagine their advice on a lot of things will be 'you need new hardware,’ " Greenbaum said.

They also face challenges in building and keeping a staff that small business users will trust to protect their business.

"They don’t have it now," Shavit said. There’s a reason they call it the J.V. team.

This article was originally published on 2011-03-21