Apple Targets Small Businesses with Joint Venture

In what I now refer to as the "good old days," Microsoft could repel potential competition simply by announcing its vague intention, real or imagined, to one day compete in the market in question. A simple press release would send its competitors scurrying to find new businesses to conquer, leaving Microsoft to its devices.

This no longer happens, of course. Bowed by multiple antitrust trials, an ongoing brain drain, and the maturation of its core markets, Microsoft is a shadow of its former bully self, like a heavyweight fighter who returns to the ring after a couple of years of retirement only to discover that the new breed of competition is younger, faster, and stronger.

And today, Microsoft's gnat-like competitors span a variety of important markets. There are a lot of these companies, actually, and while Microsoft is circling the virtual wagons, it's being assailed on all sides. Today, however, I'd like to focus on just one of these competitors: Apple.

Apple has dominated the MP3 player and digital media markets for so long they're actually on the decline with no viable competitor in site. Its iPhone will have a sizeable chunk of the smartphone market for the foreseeable future and is rightfully acknowledged as the trigger for this market. The iPad is innovating its way to a new product category that will chip away at PC sales this year. And even the aging Mac is resurgent, picking up market share slowly but surely.

Several years ago at what was at the time a controversial Macworld event in Boston—Apple declined to attend because it was moved from New York—the event organizers had to rely on a series of b-list Mac apostles in place of actual Apple employees. I attended and happened to watch New York Times reviewer and Apple promoter David Pogue give a partisan talk in which he claimed, to the delight of the crowd, that "businesses bought PCs, but real people bought Macs."

While the golf claps echoed around me, I simmered. Pogue's claim was completely bogus ... when he made it.

Today, this claim is far more valid. As I've noted in the past, Macs are much more common today, as are Apple's other products, including the iPad. And while Microsoft is in no danger of relinquishing control of the PC market to Apple per se, it's pretty clear that Apple is now one of the most dominant suppliers of personal computing devices (i.e. Macs + iPads) in the world. Not just in the US, mind you, but in the world.

Apple's success is directly responsible, I think, for what Microsoft calls the consumerization of IT. Let's speak plainly here, folks: Users aren't just asking to bring certain classes of devices into work. They're asking to use Apple devices.

Books have and will continue to be written about Apple's ongoing success, but the bit I'm most concerned about lately is its recent stealthy moves past the consumer market and into the small business market. You're excused if you've not heard about this plan, as Apple didn't announce it during one of its heavily-reported i-device product rollouts.

One part of the plan is a new paid program called Joint Venture. Apple describes it as "a program designed to help you use Mac, iPhone, and iPad to improve the way your business runs. \[Via its retail stores, Apple will\] set up your new Apple products, train your employees to get the most out of them, and make sure everything stays working with dedicated support." Joint Venture's benefits look solid. The in-store training includes two-hour sessions and monthly group workshops. And unlike with the company's services for individuals, Joint Venture provides access to Apple "geniuses" over the phone; you don't have to schedule an in-store visit.

If you're familiar with Apple's museum-like retail stores, you know that individuals are already flocking to these locations at all hours, and the company's support is second to none according to virtually every survey I've seen. (And, as it turns out, my own personal experience.)

Why this is troubling is that Apple is doing something with Joint Venture that PC makers can't or won't do, at least not for small businesses. And because this program is modeled after Apple's already successful programs for consumers, many of the people who will be drawn to this program will have already had good experiences with Apple and its products.

On the Microsoft side, the software giant's approach to small businesses has followed a predictable pattern: As with the PC market in general, Microsoft relies on an army of partners to deal with customers. And for those up and coming small businesses of the past, this system made plenty of sense: They had small budgets, wanted integrated solutions and a simple infrastructure, and needed access to the best technology.

Today, the consumerization of IT doesn't just change how large businesses operate. With many small businesses, employees can bring their own devices. There's no infrastructure per se, and no real desire for it. Integration is still a goal, but less a need then a want. And people want Apple products. They can't always afford them—the average selling price of a Mac still exceeds $1500, compared to less than $500 for a PC—but they're aspirational. And they can often afford iPads. Sure, an iPad isn't a PC. Yet.

What's odd is that Joint Venture isn't Apple's only recent outreach to small businesses. The company also recently canceled its line of Xserve rack-mounted servers, removing an expensive and unpopular product from its lineup. And then it said that in the coming version of Mac OS X, it will no longer sell a separate (and expensive) Server version. Instead, Mac OS X Server will come with the client, and can be installed as a feature. It will be free.

Contradictory as it sounds, those two events (combined with Joint Venture) indicate that Apple is suddenly embracing the business market in a big way. And what Apple is preparing is a full-frontal assault on Microsoft's core business: Microsoft cannot and will not give away a server OS to small businesses. So now Apple can extend its product desirability into the smallest of businesses by offering its server product, for free, on any Mac. Entrepreneurs who had good experiences with Apple will go for this in a huge way. Apple has managed to create a desirable alternative to Windows Small Business Server, especially the Essentials version that's shipping this year.

Add it all up, and what we find is that Google isn't the only major competitor to have its sights set on Microsoft's business customers. But Apple has something that Google lacks: Eager, engaged users. This is a serious threat to Microsoft, and one that wasn't necessarily obvious just a few short weeks ago.

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