HelloTech, Geekatoo Merger Counters Best Buy Geek Squad
In the consumer IT services and support market, two Davids are merging in a bid to topple Goliath. Indeed, HelloTech and Geekatoo have confirmed merger plans, essentially countering Best Buy’s Geek Squad business. The big question: Is there still room for SMB-focused MSPs and VARs to target the consumer and SOHO markets?
First, the deal of the day: HelloTech will combine its network of about 150 college students who provide on-demand tech repair to Southern California consumers with Geekatoo’s U.S. network of about 5,000 technicians, Reuters noted. Financial terms were not disclosed. It’s unclear if this was a fire sale or a merger of strengths.
HelloTech, founded last year, has raised $17 million from investors. Geekatoo has raised nearly $3 million and built a network of 7,000 support geeks across the U.S. over the past five years, Reuters notes. The combined company, known as HelloTech, mainly targets Baby Boomers who need help setting up high-end gadgets at home.
Water, Electricity… and IT
HelloTech CEO Richard Wolpert compares today’s consumer IT market to the early days of plumbers and electricians. “Our homes are going through a similar transformation as technology becomes increasingly embedded in our appliances, entertainment devices, and safety systems,” he asserts. “It creates an entirely different pain point for consumers today.”
Still, numerous businesses have tried — with varying success — to offer consumer-centric IT services. The players have included Geek Squad, OnForce, Office Depot (Tech Depot) and Staples, to name a few. Some services are reputable while others — such as iYogi remote IT support — face numerous lawsuits alleging questionable business tactics. Best Buy and Staples even attempted to push into SMB IT management, but ultimately exited those businesses (mindSHIFT and Thrive Networks, respectfully).
Most folks still point to Apple Stores as the most efficient model for consumer IT support. Emulating Apple’s model isn’t easy. Apple customers are willing to pay a premium for hardware and AppleCare support. Plus, Apple only services its own hardware, a small fraction of the consumer IT device ecosystem. Instead of rolling out fleets of cars and trucks to support customers at home, Apple has inspired customers to visit its retail stores for service.
Meanwhile, audio-visual (AV) resellers have also been dabbling in consumer IT support. But here again finding a sustainable market niche has been challenging — especially since “good enough” AV applications like Skype are essentially free.