482 - The Computer Store That Wouldn't Die - Part #2

Last week we revealed how we got started in this business in 1995 and how we decided to keep on doing it in spite the generally accepted opinion that small independent PC makers were soon to become an endangered species. Today the personal computer business is over 30 years old but in 1995 PCs had only been around for a dozen years and the Internet was little more than a series of bulletin boards. Dell, Gateway, IBM & Packard Bell actually designed, manufactured and serviced PCs right here in the good ole USA. They built “cookie cutter” PCs with proprietary (non-standard) components and function-integrated motherboards. This forced customers to use company repair and upgrade services. They made handsome profits on “factory replacement” components and service. 

Because of these restrictive practices many home and business users elected to have PCs built for them using non-proprietary, industry standard components. These “open architecture” PCs were much less costly to repair or upgrade. In 1995 over ten thousand independent PC makers like “The Computer Factory” accounted for nearly half the PCs sold in the USA. 

In addition to building PCs, the “independents” typically sold components to the “do it yourself” crowd. PCs were a relatively new thing and there were still plenty of “PC hobbyists” around. Selling PC components was a huge business. Weekly papers like “The Computer Edge” and the daily newspapers were full of ads for “open architecture” PC systems and components (hard drives, CDs, RAM. CPUs, motherboards, video and sound cards, cases, powers supplies, monitors and operating systems). It was a highly competitive, price driven business. Profit margins were low. As prices continued to drop so did quality and independent PC builders gained the reputation as being cheap alternatives to the national brands.

We decided early on that we would not price compete with other independents. Our main business was building new systems and repairing and upgrading PCs. We sold components but only the high quality components that we used to build our own PCs. 

Over the years low profit margins and the shrinking “do it yourself” market took its toll and the low end independents went sneakers up. Our business continued to grow as savvy business and home users found our PCs to be real values in performance, reliability and maintenance and our service was prompt and thorough.   

Comp USA, Good Guys, PC Club and Circuit City came and went and never really understood that the key to customer satisfaction is service. With great fanfare Gateway opened nearly 200 Gateway Country Stores across America to get “close to the people” only to close them a few years later. They never figured out how to satisfy their customers. You would think that satisfying customers would be easy. All they needed to do was listen to their customers needs and use then their expertise to provide solutions. Actually, helping others is a natural human response. The problem is that corporate policies and procedures often don’t permit the flexibility to account for the human factor. 

In the early years of the new millennium we were on a roll. The competition was fading and our business was growing steadily. Then we heard that Fry’s was going to move in across the street from us. How would that effect us?  Tune in next week for further adventures  of the Computer Store That Wouldn’t Die.