The local computer sales and repair industry seems to be all over the motherboard in terms of the state of the industry.

There are plenty of local options for customers who want to avoid the big-box stores, but increasingly lower prices are making it harder for the smaller players to stay afloat.

Despite the challenges, at least three area stores are primed for growth. While each business has a different reason for expanding, they all share one common theme: In order to be successful, their business plan must evolve as fast as the technology they sell.

Compuzone

“To be honest, I am doing it for me,” said Todd deNeve, owner of Compuzone in Killeen, about his impending expansion.

Nobody knows better than deNeve how quickly the industry can change. DeNeve got into the computer business when he was an undergraduate studying business at the University of Texas at Austin in the early 1990s. He started several computer-based business; at one time, he had three stores in Austin in addition to his Killeen location.

His company, Compusource, which sold computer parts and services, brought in millions of dollars in revenue per year at one time. But then the dot com bubble burst, and deNeve found himself starting over.

DeNeve has been in his current location for 14 years. He is opening another location in Belton on Oct. 1. The new location comes with a new business model.

DeNeve said Compuzone’s business is split evenly between retail sales and service. And while he will continue to sell products such as laptops, desk tops and customized gaming consoles, deNeve said the store is shifting its focus to electronic repair and refurbished computer equipment.

“What we’ve adapted to is a one-stop-shop for computer and cellphone repair,” deNeve said.

DeNeve currently handles computer repairs at Compuzone. He also owns a store called Cell Repair next door to Compuzone with a partner, Bobby Duven. DeNeve said at the new store, all of the repairs will be handled under one roof.

Significantly, this is not DeNeve’s first stab at the Belton market. While the first time around did not end well, he said he learned from his mistakes.

“We’re headed back where we were, but with a more profitable equation,” deNeve said. “The second time over, the learning curve is moving toward refurbished equipment.”

“Our bread and butter is refurbished laptops,” he added.

Texas Computer Services

There is a reason local computer shops are trending toward repairs and sales of refurbished equipment, said Roman Gorlov, owner of Texas Computer Services. He said as big-box retailers continue to lower prices on computing devices, profit margins on repairs continue to drop. He said more computer stores do not necessarily translate into industry growth.

“In fact, I see the opposite,” Gorlov said. “I see a lot of businesses closing, and I know the reason. It is the big corporations like Dell. They realized services are more profitable than sales, and they have lowered their prices on computers.”

“It is almost impossible to sell repair services of over $100 if somebody can buy a new laptop for $199,” Gorlov said. “Today, to make $500, we have to process five or more computers. In the past it was one or two.”

Like deNeve, Gorlov is looking to create new revenue streams. He is planning to become a full-service electronic repair shop within the next 1½ years.

“We are developing a retail side, which we did not have in the past,” he said. “But in the future, we will do more hardware repairs. We’re trying to get ready for it. We’re already taking televisions, but we’re not advertising. We are not quite ready for full repair services.”

Although he is facing a lot of challenges, Gorlov said he is optimistic. He said he is encouraged by the growth of the local economy. He opened the store in Copperas Cove because he noticed a lot of customers from Cove were driving into Killeen for his services

“Our first month at the Copperas Cove was profitable,” he said. “We signed a two-year lease and we are still there.”

Hudson Micro PC Systems

While that is great news for Gorlov, George Hudson might not be as happy to hear it. Hudson owns Hudson Micro PC Systems in Copperas Cove. Although he bought the store in 2005, the location has housed a computer store since 1987. He said his business is hanging by a thread, and the increased competition could be a death blow.

“It does give us concern that it will cut into our business,” Hudson said. “We’re right on the edge right now. It could throw us over.”

Hudson hopes the location’s longevity will help keep the business afloat.

“The only positive here really is the store has been here since 1987,” he said. “It’s the only computer repair and sales shop that has been here since 1987.”

Hudson also is expanding his repair services to include cellphones and other electronic devices. He knows he has to come up with new revenue streams to survive.

“Customer loyalty by itself can’t keep us open,” he said.

Extreme Systems

Greg Moore, owner of Extreme Systems in Harker Heights, might disagree. He opened the store eight years ago, and he said his business model immediately revolutionized the local industry.

“My business model is based on being the first business in the area that offered a free diagnostic,” he said. “That is our claim to fame.”

Moore said he has been able to cultivate a loyal following, and he is serving a second generation of customers because of it.

“One of my great joys is getting residual business from families I have worked with for eight years,” Moore said.

Extreme Systems currently only has one location, but like his peers, Moore is looking to grow.

“The goal would be to expand into other markets like the Temple-Belton area,” he said.

“I am interested in Waco and Georgetown, too.”

Contact Mason Lerner at mlerner@kdhnews.com or (254) 501-7567

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