Gadgets Spark Tech Repair Glory Days

BOSTON ( TheStreet) -- The Star Wars films held one valuable lesson for consumers: When your technology is broken or obsolete, take it to a Jawa. You never know what will come of it.

Just as the tiny hooded tinkerers in the original Star Wars films fixed the droids that drove the sci-fi franchise, the growing electronics repair industry is fixing the Google ( GOOG)-powered Motorola ( MOT) Droids and other devices consumers have come to depend upon. According to research firm IBISWorld, the real-world Jawas fixing America's PCs, game consoles, smartphones and MP3 players make up a $20.3 billion industry of more than 59,000 individual businesses that bring in $1.1 billion in profit.

Small electronics repairs shops make up a $20.3 billion industry of more than 59,000 individual businesses.

According to Hoover's First Research, IBM ( IBM) and H-P ( HPQ) make up 4.5% and 4% of electronics repair market share, respectively, thanks to their business services. Individual business is beginning to take up a bigger portion, with Best Buy's ( BBY) Geek Squad service alone accounted for 7% of the company's $45 billion revenue in 2009 and 9% of the company's $11.9 billion third-quarter take.

Average repair outfits -- which Hoover's says usually have one location, fewer than 20 employees and annual revenue of less than $1 million -- are also looking at a much improved picture in the next five years. Despite electronics repair's 1.1% annual decline between 2005 and last year, IBISWorld predicts 1.1% annual growth through 2015 as the economy recovers and tech sales climb.

"The economy hit everyone, and we did see some harder times, but as people turn more toward repairs, we're building it back up," says Kera Murphy, marketing and accounts coordinator for Boston- and London-based electronics repair company Tech Superpowers. "We're seeing people coming to us looking for alternatives to purchasing new products."

Founded by Massachusetts Institute of Technology graduate Michael Oh in 1992, Tech Superpowers is Apple-authorized and sells Apple ( AAPL) products and repairs Mac products for a client base ranging from Harvard and Boston University students to the Boston Celtics organization and speaker maker Bose. It weathered the opening of the largest Apple Store in America just around the corner from its Boston location in 2008 by strengthening its repair team and fixing out-of-warranty items and other requests the folks in the big glass box a few blocks over just couldn't handle.

"On the sales side, we try to offer some alternatives to our clients," Murphy says. "If we're able to offer a third-party part to upgrade their machine, whether it's RAM or hard drive, we're able to offer it and save them some money."

Those computer repairs are just less than 40% of the electronics repair market, however, which leaves enterprising techies some room to maneuver. Shane Jordan did just that in 2004, when he and partner Jean-Paul Stewart started their Tech Center business in New York City by carrying around tools in their backpacks and fixing consumers' broken tech toys at Starbucks ( SBUX) tables. Their business has expanded to include repairs for iPhones, Research in Motion ( RIMM) BlackBerry devices, Google Android smartphones, feature phones, Macs, PCs, Microsoft's ( MSFT) Xbox game consoles and Sony's ( SNE) PSP hand-held gaming system. The two -- now with retail locations in Boston, Brookline, Mass., and Montclair, Calif., and having written their own software to track repairs in all locations -- credit their success to the planned obsolescence of devices such as the iPod and iPhone, whose consumer-inaccessible lithium-ion battery and network-locked handsets put their skills in demand and gave them seed money for their business.

"Your iPod that you brought in 2003 is technologically obsolete now, and there are devices out there that can do 10 times what it can do," Jordan says. "However, what's happening with a lot of these devices is that people are starting to form an emotional attachment to these devices; you had it in college and it's an old friend."

As those devices become more integrated and perform more essential functions, more consumers are looking to keep their old friends around. As U.S. retail sales for electronics and appliance stores increased 2.9% in the first 11 months of last year compared with the same period in 2009, Hoover's First Research says total revenue for electronic and precision equipment repair and maintenance in the third quarter increased 7.8%. While IBISWorld blames consumer inability to fix devices on their own for repair-industry growth, Jordan says lives increasingly spent on the network make his 30-minute iPhone screen replacements necessary.

"What's happened over the last 10 to 15 years is that people have become addicted to technology," Jordan says. "When your cell phone breaks, are you going to send it back to Apple, Microsoft or Research In Motion, wait a week for it to ship and wait another week to ship it back? Most people can't do that."

Recent decisions upholding the right to unlock phones to increase wireless network access and jailbreak smartphones and other devices to access once-blocked applications and operating systems have given repair experts more leeway, but hasn't made their job less expensive or complex. Jordan and Stewart's company, for example, stocks 90 varieties of battery and 20 to 25 chargers to accommodate widely varied proprietary cell phone and smartphone technology. Keeping current comes at a cost as well, as Stewart recalls nearly being reduced to tears in his company's early days after paying $1,500 from his $35-per-repair salary to replace a client's high-end iPod that he'd destroyed three times during a punishing bout of on-the-job training. Overcoming those obstacles, however, has made Stewart and his colleagues as indispensable at the independent mechanics and appliance repair specialists of the past century.

"When things are really easy, our particular expertise doesn't shine as much," Stewart says. "When the market is complex and there are a lot of these proprietary technologies around, that's when our education and our employees' ability to adapt to new technology separates us from other businesses."

Even those skills aren't always enough, though, as IBISWorld notes that the rising disposable income that accompanies economic recovery may encourage consumers to replace electronics instead of repairing them. The Bureau of Labor Statistics notes that digital cameras, for example, can be more expensive to fix than replace. Even when repairs make sense, as is the case with flat-screen televisions, Consumer Reports' annual product reliability survey says those products are repaired only 3% to 8% of the time.

Jordan shrugs this off, saying saying there will always be those who can't afford to easily replace high-end electronics and -- because of increasing attachment to them and reliance on the information they contain -- won't want to discard them so quickly. Besides, you don't defeat empires and blow up Death Stars by just tossing still-valuable technology.

"Over time, more and more people will have one device for everything and, much like in Japan, your money will be stored there, your subway or metro pass will be on there, it'll have your ID," Stewart says. "It really makes sense for us to learn how to fix these small, converged devices."

>To submit a news tip, email: tips@thestreet.com.

RELATED STORIES:



Follow TheStreet.com on Twitter and become a fan on Facebook.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.