Desktop computer repair: a business opportunity for re-use organisations

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1 Business case Desktop computer repair: a business opportunity for re-use organisations Repair in the UK In the UK, the market for repair of electrical items has seen a general long-term decline. This has been driven by falling costs of new products, greater product complexity and reliability, and faster product obsolescence. The high cost of repair, either perceived or actual, is often cited by consumers as the reason they prefer to buy a replacement product. The cost of repair (when compared with buying new) is commonly driven by the sometimes disproportionate cost of spare parts combined with a high labour intensity. WRAP has identified a number of business opportunities for increasing repair that are of benefit to both consumers and businesses. This document is part of a series of business cases designed to highlight these commercial opportunities in the UK. Target audience This business case is aimed at organisations that currently take unwanted and donated electrical items and prepare them for re-use. Were these organisations to also offer repair as a service they would have very low barriers to entry and could experience significant benefits. Repair as a service Re-use organisations generally operate on the business model of receiving electrical items, preparing them for re-use and then selling them online or in a shop. A typical procedure for preparing a computer for re-use is presented in Figure 1. Pass Visual inspection Secure data wipe Preliminary function test Fail Diagnosis Repair Install operating system Final function test Cleaning PAT Figure 1 Preparing a computer for re-use N.B. preliminary function test may include PAT testing. The same skills that are needed to prepare computer for re-use can be used to offer a repair service as a complementary operation. The advantages of offering a repair service in addition to selling re-used computers include: it is a new source of revenue; repeat business is more likely; the operation is less reliant on finding a source of computers for re-sale; and

2 staff get a greater variety of experience, which may lead to increased opportunities for skilled employment. Commercial opportunities A survey of household waste sites found that nearly 60% of IT equipment discarded was working order, with a further 10% in need of repair. 1 Most of these computers are likely to have been discarded because they were perceived to be obsolete or have technical issues. A 2011 study found that over 50% of electrical items taken to household waste recycling sites were thought to be broken. 2 Almost half of the people disposing of the item cited cost as the main reason for not getting it repaired. This represents significant opportunity for cost effective repair of products to be demonstrated. Despite the recent economic slowdown, the computer repair industry is performing very well. In 2008 there were 2,000 computer repair enterprises but steady growth meant that, by 2011, there were over 3,200 enterprises and 22,000 people employed in the industry. 3 By 2011 industry turnover had grown to 2.0bn, an increase of almost 50% since Although demand is strong nationally, the success of any computer repair service operation will depend mostly on local market conditions. It is essential to research the strength of local competition and find out what prices the local market will stand. How it works There are two routes to operating a repair service: via home visits or in a workshop. Both are offered successfully by a range of businesses, with home visits generally being charged at a higher rate. Workshop repairs are likely to be the most appropriate for a re-use organisation to offer since they will already have a high street presence and workshop facilities. Figure 2 shows the typical stages that a computer will have to go through in the repair process. Drop off in shop Receive at workshop Diagnosis Identify spares needed Estimate repair cost Customer agrees to price Obtain spares Repair Final function test Figure 2 Example workflow for repairing computers Fail Customers will be wary of paying for a diagnosis in case a repair is not possible, so this could either be free of charge, at cost or refunded if the computer cannot be repaired. The price can either be per repair or per hour, with a maximum charge offered so that the customer is reassured of value for money. 1 Prospects for Household Appliances, Cooper and Mayers Realising the Reuse Value of Household WEEE, WRAP ONS, Section S of Annual Business Survey. Provisional Results for 2011.

3 The product Desktops are generally understood to comprise the computer, monitor and basic peripherals such as keyboard and mouse. In the context of this business case, monitors are too complex to repair and peripherals (which are widely available at low cost) are unlikely to be economically viable to repair. It may be a better proposition to offer replacement (re-used) peripherals. All computers are made up of a number of modular, compatible components. Open hardware standards mean that there is a thriving competitive market for replacement components; it is rare for proprietary parts from a specific manufacturer or vendor to be needed. This drives down prices and means that repairs or upgrades can be delivered at relatively low cost. Common faults There are two categories of faults with computers: software and hardware. Software faults include: malware infestation; operating system or program corruption; loss of personal data; and reduced performance. Anecdotal evidence suggests that many consumers will be tempted to replace an ageing computer due to a perceived drop in performance that occurs over time. This can be fixed with a fresh installation of the operating system and the consequent removal of unnecessary software which will drastically improve computer performance. Hardware faults can affect any one of the components, but common faults include: hard drive failure; broken power supply; and overheating. It is usually simple to upgrade or replace desktop computer hardware due to the use of modular components. However, many consumers are intimidated by the prospect of carrying this out and will seek help. Current repair offerings Figure 3 Low fragmentation of computer memory types makes it simple to build stock of used spare parts The average consumer expectation of the lifetime of a desktop computer is just 2 to 5 years. 4 To achieve these lifetimes usually requires some maintenance or repair operations, without which the consumer is likely to replace the computer prematurely. A major high-street PC retailer has dedicated service desks in all of its stores. It charges a fixed fee of 50 to cover diagnosis, delivery and repair, which will be refunded if the fault cannot be fixed; this does not cover any cost of parts. There is a 3 month warranty on repairs. Other services are also offered such as data recovery (from 80), system reset ( 50) and virus removal ( 50). There are many independent repair businesses that operate locally or nationally over the internet. This indicates that there is a robust market for the repair of this product using skills that are available to the re-use sector. 4 Public understanding of product lifetimes and durability, a research report completed for Defra by Brook Lyndhurst, July 2011.

4 What are the challenges and how can they be overcome? Funding Existing re-use organisations will already have finance in place, which may already include an aspect of funding. Offering repair in addition to existing operations should not need any additional investment (other than for marketing costs) but will potentially provide new revenue. Staff training Organisations that currently prepare computers for re-use will already have, inhouse, most of the skills they need to offer repair as a service. There may be some additional expertise needed to fix faults such as malware infestation or to recover lost personal data. Social enterprises can use staff training as an opportunity to improve skills for their staff and volunteers to help them with job prospects (This may also increase the number of funding opportunities available). Expensive spare parts Whilst the competitive nature of the computer component market means that spare parts are available for low cost, they can still make up a significant part of the cost of the repair. Building up a stock of re-usable components from obsolete computers will help to mitigate this problem allowing the cost to be kept down. Environmental benefits Repair is generally considered to carry significant environmental benefits over purchasing new replacement products. This is because, while new products consume materials, repair displaces the materials input with labour. Not all repair or maintenance activity will mean that the purchase of a replacement is avoided but, for example, upgrading a computer may extend a products life while using a smaller amount of new material. The carbon footprint of a new desktop is reported to be kgco 2 e. 5,6 This includes the electricity consumed through average use over a lifetime of five years which for highly efficient computers accounts for 40 50% of total emissions. Whilst new computers have become more energy efficient, within a reasonable product lifetime this does not offset the emissions caused by production. 7 Extending the life of a computer by carrying out repairs and upgrades prevents greenhouse gas emissions and should therefore be encouraged. Offering to set power-saving options for customers is a great way of lowering carbon emissions and saving the customer money. Price uncertainty A big factor in many consumers decision to repair is anxiety over the price. A clear pricing structure helps to overcome this. Consumer studies show that fixed price repairs are favoured because they remove uncertainty. Figure 4 A bench-top PAT inspection device 5 Fujitsu White Paper: Life Cycle Assessment and Product Carbon Footprint of an ESPRIMO E9900 Desktop PC 6 Apple Environmental Report for the 21.5-inch imac 7 Oeko Institut, Germany. Timely replacement of a notebook under consideration of environmental aspects 2012

5 Legal requirements It is important that all items leaving the workshop are checked for electrical safety (Figure 4). This is most commonly assured through a Portable Appliance Test (PAT) inspection. A fully documented PAT inspection carried out by qualified personnel significantly improves the organisation s standing should a customer claim injury due to a faulty item. However, contrary to common belief, PAT testing is not a legal requirement. WRAP re-use protocols for electrical products could be used for guidance. The protocol on ICT equipment describes the tests and procedures that should be carried out as a minimum to ensure that ICT equipment is fit for purpose. 8 Case study: Bright Sparks Bright Sparks is a social enterprise based in Islington, London. It runs a re-use centre for local residents and offers repair as a service to consumers. It was established in 2010 in response to a competitive grant offered by Islington Council through the London Community Re-use Network (LCRN). From its main shop it offers for sale low cost items such as toasters, kettles, audio equipment and computers. These items are priced very competitively, with full computer packages priced at less than 100. Excess stock and high value items are sold through internet channels to increase margins. The Plugs & Sockets etc (Safety) Regulations prohibits the supply of any domestic appliance not correctly fitted with a UK plug, conforming to BS1363, or a fuse link conforming to BS1362. The key identifying feature of plugs conforming to BS1363 is an insulated section at the base of the live and neutral pins to prevent finger contact. The Computer Misuse Act makes it illegal to knowingly gain unauthorised access to computer material or to impair the operation of the computer by intent or recklessness. Staff will need to be aware that it is illegal to gain access to areas of customers computers that they are not authorised for, such as password-protected areas. It is good practice to offer staff clear guidelines on how to report any suspected illegal content that is discovered on customers computers, whilst making it clear that they should not go looking for it. Figure 5 Bright Spark offers re-used computers for sale, but also offers repair as a service to customers Staff and volunteers The organisation employs five full-time staff, based in the shop and workshop. Each year over 50 volunteers pass through, with some staying only a few weeks and others indefinitely. Volunteers range from engineering students seeking experience, to rehabilitating prisoners looking to gain qualifications. Bright Sparks has recently started offering volunteers the opportunity to obtain NVQs in partnership with a local college and the LCRN. The social aspect of the business is considered to be crucial, and provides access to new avenues of funding. 8 WRAP Re-use protocols ICT equipment, %20-%20product%20protocols.pdf

6 How Bright Sparks approaches repair Customers can either drop their computers off at the shop or arrange for them to be collected from their homes. The computers are then taken to Bright Sparks workshop which has a dedicated area for computer repair and re-use. Once in the workshop, the computer is inspected and the problem diagnosed. If a spare part is required then the re-used stock is checked. If no part is available then prices are checked online. The customer is then contacted with a price estimate and, if agreed, the repair is carried out. Repair is priced to be affordable. A fixed 5 inspection fee is charged to examine the device. Subsequent labour is charged at 10 per hour with most repairs taking less than two hours to complete. This pricing applies to all items that Bright Sparks repairs, including computers. For computers it also offers a 25 fixed price option to reinstall the operating system and return all files and programs to their original state. Skilled staff Bright Sparks has a few key individuals, both employees and volunteers, who are critical to its success. This leaves the organisation sensitive to staff changes. This risk is being managed by encouraging knowledge transfer from key staff to new staff. Conclusion Bright Sparks successfully offers computer and electrical item repair to customers at the same time as running a re-use business. Funding by Islington council has, and continues to be, critical to making the business viable. At the time of writing Bright Sparks had been established for less than three years. The split between turnover and funding has been improving year on year. Repair prices were originally higher but were lowered in response to customer feedback, demonstrating how sensitive customers can be to pricing and that a lack of demand could indicate that prices are too high. Once repaired and tested the computer is returned to the customer by the same channel as it was received. Market demand Feedback from repair customers has been overwhelmingly positive but demand has been disappointing. This is very likely to be because most potential customers are unaware of the service, and the store does not have a significant presence on the local high street which will result in missed opportunities. In the future Bright Sparks expects to try marketing in the local community to raise awareness. In the meantime it does a lot of repair work for other LCRN members to support re-use operations.

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