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It happened to former Beatle Paul McCartney. His financial files turned up in public last spring, after someone recovered them from a PC that McCartney's investment bank, Deutsche Morgan Grenfell, had sold before purging files. Stampp Corbin loves to hear horror stories about dead computers that come back to life. That's because he makes his money from burying the information on their hard drives for good. As founder and CEO of RetroBox.com in Columbus, Ohio, he resells or recycles old computers for Fortune 500 companies. SECURITY BATH. The Internet provided the foundation for this computer rebuilder. Corbin started the business four years ago by listing refurbished computers for sale on his Web site. At the end of August, the site listed 89 laptops for about $250 to $450, plus a $12 shipping charge. Nearly 900 desktops were going for $150 to $250, compared with about $1,000 for a new computer. Most models were Hewlett Packards, but Corbin says the inventory mix will include more IBMs and Compaqs at the end of September, after a Wall Street client unloads its old machines. Potential buyers -- typically men aged 25 to 35 -- who know what they're looking for can find it quickly. The RetroBox site has pull-down menus that allow users to specify the memory and speed they want. If they find it, they can click it into their shopping cart. RetroBox promises delivery within two days of receiving a credit-card authorization, and buyers have three days to return it for a full refund. The company guarantees the machines for 90 days. Retiring old computers might not sound like a glamorous business. But RetroBox expects to book $5 million in revenue this year by either selling or recycling 150,000 desktops, laptops, and computer peripherals -- six times the number of pieces it handled last year. Before Corbin does either, he gives them a security bath, using a software program that writes over the hard drive several times. The CEO says the process guarantees that the information on the computer is unrecoverable. Most of Corbin's clients don't pay a dime for him to take their computers. He only charges if the computers are four years old or more. Usually he pays them about 75% of the eventual sale price for younger models. FASTER LIFE CYCLES. Buyers tend to be bargain seekers, not speed demons. RetroBox sells 25% of its inventory to the general public and another 25% to employees of companies unloading the machines. It gives 15% of its machines to charity and recycles the rest, says Corbin. He claims the company is profitable, but just barely. "We're investing in our growth," he says. RetroBox expects to double its volume in 2001. The company is a spin-off from Resource One Computer Systems, a $25 million computer-services company that Corbin also runs. Resource One works mostly in the Columbus area, selling name-brand computers and services to companies there. "One of our clients had some desktops they wanted to get rid of, and they asked me to help out with retirement," says Corbin, who earned an MBA at Harvard University. "I said no, but they called several more times, and at the end of the day, I thought, 'Hey, this looks like a pretty good business.'" And it's getting better. Faster life cycles mean more used PCs and laptops. Some 114 million computers were shipped worldwide last year, and an estimated 133 million are expected to be sold this year, according to Gartner Research, a Stamford (Conn.) tech-consulting and market-research firm. Companies use their computers for three years on average. "That's a whole lot of equipment that's got to find another home," says Francis O'Brien, research director at Gartner. TOXIC PARTS. Environmental concerns are also fueling RetroBox' growth. PCs contain several toxic parts, including batteries and lead glass from monitors. Simply throwing them in the garbage is illegal, though the law is not widely enforced. Massachusetts, however, recently became the first state to pass a law forbidding the dumping of computers in landfills. The Environmental Protection Agency estimates that only 20% of the computers that are retired this year will be properly recycled. Kraft Foods is among the minority of companies that dispose of computers the proper way. With Y2K behind it, Kraft decided earlier this year to upgrade all its PCs, and that meant getting rid of about 5,000 old desktops. "One of our biggest concerns was that we didn't want to have any environmental issues," says Rajiv Radhakrishnan, operations-planning finance manager at Kraft. "If a PC was stuck in a storage room somewhere, a worker might throw it in a dumpster or something. Also, data security was considered a problem." So Kraft paid RetroBox an undisclosed amount to take the computers off its hands. The computer-retirement industry is still in its infancy. Most of the business is handled by local companies or the computer makers themselves, says Gartner's O'Brien. Dell, for instance, allows customers buying new computers to post their old machines for sale on its site. RetroBox, however, is one of the first to do business nationwide, O'Brien says. It strengthened its position with a recent deal with tech-services company CompuCom Systems Inc. to retire its used machines. More such agreements are in the works, Corbin says. If the pace keeps up, there's little chance RetroBox will be retrofitting itself. Molinski contributes to Business Week Online from San Francisco |
