Can Newegg survive the post-PC future?

With tablets and ultrathin laptops locked up tight and PC makers working their own halo effects, Newegg's best hope is its human touch

There was a time when building your own desktop computer, piece by piece, could get you the best and most affordable system possible. I had a brief, exciting moment in that time, around the year 2000. I wanted a system that ran quietly, had a case that was more or less a mini-tower, and had the kind of serious sound card that would foster my college daydreams of being an audio engineer. But picking out parts, wondering if they'd work together, and obsessing over price drops and return policies was so daunting, I'd put the decisions off by doing actual schoolwork, until an older friend in the know grabbed my shoulder, gave a knowing nod, and said one word: "Newegg."

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Cut to one week later, and my tiny, quiet system with the bumping sound is up and running, but there's acrid smoke and a strange smell. That's from the microATX motherboard, which is just a smidge too big to fit the case, but I persisted in finally closing it with a mighty shove. On the phone with Newegg's service department, I can't keep from revealing that it's my first do-it-yourself system, and that I was a bit over-eager to make it work. "Well," the refund processor tells me, with a kind of verbal wink and inaudible shrug, "we can't complain that our customers are too excited, right?"

New PC parts! Hooray for Newegg!

Not a year has gone by since where I didn't order nearly all my computer needs from Newegg: memory upgrades, replacement hard drives, headphones, USB drives and cables, anything that was needed to make a computer better or faster. I can probably name at least a dozen friends who buy the same way. That brand loyalty, encapsulated by the California-based firm's "Once you know, you Newegg" slogan, is no accident. Newegg turned a profit every single year since its 2001 founding, growing to more than $2 billion in sales in 2008, powered by roughly 2,000 employees. The following year, Newegg filed for a $175 million initial public offering, stating that it planned to use $25 million of that cash to expand into the Canadian and Chinese markets through 2010.

It makes sense, then, that Newegg's September 2009 filing turned a few heads, and perhaps seemed like the most sensible tech IPO to come along in some time (even if that's a very relative statement). Newegg was an established, profitable business, even if the profits were tight, and a familiar name among the tech-savvy. What happened next was, well, nothing much. Newegg swapped CEOs without much comment or notice, though the announcement carried a thumbs-up from their largest outside investor, Insight Venture Partners. Then, in May 2011, Newegg quietly dropped IPO plans, stating that it had decided not to go ahead with the stock sale, but providing no detail.

What happened? The internal factors are unknown. From the outside, one could guess that the industry that Newegg operates in shifted under its feet. The markets for traditional desktop and laptop systems hadn't shrunk much, but might have become as uncertain as the economy itself, depending on who you ask. Amazon, Newegg's main competitor in the online-only retail space, certainly hasn't stopped growing and gaining new angles. And more and more demand and attention shifted away from component-based systems to smartphones, tablets, razor-thin laptops and netbooks, and even the nascent but intriguing Web-only Chromebooks. All of these alternatives to what we know as the personal computer are difficult, if not nearly impossible, to upgrade or repair with Newegg components.

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