The Computer Haus

June 6, 2007

Maybe it takes a quirky, individualistic guy like Jim Neu to run the only Apple computer store in Northern Michigan.
After all, he admits, most people with an allergy to red bottom lines would have called it quits long ago. Especially in 1997 when the national media was predicting Apple Computer’s imminent death. He painfully recalls a customer reading one such article in the Wall Street Journal and pulling his $6,000 order.
But Neu hung in there, and he’s proudly celebrating the 25th anniversary of Computer Haus in Traverse City, which is now filled with stylish computers, iPods, and accessories that transform televisions and sound systems into personal showcases. Apple has broadened its product line so widely, in fact, that it recently dropped the word “Computer “ off its company name
And there’s a new development in the store that’s not immediately obvious. MacIntosh computers now come with an Intel chip, which gives it the capability of running Windows software and Linux (software that’s free to the public and open source, which means programmers can add their own twist).
The compatibility factor is huge. It means MacIntosh is now completely compatible with its commercial nemeses — the PC and Microsoft.

TIGHT MARGINS
Greg Nickerson has joined forces with Neu and will either buy him out or partner with him as they ultimately relocate from their current location on Garfield Avenue. They just received word that they are authorized to sell Dell computers, so Computer Haus will likely take a step up in its range of inventory. Volume is more important than ever, Neu said.
“You’ve got more and more people buying computers, but the margins are much tighter. The whole computer industry itself has no margins. Computers have become throw-away products. We make $10 on an iPod shuffle. We make an $80 profit on a $1,000 computer. If somebody buys it with a credit card, we make $50.
“That’s why Comp USA is closing more than half of its stores. Circuit City didn’t make it here because of Best Buy. There really isn’t much room for so many places not making much money.”
But Neu and Nickerson are very optimistic about Computer Haus, not only because of its new Windows compatibility, but also because of Mac’s resistance to computer viruses that are now plaguing computers with Windows software.
“We have customers coming in who want a Mac, saying they have had it with losing their stuff to viruses,” Nickerson said. (Note: The Windows program on Macs will be just as vulnerable to viruses.)
The Mac operating software is much less vulnerable to viruses because its operating system is based on Unix, which is very secure. Hackers also focus their efforts on the PC market since it’s so much bigger. Apple is so confident of its virus resistance, its commercials dare hackers
to infiltrate a Mac, while universities hold “hack a Mac” contests.

TURNING POINT
Computer Haus first opened in 1982 across from the Cherryland Mall in the Colonial Square strip mall. When Jim Neu and his dad bought the store in 1987, the store sold both PCs and Apple computers. Computer Haus was the first computer store in town, in fact. Two years after taking over the store, it dropped its line of PCs.
“The reason why is that people would come in with their hair standing on end because they couldn’t get their PC working,” Neu said. “The PCs were a great source of revenue for our service department, but dealing with frustrated customers was not pleasant.
“People enjoyed the Mac, and came back buying more stuff for it, rather than coming back to have it fixed. To this day, we still only have six guys who support Northern Michigan in service. That tells you how much they don’t break.”
Nickerson, who has worked with Neu for 15 years, said that Macs have long enjoyed a reputation of not “crashing” and losing data like PCs. They do lose data more often now, however, because thousands more megabytes are being put in the same physical space.
In the early days, PCs always appeared to have a lower price tag, but then customers would later realize they had to buy specific cards and accessories to add a printer or sound—and that didn’t make them happy, Neu said.
“If you get a Mac, it’s all built in, it works, there’s no stress, and it’s awesome.”
But the decision to stick with Macs brought Neu intense stress at times, particularly when the company “abandoned” the education market in the mid 1990s.
“We had Mac computers in all the schools around here—from elementary to college level. They would order the computers from Apple at a discount, but they’d hire us as the local dealer to put it together and service them at no cost to the schools. Around 1995, they decided they would save money and cut the local dealer out—do everything themselves. The schools had no way of putting it together and call us. We’d say, ‘Sure we can help you, but you’ll have to pay us.’ So in the end, Apple lost a lot of the education market share,” Neu said.

BIG SHIPMENT
That was also about the time that Apple introduced the Newton computer, which ended up as a commercial bomb.
Did Neu ever think of calling it quits?
“Hmmm, was there ever a year I thought of not calling it quits?” Neu asked, laughing.
Things began turning around when Steve Jobs rejoined Apple, and the company introduced the beautifully designed iMacs. Neu said he knew the tide had turned when Apple accidentally shipped Computer Haus 50 computers instead of 25. Before they could ship back the surplus, customers snapped them up and Neu quickly ordered 50 more. “We weren’t used to the popularity,” he said, wryly.
Neu said one reason for his long-term success is a great staff—predominantly male, young, loyal, loves computers, and can fix computers. He’s only hired four women over the years because historically they weren’t really “into” computers. That is definitely changing, he said.
“Kids in their 20s, men and women, are completely comfortable with computers because they grew up with them,” he said.

CUSTOMERS
Unlike the big box stores, Computer Haus has its groupies. “We have customers who hang around here and even help sell our computers for us. They’re proud to be Mac owners,” Neu said.
“They feel part of a special crowd,” Nickerson added.
One of the store’s most memorable customers has been Randy McMillan, who once owned Computerland.
“He was our competitor, before they pulled Apples from every other local dealer but us. After he sold Computerland in 1994, he has bought a new Mac every year. He just bought another computer from us last month.”
“It turned out I had a teaching job at Ferris and I taught on Macs, and I needed to be compatible with my students,” McMillan said. “I have lived in two worlds — Windows and Macs, but one of the things I like about the new laptop is that I can have both on the same machine.”
McMillan said he now prefers the Mac operating system over Windows. “It comes up faster, and no one is writing as many viruses as they do for Windows. Windows is also bloated with a lot of things I don’t need. The OS-X (Mac’s operating system) is fairly elegant and simple, and some of the installations are far easier. There’s an elegance to their creations that’s kind of nice.”
One other plus: “I’ve always had good luck selling Macs. I don’t get the full price back, but it’s pretty good,” McMillan said.A NEU FUTURE
Nickerson is confident that Computer Haus will grow significantly in the future. Its biggest competitor, ironically, is Apple Inc. itself, which sells a wide range of products online, as well as in Apple dealerships—although none in Northern Michigan. Nickerson plans to sell Dell computers when a new space is found.
Neu isn’t sure of the role he’ll play as Computer Haus evolves. He is less eager to talk about computers now. What’s really on his mind is a deeply spiritual — almost mystical — transformation he experienced last year that left him wondering how to spend the rest of his life.
Neu said that after his father died in 2005, he often asked God for a sign. Then one night after three hours of jamming on his drum set with singer/guitarist Tim Callahan, Neu got down to his car. Before he started the engine, he felt an overwhelming “electrical pulse of love that rocked my world.”
“It was nothing like I’ve ever felt before—a physical feeling of divine ecstasy in my chest that was almost too much to endure.
“It happened four times and every time it was huge. The last time, I was dumped in front of a church. Was it a thank you from God? I don’t know, but now I’m happy, I know God does exist, and I have absolutely no fear of dying. But I feel like I’m not doing something I’m supposed to do. I guess if He can pin me down in front of a church, He can let me know what my next chapter will be for my life.” Since that explosive, divine experience, Neu, a hard rock drummer, said he no longer enjoyed smoking,or playing at bars. Maybe his next life will include playing in a Christian band. “Who knows?”