Brian Dunn s first-floor, windowless office at Best Buy headquarters in Richfield, Minn., has the feel of a high-tech freshman dorm room. Along with a basketball autographed by Magic Johnson, there s an iPad, three glowing computer screens and a digital photo frame. There are also four smartphones in regular rotation, and Dunn is intent on testing out a few more. I want to play with these devices and learn from them, he says.

As much as he loves fiddling with all the tech gear, what Dunn really wants is to sell more of it to you. He started hawking electronics as a salesman at Best Buy in 1985, when the chain consisted of just a few stores in the Midwest. Dunn, 50, has seen his career grow along with the retail giant, which now has $50 billion in annual sales. He managed stores around the country before settling in the Minneapolis suburbs. One stop he never made was college, but he likes to say he studied at the University of Retail.

He seems to have learned the lessons well. He took over as CEO in June 2009, as the consumer-electronics industry was facing its biggest sales drop in more than three decades. While Dunn says the sales of products like household appliances suffered mightily, growth in other categories, such as digital cameras and laptops, more than offset them. The company also gobbled up market share after longtime rival Circuit City shut down last year. The result: Earnings for Best Buy s fiscal first quarter, ended May 29, increased 1 percent from a year earlier, to $155 million, on a 7 percent increase in sales.

The stock price, which was under $18 in late 2008, has more than doubled. With consumer spending on the rebound, analysts expect Best Buy s sales to continue to expand.

But for all the recent good news, the stock is around the same price it was five years ago, and the company is starting to see a decline in one of its biggest profit makers: services like warranties. So Dunn is remodeling. Some new mall-based stores will sell only mobile phones, and the traditional big-box outlets will add connectivity centers to teach customers how to use all those fancy gizmos. Plus, new product offerings like popcorn machines and curling irons are starting to appear on shelves.

Of course, as other retailers muscle into its territory, Best Buy still has to convince customers that its prices are competitive and it offers a large enough selection. The biggest challenge facing Best Buy is Wal-Mart and Amazon, says William Truelove, retail analyst at UBS. Dunn sat down to talk about how he went from selling VCRs to being the boss and what s in store for the nation s largest electronics chain.

You worked at a grocery store at age 14, continued after high school and never went to college. Why not?

I really thought about staying full-time in the grocery business, and then elected to make a change and landed in Best Buy. I definitely feel like I missed that [college] experience, [but] I think that Best Buy filled that space.

Best Buy is known for TVs, computers and appliances. Are you trying to compete with companies like Amazon by carrying everything from electronic toothbrushes to martini makers?

I don t think we re necessarily looking to compete with the long tail of Amazon. Our Reward Zone customers want us to provide more solutions in more spaces, so you re going to see a lot of tests. That s what leads us to have e-bikes and electric motorcycles in some of our stores. We had patio furniture on BestBuy.com last summer. I didn t know we had the martini maker; I ll have to get one.

What growth opportunities emerged even as consumers pulled back on spending during the downturn?

Smartphones, notebook computing, digital cameras and home theater [products] continued to grow at double digits at a time when people were very careful about opening their wallets. It became crystal clear to us that this notion of connectivity was no longer discretionary it was core to how people lived, and it was the future. We did foresee it coming, and we had made bets before in that space.

Like what?

We are very pleased with the results to date with our freestanding Best Buy mobile mall stores. We have about 100 locations. We re accessing a new customer typically she s a mom in the mall. We see a big opportunity there.

How are you addressing the falling revenue for support services, such as warranties?

We have not been as quick as we have needed to be in terms of moving our price on some service offerings with the product price. You ll see us be more sensitive there.

What country offers you the greatest growth prospects?

China is really important for us. We own Five Star, which is a profitable business for us. It has grown significantly since we acquired it four years ago. We have a six-store venture in Shanghai, where we re going through growing pains of having a different operating model than is the norm there. I m very confident we will crack the operating model, but we re working through it.

Are Internet-connected TVs going to be everywhere by the holidays?

I don t think we ll have a 40-inch TV in the assortment that isn t an Internet television.

How will this help business?

That s an important part of what we can do for our customers and shareholders. We ll be in a position to help people configure their televisions whether it s with a video, cable, satellite, photo, music or gaming service.

You ve recently offered devices like the iPad before many of your competitors. But has the company been flexing its influence with manufacturers to design exclusive products for Best Buy?

We have what we call Blue Label computers. That is where we go to manufacturers and tell them we have talked to our consumers and employees, and these are features that they want in a notebook computer and we would like you to build an exclusive one.

And 3-D TVs are getting a lot of hype, but many consumers have already upgraded their flat screens. Who s going to want to buy these?

I don t think 3-D is going to be a must-have for every home, but I think there s a significant number of early adopters who are really going to want this technology. We have movies like Avatar and Alice, and gaming hasn t even come into play yet. I think that will spur some good adoption.

What are the new connectivity centers you re planning to roll out going to do?

Choice is really important, whether you want Napster, iTunes or whatever it is. We re going to set you up and help you get the most out of that. Whether you re in for Netflix, CinemaNow or Apple TV, we find that we re spending a lot of time helping people get connected.

Are you going to charge people for these services or, say, raise prices across the board to cover this expense?

There are different levels of pricing, but I would never describe it as though we re going to layer a 2 or 3 percent bump unilaterally. I think what we ll do is charge for the service people are looking for.

How successful has Best Buy been at using online social networks?

We reworked our Facebook page in the fall, and in less than 90 days, we had over a million fans. We haven t been public about this, [but] we re starting to find traction on our Best Buy mobile app. When a customer shoots me a tweet, employees will swoop in and say, I just saw you tweeted; I can help you with this. There s no instruction from me to go cover my flank my staff wants to help.

Someone broke into your Twitter account, and yet you re still using it to address customer complaints. Why?

I don t see any alternative strategy. Someone had hacked my account and said, I m having a lot of great sex lately and here s why. I m turning red right now just thinking about it. But you know what? It s part of the territory.

Can Best Buy grow as fast as it has in the past, or have we seen its prime?

Everybody wants us to behave like a mature company and jump into this 7 to 8 percent year-over-year growth. I think we are in the front end of an explosion around technology and people s appetite for it. We see explosive growth [ahead].

What device do you always have with you?

If I leave my wallet behind, I ll come to the office without it. I will always go back and grab my smartphone.