03/22/2006, 10:40pm, EST
Wednesday, March 22nd
Dell buys Alienware to counter Apple?
The Dell brand is well known for its mainstream, family PCs, while Alienware's high-end gaming machines have drawn a crowd of power gamers and users.
The notion of the Alienware buyout by Dell was first discussed by
Rahul Sood, CEO of Voodoo PC, an Alienware competitor. According to the report, Sood argued that Dell needed to buy Alienware, in part to position itself better against Apple, which has begun producing Intel-based Macs, a bold departure from its PowerPC-based roots.
"With the recent Intel/Apple relationship, it's clear that 15% (or whatever) of the consumer space for Dell may not be enough," wrote Sood. "Apple is likely to go to 8% with the help of Intel, over the next year or so. The PC-gaming market is threatening Dell's 'perceived technology leadership'--and ultimately the consumer space."
The report argues that Dell acquired Alienware so it could help establish a strong brand.
"The Dell brand has become synonymous with mainstream, family PCs, while Alienware's cutting-edge cool has a strong following among young gamers and power users," according to the report. "Alienware has also gained some traction in recent years by selling its powerful machines to businesses. And while that market is still small, the PCs are increasingly being used in graphics applications and to perform high-end engineering."
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The attempt to draw a connection to the Dell purchase to "defeat" Apple somehow is hackneyed journalism at best.
Dell has a share that Apple would kill to have... maybe that's the connection? Bleh.
So I do agree with the article on that one point. Dell should be worried.
One response is tackling Apple head-on with 'designer PCs' (a la Sony). The other is growing that market-share by tackling another area of the market - i.e. the gaming sector rather than the casual consumer.
The gaming sector is also pretty profitable as these guys will pay as much as they can afford and then upgrade again and again - much better margins that cheapest you can afford.
Alienware looks pretty cheesy if you like Mac design, but they have a great reputation. Maybe they're hoping for a bit of reverse cool (like Intel getting cool points from Apple)?
What it actually says is that Dell's own line of high-end machines must have been a flop. That's not exactly startling - it's like McDonald's selling Kobe beef - you need to understand your customer, and your Kobe beef customer doesn't want to go to McDonald's - so buy out where he is going.
At least I can smell some Wintel fear somewhere in this article. Makes my day.