Staff WritersNot a company known for growing through acquisition online direct hardware supremo Dell has confirmed it will buy cult game computer maker Alienware.
As foreshadowed on SmartOffice News last week Dell has made the curious acquisition of a small but highly-regarded PC gaming maker Alienware.
The acquisition won’t make much difference to the hardware goliath’s bottom line in the short term. Dell reported revenues of US$55.9 billion last year compared to Alienware’s US$200 million, but the purchase will certainly add a lot of cache to the black box maker’s product list.
Alienware is highly regarded in the lucrative computer gaming market and although Dell’s first foray into that market, the XPS line, has received okay reviews, it has failed to ignite the enthusiasm of the style and power conscious gamers.
The Dell XPS line of gaming platforms is not available locally.
Alienware will continue to operate as a separate unit and keep its product development, marketing, sales and technical support staff as well as its brand, Dell said in a statement.
“This is good news for Dell’s consumer market,” said Ted Schadler of Forrester Research Inc. “It is kind of re-upping Dell’s commitment to that market.”
The acquisition is notable is as the first time Dell has sold computers powered by AMD processors, Dell has remained a stalwart Intel supporter to date and pundits have speculated that the number one PC player would mark a significant coup for AMD.
AMD made significant in-roads against Intel, particularly in the Server and desktop markets through 2005 due to a widely acknowledged price performance advantage of the CPU leader. While this performance edge may be lost this year in the game of leap frog Intel and AMD have played out over the past five year’s AMD’s plans for 2006 are still a closely kept corporate secret.
However, Dell spokesman Jess Blackburn told Reuters that the acquisition was not an indication that the company was contemplating switching chip suppliers. “Our strategy in terms of suppliers that we work with is unchanged,”
Dell’s consumer business accounts for just 15 per cent of its revenues and with growth at the company slowing, Dell sees the consumer market as its next market segment to conquer. As a result, the company has entered into a significant discounting war over the past six months that have forced competitors like HP and Acer to fight a sticker price battle.
While Dell’s volume and direct-to-market business model give it significant advantage the company posted slower-than-forecast growth last year as it lowered prices on entry-level PCs too aggressively.
But Dell Chairman Michael Dell, knows that 20 per cent of consumer PC users are hard core gamers looking for souped up machines and willing to pay a high price for the privilege.
Now we await news that Acer is buying Gateway for much the same reasons.
Terms of the Dell/Alienware transaction were not disclosed, but we are sure it was small change to the global No. 1 PC vendor.
(Additional reporting by Reuters’ Philipp Gollner & Scott Hillis)