Dellienware and VoodooHP -- a good thing or a bad thing?

[robwright]

Now that Alienware and VoodooPC are now part of Dell and HP, respectively. Will this be a good thing for gamers or a bad thing? Think short term, long term, micro, marco, whatever.

 

[guruofchem]

It all depends on how well the big companies can leave the boutique vendors alone - the more they meddle, the more poorly the acquisitions will turn out. Dell and HP have to remember that they acquired these game-rig specialists to bolster their own fairly uncompetitive offerings for high-end gaming (Dell was admittedly doing better than HP to begin with), and as such they should provide support, marketing, and distribution assistance without fundamentally altering the way Alienware and Voodoo work. Lots of potential for "Corporate Buffoons Kill Golden Egg-Laying Goose" stories here - should be intriguing to watch... :lol:

Ultimately, the two acquisitions should benefit gamers, since the larger companies can create economies of scale impossible for smaller boutique vendors to match. We SHOULD see lower costs for gaming rigs of high quality, and that is great. The flip side of the coin is that this may kill off the smaller independent vendors altogether; they can't compete on price with Dell or HP, who could treat high end gaming rigs as loss-leaders if they chose to do so, and the smaller companies would then have few options but to pursue their own giant corporate protector or get out of the business. It's a Wal-Mart kind of move - consumers get lower prices at the expense of diversity of choice...

 

[cafuddled]

The thing about Alienware is that it was a very profitable company at the time dell went for the takeover. Anything they do now must be to either increase that profitability or increase the sales because if they did not there was really no point in taking over the company in the first place. Also Dell will not and cannot afford to cut prices on Alienware PC since Dell are already make a huge loss on their entry-level systems. I suspect the purchase of Alienware was simply to float Dell in to some level of profitability.

As for what this move will mean for gamers… well absolutely nothing. Games will still be made to run optimally for single GPU computers and with the ability to run on a PC made from any manufacturer in the world.

The thing is Alienware PC are only sold to the people who are ignorant to the price they should pay for a high end PC’s or the people who want the prestige of owning an Alienware. There almost like the Austin Martin of the PC world. I could build my self the same PC’s as Alienware are offering and save my self a lot of money from that.

 

[guruofchem]

The thing about Alienware is that it was a very profitable company at the time dell went for the takeover. Anything they do now must be to either increase that profitability or increase the sales because if they did not there was really no point in taking over the company in the first place. Also Dell will not and cannot afford to cut prices on Alienware PC since Dell are already make a huge loss on their entry-level systems. I suspect the purchase of Alienware was simply to float Dell in to some level of profitability.

Dell ought to be able to sell Alienware machines for less because they enjoy lower component costs and have a pervasive marketing and distribution network, all advantages Alienware didn't enjoy as a boutique vendor. Whether Dell chooses to drop prices or not remains to be seen, but they could do so and still maintain a solid profit in that market sector.

As for what this move will mean for gamers… well absolutely nothing. Games will still be made to run optimally for single GPU computers and with the ability to run on a PC made from any manufacturer in the world.

The thing is Alienware PC are only sold to the people who are ignorant to the price they should pay for a high end PC’s or the people who want the prestige of owning an Alienware. There almost like the Austin Martin of the PC world. I could build my self the same PC’s as Alienware are offering and save my self a lot of money from that.

Of course you could build it yourself, and pay less for the components than people do for the completed machine, but what is your time worth? How much time are you willing to spend tuning, debugging, and fixing the machine yourself? I enjoy building and tinkering with PCs, as do you, but many people lack the time, interest, or ability to do so. I see nothing wrong with buying a machine that comes with considerable customer support, and clearly many people are willing to pay a premium for that level of service and support, based on the success of boutique game-rig builders. It is unfair to assume ignorance simply because other people do not make the same choices you do; many folks want to spend their time playing the games, not fiddling with their hardware , and more power to them if they have the finances to do so.

 

[cafuddled]

The fact is that it’s not just a little it’s a LOT more than what you could get off a local PC vender. As I said before do not expect any prices to be dropped, as Dell need to make profit very badly. This merger was all about getting Dell out of trouble, they could dilute the cost of the technical support team and manufacturing process in to Dells own and as you said reduce costs due to there huge buying power.

I was talking to a customer of mine the other day and he was telling me a story about some one that came in to his computer shop a year ago about a quote on a PC. He came in and said, “I am looking for something about the same spec as this Alienware, how much do you think you can do it for”. He told me he started laughing at the guy and then proceeded to tell the guy that he could do the same thing for £1,000 less and throw in a plasma screen as well. At the end after he had done it all guy taken the system and the plasma and he still made £1,000 profit on the system.

A little quote off Alienwares website shows it all when compared to a local computer shop.

 

[guruofchem]

OK - looking at the base model Alienware machine (Area 51-7500), and pricing equivalent components at Newegg, I could build a machine for which Alienware charges $1899 for about $1420, including shipping and $80 of mail-in rebates. I will post the spec as soon as Newegg's server updates my list to be public. Let's call the difference $500, and consider how long it would take for you to build and tweak the system yourself, download drivers, etc. Figure maybe 10 hours from arrival of boxes to functional, tweaked system, and if your time is worth $50/hour, you break even. I haven't gone back to see what a high-end system would come in at, but given that my system was about 25% lower in cost, you could probably build a $5000 Alienware box for about $4000. Time would be a bit greater, since you would likely be dealing with SLI configuration and a liquid cooler as well, but if you have the savvy and desire to build your own box on a budget, you can do so quite well.

What does this mean in terms of Alienware's profit margin? Hard to know precisely, but pretty large. They will get parts less expensively than we could (the costs I have are discount retail), but they have to pay for salaries, facilities, advertising, customer service, and such that a homebuilder doesn't worry about in general. Bottom line - Alienware provides a number of services aimed at helping the less than computer savvy customer who wants a high-end system he or she can be proud of, and they charge for that service. Alienware exists and is quite profitable because there is market demand for the services it provides. They do all of us as gamers an indirect favor by increasing the number of top quality gaming rigs in use, which in turn helps justify the development of faster and more powerful games, graphics tools like DirectX, and ever more amazing graphics cards.

As far as the original question goes, I am pretty happy with my thesis that so long as neither Dell nor HP meddles with their new acquisitions, we as gamers will benefit from better, more affordable systems than ever before.

 

[cafuddled]

I was talking about a local shop not buying online. You get a years warranty on all your parts just like dell and the place I used to work only slaps up a £25 build fee and they can slap one up for you over night if not same day. You quoted on the base system but in every company that’s always the one with the very lowest margin. It is there to get the borderline punters. If you speced up a high-end system from them you will see an increase in both their profit margin and the more the system will cost over one from a local shop.

Also the shops warranty is also with the shop that could be just as far as round the corner. Alienware will send a courier to come and collect it and you could be with out a system for as long as 3 weeks!! As for the after sales service… is it worth $500 at the very minimum… no. Is it worth $250… no, is it worth $50 I bet not.

Plain and simple you buy Alienware just for the badge just like you buy an Austin Martin for £100,000 when you can buy a Toyota that’s just as fast for £30,000. You cannot justify the prices they charge by saying it is worth its money because it is not. It’s all prestige and nothing more.

All this will mean as you said is that Dell can still continue to create their low-end systems for below cost for longer, screwing up the economy as they go.