Dell Snaps Up Alienware

SAN FRANCISCO -- Dell has agreed to purchase high-performance PC vendor Alienware, the two companies announced Wednesday.

The acquisition will "complement Dell's own line of high-performance computers," while giving the Alienware products the benefits of Dell's "supply chain and operational efficiencies," the companies said in a statement.

Details

The purchase, which was rumored for weeks, is expected to clear regulatory requirements in 30 to 60 days. Ultimately, the acquisition will shorten the time it takes for customers to get their hands on Alienware's sleek gaming workstations and laptops.

It can take from four to six weeks for customers to take possession of some of Alienware's products, said Mark Vena, an Alienware spokesman. For Dell that lead time is generally less than 10 days, he said. "They're absolutely world-class in that area."

Dell already sells high-end workstations under its XPS brand, but with the Alienware acquisition it gets something that the Round Rock, Texas-based company would have had a hard time creating on its own: gamer cachet.

"Dell will always be thought of as a good business-and-consumer company," said Tim Bajarin, president of the Creative Strategies analyst firm. "A Dell logo will still not play in the same way Alienware would."

Stand-Alone Unit

Miami-based Alienware will continue to operate as a wholly owned subsidiary of the PC maker, and will continue to develop, market, sell, and support the Alienware products.

Founded in 1996, Alienware is best known for its high-performance gaming PCs and stylish laptops. The privately held company sells systems in the United States, Europe, Australia, and New Zealand.

AMD Effect?

One interesting side-effect of this structure is that it will give microprocessor vendor Advanced Micro Devices (AMD) a foothold in Dell, which has to date resisted selling systems based on AMD's chips. A number of Alienware's PCs, including its Aurora and ALX series systems, are built with AMD processors.

Alienware employs a staff of about 700, none of whom are expected to be laid off as a result of the acquisition, the companies said.

Industry observers have speculated that Dell's tight relationship with AMD rival Intel has kept the PC maker from selling AMD's chips. But according to a Dell spokesman, Alienware will be free to continue to sell whichever processors it chooses. "That's the kind of decision that they make on their own," the spokesman said.

Bajarin said it was unclear whether or not the company might discontinue its XPS systems, following the acquisition. "It's hard to tell," he said. "There are some segments that would still buy Dell because of the service and support image, and who really don't care about the gamer image," he said.

Terms of the acquisition were not disclosed.

Hot Gaming PC

Dell's ambitions in selling PCs aimed at the high end of the video game market also clarified today as the company began taking orders for its new XPS 600 Renegade desktop, which it showed at January's International Consumer Electronics Show. With hand-painted designs on the PC chassis, Dell says this product is a "collector's item," not a competitor to dedicated gaming consoles like the Microsoft Xbox 360, Nintendo Revolution, or Sony PlayStation 3.

"We attract people who want to play massively multiplayer games online, not the casual console gamer, people who use a monitor instead of the TV for better picture quality, people who have LAN parties so they can play on a team," said Ketan Pandya, Dell's senior marketing manager for consumer desktop systems.

To reach that level of performance, the machine will use three dedicated processors: a general system processor, a graphics card, and a physics processor.

The general system processor is a Pentium 965 dual-core from Intel, overclocked to run at 4.26 GHz instead of its rated base speed of 3.73 GHz. The graphics card uses Quad-SLI technology from nVidia, with four GeForce 7900 graphics processing units. The physics chip, the PhysX processor from AGEIA, is what Dell calls "the industry's first dedicated physics accelerator."

PC World Associate Editor Danny Allen said in a blog entry today that the Renegade's pricing starts at around $10,000.

Why Now for Gaming PCs?

"Games are no longer bound by the CPU; the best high-end games, with the most realistic effects, are bound by what the graphics card is doing," Pandya said.

Dell's boutique approach to marketing turns conventional strategy on its head, analysts say. Most hard-core gamers today choose a dedicated appliance instead of a PC.

But from a technological perspective, "there is not much difference in the inner workings of a PC and a current-generation gaming box. It's all in the graphics and, of course, the user interface," said IdaRose Sylvester, an analyst with IDC's Consumer Semiconductor Program.

So Dell may find commercial success by targeting this niche market, she said. In fact, the company's timing is excellent.

"This is a particularly good time now, since we are at the start of a major uptick in the gaming cycle for consoles. There can be a halo effect with more games coming out for both platforms, creating more consumer knowledge and awareness," Sylvester said.

Ben Ames of IDG News Service contributed to this story.

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