Originally Posted by PCmag.com

It's Official: Dell Beams Up Alienware
03.22.06
Total posts: 1


By Mark Hachman

Dell Inc. confirmed Thursday that it had acquired boutique PC vendor Alienware, a move that will add some zing to the company's image.


Although Dell's acquisition was widely anticipated, Alienware chief executive Nelson Gonzalez said that his company will remain a wholly-owned subsidiary of Dell, continuing its own brand, design, sales and marketing, and support. Terms of the deal were not disclosed.

For consumers, the purchase will mean that Alienware will now access Dell's well-known supply-chain efficiencies, ideally reducing wait times for new PCs that Alienware executives said have swelled to as much as a month or more. Interestingly, the deal also means that a PC containing a processor from Advanced Micro Devices will finally contribute to Dell's bottom line.

Gonzalez said that to expand Alienware's product line with more, highly-tuned boutique products, the company needed more resources. Although the company sells its PCs to customers in Japan, Korea, and Asia, Alienware didn't have the cash to fund the worldwide expansion it needed, he added.

"We were at a crossroads, we were at a point in time where we had to make a decision to go public or to perhaps merge with another entity if it made sense," Gonzalez said. "There were very few organizations out there that we would do this with—and there's only one that I could think of, and that was Dell, just because of the similarities in terms of the direct business model, and that we have a lot of similarities with the [company]. The problem is that we were at these crossroads, we needed to raise capital, and we had never raised capital at this company from day one."

"We needed to get bigger, and we needed to release more products," Gonzalez added. "We do our own designs and our own form factors, and that costs a lot of money, frankly."

That won't come at the expense of the Alienware brand, however. Gonzalez said that Alienware PCs would not carry a Dell logo, and that he would report directly to Jim Schneider, Dell's chief financial officer. "I think that you'll find it very hard to find the Dell name on the [Alienware] web site," he said.

"The reality is that you're not going to see a whole lot of changes," added Mark Vena, Alienware's vice president of marketing and the former chief of Dell's Dimension consumer PC business.

The Dell-Alienware deal was first "reported" by a blogger and rival, VoodooPC chief Raul Sood, who predicted that a then-rumored deal would make sense. "Why the potential for a Dellienware and not another? Alienware is widely considered to be the volume leader in gaming, they have scale," Sood wrote.

Somewhat ironically, Dell announced the Alienware acqusition on the same day as it released the Dimension XPS Renegade, its own boutique PC sporting a ramped-up design, four graphics chips, an overclocked CPU, even a physics accelerator – and a price tag above $9,000, aimed at the well-to-do enthusiast that Alienware, Falcon Northwest, and its competitors covet. Unsurprisingly, Alienware PCs will also use the Ageia physics chip.

And that means competition will undoubtedly occur, Gonzalez said. "Dell is going to do what they do," he said. "I'm sure they have no plans of eliminating the XPS," he said. "They're going to have their lineup; we're going to have ours."

The Alienware and Dell Renegade lines will "complement, not compete with one another," said Jess Blackburn, a Dell spokesman. Alienware will not sell Dell PCs, but may sell Dell peripherals, he said.

What Alienware does plan is a further expansion into the server and Media Center PC market, with a few specialized sidelines, such as government offerings. While Gonzalez readily admitted that Alienware would never develop a business PC, he added that the company plans to launch a new all-in-one PC in a few weeks' time. A specialized home media server is also in the cards, as is an aggressive push into the high-end workstation space, Vena added.

Customers of both product lines will also be able to tap into Dell's financing options, Vena noted.

Being added to the Dell organization also means that the company can take advantage of the Dell supply chain and its relationships to suppliers like ATI, Intel, and Nvidia. According to Vena, customers were being forced to wait up to five weeks for new PCs using the latest technology, a trend that he said should be far easier to buck now that Alienware can tap into Dell's supply chain.

Finally, the deal also allows Advanced Micro Devices to finally gain access to Dell, the last major PC OEM that existed as an Intel-only shop. While the deal doesn't mean that Dell will ship an AMD-based PC under its own label, the deal could provide a way for AMD to move closer to Dell over time. Gonzalez appeared to be one of the few people in the PC industry that said he didn't care, however.

"We're completely agnostic to any one vendor," Gonzalez said. "We talk about performance."