Dell purchases Alienware?

  • Thread starter Thread starter Allan Parent
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A

Allan Parent

I just saw this in the morning paper and was totally surprised. Was
this in the works for a while? At least Dell will now get to
distribute AMD CPU's...although at a distance.

Allan
 
I just saw this in the morning paper and was totally surprised. Was
this in the works for a while? At least Dell will now get to
distribute AMD CPU's...although at a distance.
Click to expand...

It's been rumored for about a month now. I wouldn't be surprised
though if Dell cuts out the AMD-based systems from Alienware's
line-up. My opinion is that this is related more than anything else
to Dell kinda failing to achieve their goals with their XPS line, so
instead they're just buying out a company that makes similar products.
We'll see though.
 
Tony said:
It's been rumored for about a month now. I wouldn't be surprised
though if Dell cuts out the AMD-based systems from Alienware's
line-up. My opinion is that this is related more than anything else
to Dell kinda failing to achieve their goals with their XPS line, so
instead they're just buying out a company that makes similar products.
We'll see though.
Click to expand...

I highly doubt that's the case. Alienware wasn't big enough to be a
threat to Dell. I could see them buying out Gateway to shutter them
down for this reason. However, Alienware represents a chance for Dell
to get into AMD processors. In fact, it wouldn't surprise me if they
started encouraging Alienware to expand out beyond gamer PCs (they also
have a fledgling workstation business), and into servers. They've said
that Alienware will be operated as a wholy-owned subsidiary. This is
advantageous on two fronts, one for Dell, and one for Alienware. For
Dell, it means that they can sell AMD processors without Intel taking
away their subsidies. For Alienware, it means that they can continue to
offer the best technologies without respect to the parent's corporate
dogma.

Q: Much of the attention around this deal in the speculation leading up
to it centered on Intel (INTC) and Advanced Micro Devices (AMD). Dell
is so far an Intel-only shop, but it now owns Alienware, which uses
chips from Intel and AMD. Will being a Dell subsidiary cause you to
change the suppliers you use?

A: I can't imagine ever changing what we do. We will always offer what
is the best product. If that means we offer Intel, we offer Intel. Or
AMD or NVidia (NVDA) or ATI (ATYT). We are completely
supplier-agnostic. We've always been that way.
Click to expand...

Can Alienware Keep Its Cool?
http://yahoo.businessweek.com/technology/content/mar2006/tc20060324_968310.htm
 
I highly doubt that's the case. Alienware wasn't big enough to be a
threat to Dell. I could see them buying out Gateway to shutter them
down for this reason.
Click to expand...

Who said anything about shuttering them? I'm talking about basically
replacing their XPS line with Alienware's product line.
 
Tony said:
Who said anything about shuttering them? I'm talking about basically
replacing their XPS line with Alienware's product line.
Click to expand...

Yes, *that* scenario I can see. But of course the reason Dell would
want to do that is simply because their XPS line was not selling well,
because it was all Intel. Nobody serious about games goes with Intel at
this moment. So I don't see Dell buying Alienware to sell gaming PCs
and then having them remove their AMD products, because that would put
their Alienware line in the same boat as their own XPS line.

Yousuf Khan
 
Yes, *that* scenario I can see. But of course the reason Dell would
want to do that is simply because their XPS line was not selling well,
because it was all Intel.
Click to expand...

Or perhaps simply because it was a Dell? Perhaps Dell just hadn't
figured out how to market the things towards gamers?
Nobody serious about games goes with Intel at
this moment. So I don't see Dell buying Alienware to sell gaming PCs
and then having them remove their AMD products, because that would put
their Alienware line in the same boat as their own XPS line.
Click to expand...

If selling AMD chips would have made that big of a difference then
Dell would have sold AMD chips in their XPS line. Intel is in a
touchy enough situation as it is that they wouldn't dare try to punish
their #1 customer for such a move with a low-volume product line.

Honestly I really don't see the whole Intel vs. AMD thing factoring
into this deal. Really I think it all comes down to the fact that
Alienware KNOWS how to market systems to gamers and Dell doesn't.
Dell tried with their XPS line, but I'm guessing that they just
haven't succeeded.
 
It's been rumored for about a month now. I wouldn't be surprised
though if Dell cuts out the AMD-based systems from Alienware's
line-up. My opinion is that this is related more than anything else
to Dell kinda failing to achieve their goals with their XPS line, so
instead they're just buying out a company that makes similar products.
We'll see though.
Click to expand...

I think it's more related to Dell failing to achieve<period>. Even though
this won't have a significant effect on their situation, it stirs the
pot... rattles the cages that anal...ysts live in and obfuscates their
financial situation. Their next two Qs do not look good (according to the
anal...yst gossip) so this gives them either a partial excuse or a boost...
admittedly minor in real terms but anal...ysts love to speculate and it's
grist for that mill.

From the conspiratorialist POV, it could be another Intel dirty trick by
proxy: get Dell to borg one of AMD's burgeoning market leaders. I don't
think this is *that* far fetched - whatever Mikey says about leaving
Alienware to chart its own course is obvious BS - no way he's not going to
bring them into the Dell supply chain.

It *could* be good for AMD though - we'll have to see but it could allow
Alienware to blossom. OTOH it's also possible that Alienware's customer
base is "not gonna buy a ****in' Dell" so they'll move on to the next guy,
though even in that case Alienware's reputation may help sell systems to
the mass market. Kinda like the way people still buy Buicks.:-)
 
It *could* be good for AMD though - we'll have to see but it could allow
Alienware to blossom. OTOH it's also possible that Alienware's customer
base is "not gonna buy a ****in' Dell" so they'll move on to the next guy,
though even in that case Alienware's reputation may help sell systems to
the mass market. Kinda like the way people still buy Buicks.:-)
Click to expand...

Yeah, right, but avg Buick buyer's age (not counting rental fleets
etc.) is over 65 and still going up. GM must pray for a medical
breakthru to increase longevity of their customers. OTOH any
longevity increases will affect their retirees whose benefits are
already pushing GM towards Chapter 11.

But anyway the spinners of both AMD and INTC got their fodder. AMD
can claim cracking the last remaining Intel-only Tier 1 PC OEM. OTOH
Intel can claim that 2 major OEMs (Dell proper and AAPL) stay Intel
exclusive (just please don't start another argument about Mac being or
not being a PC). And Dell gets their back door to sell AMD-based
tech, including Opteron servers, without actually doing so. If some
Dell customers insist on AMD, they can be quietly redirected to Dell's
subsidiary, instead of being sent to the competitors. The volves are
fed, and the sheep (Dell-Intel relationship) are not harmed.

NNN
 
Tony said:
Or perhaps simply because it was a Dell? Perhaps Dell just hadn't
figured out how to market the things towards gamers?
Click to expand...

Dell is all marketing, how can they possibily have not learned to
market to gamers, when they've learned to market to every other person
on the planet? I don't think it's a marketing problem, you just can't
sell a sow's ear as a silk purse, no matter what.
If selling AMD chips would have made that big of a difference then
Dell would have sold AMD chips in their XPS line. Intel is in a
touchy enough situation as it is that they wouldn't dare try to punish
their #1 customer for such a move with a low-volume product line.
Click to expand...

Intel is not in touchy enough of a situation to let Dell get away with
that; it can let other companies get away with that, but Dell is
unique, court-cases are not a big enough reason to let it off the hook.
There's certain things that are unforgiveable, and Dell going AMD is
one of them, no matter how much of a small scale. Intel contributes
heavily to Dell's bottom line, and therefore Intel expects full loyalty
from Dell. In return, Dell gets to severely spank Intel into price cuts
more so than any other company. Those Dell spankings usually take the
form of the typical quarterly AMD publicity-stunts. When the majority
of your bottom line is being set by another company, then that company
fully expects you to stay loyal to them, quite understandibly. Nothing
needed to be written down, it's all just understood by tradition.

Anyways, it's not the gamer market that Dell is buying into. Buying
Alienware is a backdoor into the really important Opteron market. I
fully expect Alienware to be announcing servers anyday now. It's the
Opterons that Dell's salesmen really want badly.
Honestly I really don't see the whole Intel vs. AMD thing factoring
into this deal. Really I think it all comes down to the fact that
Alienware KNOWS how to market systems to gamers and Dell doesn't.
Dell tried with their XPS line, but I'm guessing that they just
haven't succeeded.
Click to expand...

I don't see any difference in Dell's marketing of XPS vs. Alienware's
marketing. The only difference is that the gaming market just knows
what it wants, and it wants AMD now.

Yousuf Khan
 
Yeah, right, but avg Buick buyer's age (not counting rental fleets
etc.) is over 65 and still going up. GM must pray for a medical
breakthru to increase longevity of their customers. OTOH any
longevity increases will affect their retirees whose benefits are
already pushing GM towards Chapter 11.
Click to expand...

Age of Buick buyers notwithstanding, the model works. This is reminiscent
of the buy-outs of boutique, high-end audio mfrs which have taken place
over the years. The buyer gets to bask in the glow of the original brand's
cachet in the mass market for a coupla years while losing the patronage of
the enthusiast who got it all started.
But anyway the spinners of both AMD and INTC got their fodder. AMD
can claim cracking the last remaining Intel-only Tier 1 PC OEM. OTOH
Intel can claim that 2 major OEMs (Dell proper and AAPL) stay Intel
exclusive (just please don't start another argument about Mac being or
not being a PC). And Dell gets their back door to sell AMD-based
tech, including Opteron servers, without actually doing so. If some
Dell customers insist on AMD, they can be quietly redirected to Dell's
subsidiary, instead of being sent to the competitors. The volves are
fed, and the sheep (Dell-Intel relationship) are not harmed.
Click to expand...

It's been reported here that Dell has been selling AMD-based systems for a
year or more... to those who "insist". I guess Alienware will at least
make it official... from the front door.
 
Tony Hill wrote:

I don't see any difference in Dell's marketing of XPS vs. Alienware's
marketing. The only difference is that the gaming market just knows
what it wants, and it wants AMD now.
Click to expand...

No difference? Alienware has a cachet with the non-homebuilt
bleeding-edge crowd that Dell can never hope to attain. A lot of this
comes from ads in gamer mags.

My kid and his friends are pretty hard-core gamers, but not builders,
and if you ask them what PC they'd buy if they won the lotto,
Alienware is always at the top of the list, while Dell isn't even
mentioned. AFAICT, this is strictly due to cool looks and marketing.

I was traveling with my son recently, and he spotted someone with an
Alienware laptop, with those eyes glowing in the lid. This started a
long discussion about cool PCs and design. I just can't imagine him
going "Wow! An XPS!!!"

Not being builders, they don't even care what the CPU is - they know
the top-end Alienware will have enough performance for them. Sure,
it's form over function, but that's what marketing's about.

max
 
max said:
Not being builders, they don't even care what the CPU is - they know
the top-end Alienware will have enough performance for them. Sure,
it's form over function, but that's what marketing's about.
Click to expand...
From what I know, the ones that can actually afford an Alienware are
Click to expand...
also pretty techno-savvy. They would make the decision to buy such a
machine and their word-of-mouth will influence lesser gamers such as
your son. There is a looks factor, but there's a lot of very cool
looking machines out there.

Yousuf Khan
 
Dell is all marketing, how can they possibily have not learned to
market to gamers, when they've learned to market to every other person
on the planet? I don't think it's a marketing problem, you just can't
sell a sow's ear as a silk purse, no matter what.
Click to expand...

Dell marketing is based very heavily on price. Even for servers most
people I talk to prefer IBM or HPaq stuff, but go for Dell because
they are cheaper and/or because they have standardized on Dell
desktops and want a single-source. The fact that they've utterly
failed in their attempts to sell high-end servers should be some
indication that they haven't figured everything out.
Anyways, it's not the gamer market that Dell is buying into. Buying
Alienware is a backdoor into the really important Opteron market. I
fully expect Alienware to be announcing servers anyday now. It's the
Opterons that Dell's salesmen really want badly.
Click to expand...

Alienware already sells servers, but if you check their website you
won't see a single Opteron among them, all Xeons.
I don't see any difference in Dell's marketing of XPS vs. Alienware's
marketing. The only difference is that the gaming market just knows
what it wants, and it wants AMD now.
Click to expand...

The difference is that Alienware has convinced gamers that they are
going to make top-end performing systems, Dell hasn't. The Intel vs.
AMD thing is only a small part of the story here.
 
I think it's more related to Dell failing to achieve<period>. Even though
this won't have a significant effect on their situation, it stirs the
pot... rattles the cages that anal...ysts live in and obfuscates their
financial situation. Their next two Qs do not look good (according to the
anal...yst gossip) so this gives them either a partial excuse or a boost...
admittedly minor in real terms but anal...ysts love to speculate and it's
grist for that mill.
Click to expand...

You might not be entirely off-base there, though I think the rumors of
Dell's demise are rather premature. They're still the #1 PC vendor in
the world and they are still making money at it. They just aren't
growing like they used to, likely because they've hit something of a
saturation point.
From the conspiratorialist POV, it could be another Intel dirty trick by
proxy: get Dell to borg one of AMD's burgeoning market leaders. I don't
think this is *that* far fetched
Click to expand...

I'd say that it's pretty darn far fetched. Possible perhaps, but
rather unlikely.
- whatever Mikey says about leaving
Alienware to chart its own course is obvious BS - no way he's not going to
bring them into the Dell supply chain.
Click to expand...

This is where things get a bit interesting, just how tightly do they
bring in Alienware? The public statements are basically saying that
it'll be a subsidy with basically no interaction with the parent
company, however like you I don't quite believe that. On the other
hand, getting Alienware into the supply chain will complicate things
because they are using almost totally different components. With only
a few exceptions there just aren't any common parts between a Dell PC
and an Alienware PC (the notable exception being the Dell XPS line).
Integrating their supply chain would probably be a bad idea unless
Dell is planning on really getting involved with the design side of
things such that the two companies use the same parts.

There's also the question of the service and support side of things.
Certainly Dell isn't about to ship the support for these systems off
to India, but they do operate two call centers here in my home town
(Ottawa, Canada), one of which I believe is handling support for the
XPS line (not 100% certain on this, but the timeline was right and the
job ads a few months back seemed to fit).

The one place where integrating services might make sense would be for
repairs and such. Alienware, like Dell, probably outsources this to
some company anyway. They might actually be outsourcing to the same
company, so it might make good sense to role this into one contract.
It *could* be good for AMD though - we'll have to see but it could allow
Alienware to blossom. OTOH it's also possible that Alienware's customer
base is "not gonna buy a ****in' Dell" so they'll move on to the next guy,
though even in that case Alienware's reputation may help sell systems to
the mass market.
Click to expand...

The real problem here is that I'm not sure that either Dell or
Alienware WANT to sell to the mass market. Dell is already #1 in the
mass market, but that just isn't a very profitable business. The
whole idea of the Alienware deal has to be that high-end, and higher
profit, niche market.
Kinda like the way people still buy Buicks.:-)
Click to expand...

People buy Buicks!?!?!
 
Tony said:
Dell marketing is based very heavily on price. Even for servers most
people I talk to prefer IBM or HPaq stuff, but go for Dell because
they are cheaper and/or because they have standardized on Dell
desktops and want a single-source. The fact that they've utterly
failed in their attempts to sell high-end servers should be some
indication that they haven't figured everything out.
Agreed.

Alienware already sells servers, but if you check their website you
won't see a single Opteron among them, all Xeons.
Click to expand...

Well, if they're already selling x86 servers, then I expect that
they'll be announcing Opteron servers soon, based on requests by Dell's
salesforce.

Yousuf Khan
 
You might not be entirely off-base there, though I think the rumors of
Dell's demise are rather premature. They're still the #1 PC vendor in
the world and they are still making money at it. They just aren't
growing like they used to, likely because they've hit something of a
saturation point.
Click to expand...

Nobody said "demise" - they're on an uphill slope at the moment and their
business model is fragile... as you note by the saturation point comment.
I'd say that it's pretty darn far fetched. Possible perhaps, but
rather unlikely.


This is where things get a bit interesting, just how tightly do they
bring in Alienware? The public statements are basically saying that
it'll be a subsidy with basically no interaction with the parent
company, however like you I don't quite believe that. On the other
hand, getting Alienware into the supply chain will complicate things
because they are using almost totally different components. With only
a few exceptions there just aren't any common parts between a Dell PC
and an Alienware PC (the notable exception being the Dell XPS line).
Integrating their supply chain would probably be a bad idea unless
Dell is planning on really getting involved with the design side of
things such that the two companies use the same parts.
Click to expand...

"Design"? No, I'm thinking more of where Alienware gets its mbrds and
cards - I'd think Alienware gets them from Asus, MSI, Abit or the likes -
Dell, OTOH, I'd think has a direct line into Foxconn, InfoTek and the like.
There's also the question of the service and support side of things.
Certainly Dell isn't about to ship the support for these systems off
to India, but they do operate two call centers here in my home town
(Ottawa, Canada), one of which I believe is handling support for the
XPS line (not 100% certain on this, but the timeline was right and the
job ads a few months back seemed to fit).

The one place where integrating services might make sense would be for
repairs and such. Alienware, like Dell, probably outsources this to
some company anyway. They might actually be outsourcing to the same
company, so it might make good sense to role this into one contract.


The real problem here is that I'm not sure that either Dell or
Alienware WANT to sell to the mass market. Dell is already #1 in the
mass market, but that just isn't a very profitable business. The
whole idea of the Alienware deal has to be that high-end, and higher
profit, niche market.
Click to expand...

Well, mid-range mass market.:-)
 
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