3.22.2006

It's Official: What are the implications?

A number of weeks ago I speculated that Alienware would be acquired by Dell in a move to help revitalize Dell’s business (among other things). It turns out that they announced it earlier than I expected - by about a week.


Regardless of the situation, this is pretty big news with industry wide implications. There will certainly be shockwaves in the gaming industry judging by what seemed like 200 incoming phone calls that were fielded this afternoon at Voodoo.

Here are some random thoughts;

Implications to Dell:

  • Dell now has another brand that they can plug into their engine.
  • Dell has a new brand that they can scale and take to new markets around the world.
  • It may give Dell a stronger negotiating position with their suppliers.

Short to Mid term Implications to AMD:

  • Alienware, a soon to be subsidiary of Dell, is currently one the biggest swallowers of high end AMD Athlon 64 FX processors. This means Dell is technically a customer of AMD, and this is just the beginning.
  • Dell may launch AMD based servers in the not too distant future.
  • It’s likely that channel partners who are currently not engaged with AMD will be left confused and bewildered as their customers start making RFQ’s for systems with AMD based technology simply based on the influence that Dell has on the market.

Implications to Intel:

  • It should be good news for Intel in the long term, that should be obvious.
  • Intel will be in a stronger position than they currently are once their new parts come out.
  • On the other hand, Dell could use this relationship to squeeze margins out of Intel.

Implications to others:

  • The supply chain will change; Alienware will likely drop most of their channel suppliers and procure their products via Dell.
  • Nvidia will certainly benefit immediately with their Quad SLI technology, nForce chipsets, SLI, and all the rest.
  • When AM2 and Conroe come out it’s likely that ATi will also benefit in a big way because we are already seeing massive performance jumps from ATi’s previous generation to their current.
  • I can’t speculate on the long term implications to the AW brand, only time will tell.
  • Charlie at the Inquirer will wear the bunny suit decorated however we see fit. Anyone have any suggestions?

Implications to Voodoo and our other competitors:

  • VoodooPC will continue to build high end luxury PCs including some new soon to be announced desktops. We will continue to evaluate new technologies as they come out – we’re certainly looking forward to both AMD’s new AM2 architecture and Intel Conroe.
  • VoodooPC will launch a couple of new notebooks soon; we’re pretty excited about Intel Core Duo as well as AMD Turion 64 X2.
  • There will be huge interest in the PC gaming space again. Dell has legitimized the gaming space, it’s clearly very important to them to be perceived as a leader in our space.
  • The enthusiast companies like Voodoo will influence mainstream buying decisions more than ever.
  • The smaller competitors in our space should also see a spike in business.
  • Ten more companies will start painting their systems green and throwing neon lights in them only to call them gaming PCs. Eleven companies will shut their doors realizing that they don’t understand the gaming market.

50 comments:

Anonymous said...

Did you know that Dell would buy Alienware because Dell came to you first and you rejected their offer? This is juicy!

A_Pickle said...

They need a Core Duo based SLI variant in notebooks. Tell Michael Dell to poke Jen Hsun Huang for me.

-Pikl

whorush said...

why have core duo when u can have turion x2?

whorush said...

i agree that dell might try to expand the alienware brand to go after AMD only contracts.

maybe servers or corporate clients?

correct me if i'm wrong, but i dont think there's anything from a tech and cost persepective that alienware can do that dell couldnt do better ..... besides selling AMD. so i'm saying that dell bought alieneware FOR amd, not despite them.

[[Rodney]] said...

Hopefully Charlie won't wiggle out of that bunny suit due to a technicality ;)

I agree with most of your implications, but there's a couple additional points to consider.

1). As the largest consumer of AMD FX series processors, channel supply for these parts could be impacted if the Dellienware brand sees significant growth. Let's hope AMD remembers it's numerous supporters and doesn't go the low margin, high volume route that this deal may offer them. After all, several quarters of short supply of Intel parts that somehow ended up resulting in record shipments and earnings for Intel pointed to a bit of Tier-1 OEM favoritism.

2). It still remains to be seen whether this will bring Dell any brand value in this segment, as the hard core already viewed AW as the "Dell" of the gaming market (as I blogged earlier). The recent MP3 and speaker products released by AW already pointed to a bit of an overextension of their brand in the hopes of reaching new markets & customers.

A good deal of vendors would be wise to invest more in their channel programs. Another high volume player being swallowed by Dell ought to prompt some worries about "too many eggs in one basket". Intel and Microsoft's investment in System Builders and channel partners in the past year or so hints at a subtle attempt to lessen the impact a monster like Dell has on their own margins and earnings.

I'm interested to see how much AW becomes Dell in terms of how they source product. It could go either way, since manufacturers could be following all over themselves to go direct with AW, or they could follow the Dell model and insist on custom boards, cards, etc. built to their specs at their prices as has been the Dell norm. If I was a components manufacturer I'd be nervous. Either way, it'll put some strains on some relationships, financials and supply in the channel.

I'd also be surprised if ATI doesn't pick up both a bit more business as well as some more loyalty in the channel now that NVIDIA has in some degree snubbed loyal partners with the Quad SLI exclusive offered to Dell. This purchase couldn't help things.

Oh, and ever thought of adding an atom or rss feed? Newsreaders rock!

Anonymous said...

its hard to keep up "originality" when you are buy out by someone..you have to follow certain rules and its just a matter of time when u will lost control completely.
just look at alienware's new website..it starts to look like a dell website already. booooorrrring...

Anonymous said...

overclock memory plays a big role in gaming machines..right now, it is patriot memory that goes into alienware's system. if dell tries to put a dell system outside an alienware box and not keeping up with the gaming standards, then the brand name is doomed to fall.
competitors of aw however might benefit?

Sharikou, Ph. D said...

Rahul, was your original post a pure speculation or insider info? Charlie at INQ wrote that the deal was done one month ago, and you had 3 sources. I found it hard to believe that you could pin Alienware as the acquisition target, as there are better targets there, such as SuperMicro, which makes Opteron boards and barebones and have big presence in server markets. Of course, Dell dudes are pretty much stuck with a PC mentality, so maybe they see Alienware more valuable.

http://sharikou.blogspot.com

Anonymous said...

i guess someone will be wearing a bunny suit soon...
I remember some people flaming Rahul for his article... well i call this a backdraft and they just got burned big time. I guess some AW lovers just got slammed, and gonna slam their heads agianst the wall. Now its no more AW... its Dellware.

Good move Rah, good luck to Voodoo. No more hesitations, u are number one now. And keep voodoo prestige as it is...

Rookierookie said...

I think you forgot to add "Charlie wears the bunny suit" in the list of implications...

Rahul Sood said...

Anonymous said...

Did you know that Dell would buy Alienware because Dell came to you first and you rejected their offer? This is juicy!


Juicy indeed, but not the case.

Wed Mar 22, 10:59:18 PM
whorush said...

i agree that dell might try to expand the alienware brand to go after AMD only contracts.

maybe servers or corporate clients?


It's possible.

correct me if i'm wrong, but i dont think there's anything from a tech and cost persepective that alienware can do that dell couldnt do better ..... besides selling AMD. so i'm saying that dell bought alieneware FOR amd, not despite them.

There are many reasons why Dell bought Alienware, AMD being perhaps a part.

Wed Mar 22, 11:02:28 PM

[[Rodney]] said...

Hopefully Charlie won't wiggle out of that bunny suit due to a technicality ;)


Charlie has too much integrity to wiggle out of something like that. :)

I agree with most of your implications, but there's a couple additional points to consider.

There's lots I'm sure.

1). As the largest consumer of AMD FX series processors, channel supply for these parts could be impacted if the Dellienware brand sees significant growth. Let's hope AMD remembers it's numerous supporters and doesn't go the low margin, high volume route that this deal may offer them. After all, several quarters of short supply of Intel parts that somehow ended up resulting in record shipments and earnings for Intel pointed to a bit of Tier-1 OEM favoritism.

Somehow I don't think AMD will forget their roots.

2). It still remains to be seen whether this will bring Dell any brand value in this segment, as the hard core already viewed AW as the "Dell" of the gaming market (as I blogged earlier). The recent MP3 and speaker products released by AW already pointed to a bit of an overextension of their brand in the hopes of reaching new markets & customers.

Yes, time will tell.

A good deal of vendors would be wise to invest more in their channel programs. Another high volume player being swallowed by Dell ought to prompt some worries about "too many eggs in one basket". Intel and Microsoft's investment in System Builders and channel partners in the past year or so hints at a subtle attempt to lessen the impact a monster like Dell has on their own margins and earnings.

Yeah, the channel is a pretty powerful entity on its own.

I'm interested to see how much AW becomes Dell in terms of how they source product. It could go either way, since manufacturers could be following all over themselves to go direct with AW, or they could follow the Dell model and insist on custom boards, cards, etc. built to their specs at their prices as has been the Dell norm. If I was a components manufacturer I'd be nervous. Either way, it'll put some strains on some relationships, financials and supply in the channel.

I imagine Dell's supply chain won't chain its spots.

I'd also be surprised if ATI doesn't pick up both a bit more business as well as some more loyalty in the channel now that NVIDIA has in some degree snubbed loyal partners with the Quad SLI exclusive offered to Dell. This purchase couldn't help things.

Interesting perspective. I do believe ATi will benefit regardless of what happened with Quad SLI.

Oh, and ever thought of adding an atom or rss feed? Newsreaders rock!

I have one, I just don't know how it works (look on the right hand side under all the links).

Wed Mar 22, 11:59:46 PM
Anonymous said...

its hard to keep up "originality" when you are buy out by someone..you have to follow certain rules and its just a matter of time when u will lost control completely.


Very true.

just look at alienware's new website..it starts to look like a dell website already. booooorrrring...

Yeah, I like our site better.

Thu Mar 23, 12:25:45 AM
Anonymous said...

overclock memory plays a big role in gaming machines..right now, it is patriot memory that goes into alienware's system. if dell tries to put a dell system outside an alienware box and not keeping up with the gaming standards, then the brand name is doomed to fall.


Patriot may not be a supplier for long.

competitors of aw however might benefit?

Perhaps.

Thu Mar 23, 12:51:10 AM
Sharikou, Ph. D said...

Rahul, was your original post a pure speculation or insider info?


Hi Sharikou, when I wrote this initial speculation I only knew two things;

1) Dell was looking to change their business.

2) I suspected the only way Dell could change is to acquire someone else.

I am guessing that only 5 peoeple at Dell and maybe 5 at Alienware knew this was going to happen. Once I wrote it, however, I received some interesting emails from people suggesting that I might be right (along with mail from those saying that it would never happen).

I Charlie at INQ wrote that the deal was done one month ago, and you had 3 sources.

Charlie took what he saw in my blog and wrote about it. I have no idea what he heard after the fact.

I found it hard to believe that you could pin Alienware as the acquisition target, as there are better targets there, such as SuperMicro, which makes Opteron boards and barebones and have big presence in server markets.

Why on earth would Dell, a company who most of their market is corporate - a company who has expertise in servers acquire a server company? The only other alternative would be Rackable, but there's no way Supermicro is a likely choice for Dell.

Of course, Dell dudes are pretty much stuck with a PC mentality, so maybe they see Alienware more valuable.

Yeah, clearly they see value in Alienware.

Thu Mar 23, 02:23:44 AM
Anonymous said...

i guess someone will be wearing a bunny suit soon...


Yep.

I remember some people flaming Rahul for his article... well i call this a backdraft and they just got burned big time. I guess some AW lovers just got slammed, and gonna slam their heads agianst the wall. Now its no more AW... its Dellware.

Yeah, I remember that too ;)

Good move Rah, good luck to Voodoo. No more hesitations, u are number one now. And keep voodoo prestige as it is...

Thank you, we're trying.

Thu Mar 23, 03:11:28 AM
Rookierookie said...

I think you forgot to add "Charlie wears the bunny suit" in the list of implications...


I did indeed, and I added it thank you!

Anonymous said...

I suggest a bare arsed suit so Charlie will have some place to put his carrots!

Anonymous said...

Regarding what Rahul knew and when, it just appears that this is too much of a coicidence. Rahul just rolls out of bed one morning and has an "epiphany moment" that "Dell would likely soon buy Alienware", when many more plausible and much less prophetic events would be equally dramatic in nature -- like Dell announcing its own deal with AMD, or Microsoft being late with its consumer version of Vista, which probably kills Q4 for most mainstream computer manufacturers and a whole host of channel suppliers.

Also, why is this long-term positive for Intel (and why is that "obvious" -- losing a 100% lock on the world's largest customer is not a good thing; please explain that one).

Noteworthy too -- if anyone else has noticed -- that the Alienware CEO's "announcement" of the deal is no longer on their site. It was there and then it was quickly "gone" (it's still available here, though, courtesy of ExtremeTech.com ... http://www.extremetech.com/article2/0,1697,1941399,00.asp

Not sure why it was promptly removed, or what that may mean beyond all the nice talk about "autonomy" and no changes ...

Rahul Sood said...

Anonymous said...

I suggest a bare arsed suit so Charlie will have some place to put his carrots!


Nah, Charlie is a nice guy, it was all in good fun. We'll take it easy on him.

Thu Mar 23, 05:41:22 AM
Anonymous said...

Regarding what Rahul knew and when, it just appears that this is too much of a coicidence. Rahul just rolls out of bed one morning and has an "epiphany moment" that "Dell would likely soon buy Alienware", when many more plausible and much less prophetic events would be equally dramatic in nature


Like I said, I knew Dell wanted to change their business and I thought that the only way they could do this is with an acquisition. Once I posted it I received a number of interesting emails/calls.

like Dell announcing its own deal with AMD, or Microsoft being late with its consumer version of Vista, which probably kills Q4 for most mainstream computer manufacturers and a whole host of channel suppliers.

Are you suprised by the Vista delay? I'm not, I actually expected it - and I don't think it will hurt our business directly.

Also, why is this long-term positive for Intel (and why is that "obvious" -- losing a 100% lock on the world's largest customer is not a good thing; please explain that one).

Well, there are many factors here, perhaps for another article. AMD will also experience a positive impact no doubt.

Noteworthy too -- if anyone else has noticed -- that the Alienware CEO's "announcement" of the deal is no longer on their site. It was there and then it was quickly "gone" (it's still available here, though, courtesy of ExtremeTech.com ... http://www.extremetech.com/article2/0,1697,1941399,00.asp

Yep I saw that.

Not sure why it was promptly removed, or what that may mean beyond all the nice talk about "autonomy" and no changes ...

yeah.

Anonymous said...

Rahul

would voodoo pc interested with patriot memory like patriot memory in alienware?

if no..why and if yes, how?

Dan said...

Rahul,

I guess "where there is smoke there is fire!". Good jb on calling it out a couple of weeks ago.

I hope people really understand the difference between enthusiasts PC's and mainstream PC's because thats were alienware is headed now that they were aquired by Dell.

Dan

Anonymous said...

The real losers in all of this are the Alienware employees. Before rumors of the Dell buyout, the rumors of Alienware going public were ripe. Now what do they have? No shot at getting wealthy because of stock options. I hope Nelson/Alex took care of this during negotiations and possibly secured Dell stock for the AW crew. I think Alienware should have stayed the course and went IPO. I don't know how much they made because of the buyout but i bet they would have done very well on their own.

Rookierookie said...

"Patriot may not be a supplier for long."

Ooo, another speculation? :)

Anonymous said...

I would love to see Alienware adopt Dell's accidental damage protection warranty. Just imagine not having to worry if your pc gets damaged while shipping it to a LAN party. The Warranty protects against drops and power sureges and even liquid spills. Other than that I wpuld not change a thing about alienware, except maybe hope the price drops by $100-200. While maintaining the same levels of quality. I bet we will see some changes in the Alienware website. Within the next 2-3 weeks. It just sucks that all the computer builders are outsourcing their tech support to India to cut costs. I had a nightmare of my own when my $150 Speakers broke and just wanted a replacement that was under warranty. finally got them 6 weeks later after 12 phone calls.

Sharikou, Ph. D said...

"Why on earth would Dell, a company who most of their market is corporate - a company who has expertise in servers acquire a server company? The only other alternative would be Rackable, but there's no way Supermicro is a likely choice for Dell."

I found this line of reasoning lacking logic. A better question can be asked why on earth DELL would acquire Alienware--an assembler of offshelf parts, given the fact Dell is an expert in assembling PCes and already has an XPS line? I can only find rationale there because of Dell's PC mentality, and Alienware's similarity with Dell.

SuperMicro is a major player in server business. Here in California, a lot of web based companies buy massive amount of SuperMicro gear. SuperMicro is one of the few Opteron motherboard designers, they have a set of very good Opteron motherboard and chasis designs. Google is using SuperMicro designed Opteron systems. Buying SuperMicro will immediately bring Dell into Opteron business in a big way. Rackable is not a better target for Dell, as its products are quite specialized for HPC environments, unlike SuperMicro, which is quite generic.

Anonymous said...

#14.1 Posted by Sazar at 5:16pm on the 23rd March 2006

Rahul Sood is a complete idiot. He was right about Alienware and Dell joining, granted. That doesn't change the fact that he is an idiot.

Dell will use AMD's when it's practical. It is not currently practical and has not been in the recent past. Dell used other procs well back in the day. I have personally never said that Dell will never use AMD. My reasons are practical. What Dell corporate decides is not in my hands.

Guy over on OSNN works for Dell and was like no way this will ever happen

Rahul Sood said...

Anonymous said...

Rahul

would voodoo pc interested with patriot memory like patriot memory in alienware?


Probably not, simply because we believe in only the best proven components on the market. Corsair has been with us through thick and thin, and they truly understand the enthusiast market better than any other memory manufacturer we have come across.

Thu Mar 23, 09:04:11 AM
Dan said...

Rahul,

I guess "where there is smoke there is fire!". Good jb on calling it out a couple of weeks ago.


Yep, or mirrors - but I prefer fire!

I hope people really understand the difference between enthusiasts PC's and mainstream PC's because thats were alienware is headed now that they were aquired by Dell.

People will do their research when spending big cake on a P.C.

Thu Mar 23, 09:35:52 AM
Anonymous said...

The real losers in all of this are the Alienware employees. Before rumors of the Dell buyout, the rumors of Alienware going public were ripe. Now what do they have? No shot at getting wealthy because of stock options. I hope Nelson/Alex took care of this during negotiations and possibly secured Dell stock for the AW crew. I think Alienware should have stayed the course and went IPO. I don't know how much they made because of the buyout but i bet they would have done very well on their own.


I think you have an interesting point, no doubt.

Thu Mar 23, 09:40:00 AM
Rookierookie said...

"Patriot may not be a supplier for long."

Ooo, another speculation? :)


Well it depends, but I think Dell will implement their supply chain into much of the product line.

Thu Mar 23, 09:45:28 AM
Anonymous said...

I would love to see Alienware adopt Dell's accidental damage protection warranty. Just imagine not having to worry if your pc gets damaged while shipping it to a LAN party.


Yeah, those ADP warranties have some great fine print though. We have been looking at them in any case.

Thu Mar 23, 10:02:02 AM
Sharikou, Ph. D said...

I found this line of reasoning lacking logic.


Okay :)

A better question can be asked why on earth DELL would acquire Alienware--an assembler of offshelf parts, given the fact Dell is an expert in assembling PCes and already has an XPS line? I can only find rationale there because of Dell's PC mentality, and Alienware's similarity with Dell.

There's many reasons they chose Alienware - but I'm not saying that I agree it was the ultimate fit, I just understand what their reasonings are.

SuperMicro is a major player in server business. Here in California, a lot of web based companies buy massive amount of SuperMicro gear.

True that.

SuperMicro is one of the few Opteron motherboard designers, they have a set of very good Opteron motherboard and chasis designs. Google is using SuperMicro designed Opteron systems. Buying SuperMicro will immediately bring Dell into Opteron business in a big way.

Yep, good point.

Yeah, Rackable is not a better target for Dell, as its products are quite specialized for HPC environments, unlike SuperMicro, which is quite generic.

Very true, Rackable is a "boutique" server company.

Anonymous said...

Well, well, well. What we got in here?
I see if Dell is an AMD client then Charlie goes to IDF as a bunny. On the other hand, it is AW who is an AMD front to Dell. There is no such thing as an AMD inside sticker on any Dell branded box. If AMD is not inside Dell, then Rahul goes to IDF in a bunny suit, spring time style. To be fair to everyone I think we should see Charlie and Rahul in a bunny siamese twin brothers suit. You know, those big jumpsuits with four legs two arms and two bunny heads.
But that is just to be fair and I know you guys will make a lame excuse in the last minute...
Regards,
Adriano

Anonymous said...

The all mighty Sazar claims that Dell does not sell AMD machines , because Alienware's are not really Dell's


WOW this guy is bright huh !

He also tends not to be able to read ? marks and things like that I think his punctuation skills are below high school level most times.

Rahul Sood said...

14.1 Posted by Sazar at 5:16pm on the 23rd March 2006

Rahul Sood is a complete idiot. He was right about Alienware and Dell joining, granted.


Thanks Sazar for using your real name, Good arguement there!

Dell will use AMD's when it's practical. It is not currently practical and has not been in the recent past.

So I'll be right when it's practical?

Dell used other procs well back in the day. I have personally never said that Dell will never use AMD.

So you never never said this? Huh?

My reasons are practical. What Dell corporate decides is not in my hands.

Certainly not.

Does that still make me an idiot?

Guy over on OSNN works for Dell and was like no way this will ever happen

I wonder what the guy from OSNN was like about Dell and Alienware.

Anonymous said...

Pretty interesting post, Rahul. Like another reader of your blog, I don't fully understand how the Dell-Alienware deal could be helpful to Intel in the long run. Could you elaborate on that sometime?

I don't know if you've seen the cover of businessweek a few months back which talked about how Intel has changed with Paul Otellini instead of Andy Grove. You could do a google for "intel businessweek" to find it. Here's a link to the story too:

http://www.businessweek.com/magazine/content/06_02/b3966001.htm

This article talks about how microprocessor design groups from Intel were split up a couple of years back when Otellini took over and sent to work in communication chips, DSPs and digital home initiatives. And if you've noticed, its only the last year and a half or so when Intel hasn't been doing so well.

In fact, a contact of mine at Intel (he didn't want himself to be named) told me that the guys who first designed the Foxton system on the Itanium chip (Montecito) moved to other projects, and the guys who later worked on Foxton weren't the guys who came up with the idea. And as we all saw, Montecito was delayed by more than 6 months because Foxton didn't work properly. I was also told that if the original inventors of the idea had worked on Foxton longer, the system would have probably worked.

A lot of people at Intel also seem to be unhappy with a person who doesn't understand how chips work running the show. As you'd know, Otellini is the first big boss of Intel who doesn't have a PhD in some aspect of chip design. Moore, Noyce and Grove are legends in CMOS design and technology and Barrett is also considered an excellent tech person. I've heard people who're good technically used to be worshipped within Intel before, but now under Otellini's regime, its only the techie people who're smart talking who're revered.

What do you think of Intel's efforts to diversify? I understand diversification is good for Intel, since the processor business is maturing, but is it good to diversify at the cost of the processor business itself?

Also, is the big beast that is Intel on its way down? In the two years or so of Otellini's regime, we've seen half a dozen cancelled projects, many bad products from Intel's stable and discontent within the company itself.

If I've said something controversial and you'd prefer not to comment about it, that's okay. I'd understand!

Deepak said...

Did you notice that Intel has made two very interesting comments during IDF?

Comment 1: Intel's new chips are 20% faster than AMD's current chips

Comment 2: Intel's new chips are 40-80% better than the current ones

"Conroe, for the desktop, will deliver a 40% increase in performance compared to the Pentium D.

Woodcrest, for servers, will provide an 80% performance increase than the current dual-core Xeon."

It doesn't take a genius to do the math.

If X is 20% better than Y,
and X is 40-80% better than Z,
then both the above statements mean
Y is 12-50% better than Z.

So if you look at the implications of comments 1 and 2, it means that INTEL HAS ADMITTED BY ITSELF THAT AMD's CURRENT CHIPS ARE AS MUCH AS 50% FASTER THAN INTEL's CURRENT CHIPS FOR SERVERS and 12% FASTER THAN INTEL's CURRENT CHIPS FOR DESKTOPS!!! And AMD sells its chips cheaper than Intel too.

I wonder how Intel will manage to sell their chips for the next 6 months or so with such bad performance numbers compared to AMD. Intel had better know their marketing well.

If their new chips get delayed, and I won't be surprised to hear that, they're probably going to be in big trouble.

Besides, like many other people, I don't believe the 20% number is fair at all. AMD will come up with product improvements in the near 6 months, and I don't see the point of Intel taking their best performing processor in their tests to compare with AMD. Most of the chips Intel will sell would not perform this well, and I can't see them getting a 20% improvement over AMD in 6 months time.

Surya said...

So when are you quad sli systems coming out Rahul?

Anonymous said...

Interesting commentary in reuters makes most sense of all. Proprietary cooling of Alienware systems is now available to Dell... More of an intellectual property play I would say. FWIW

Sharikou, Ph. D said...

DELL is basically draining Intel's life blood while driving others out of Intel business the same time. For Intel's own benefit, it should cut off the special relationship and encourage others to do more Intel. With DELL getting free CPUs, others find it impossible to make a dime selling Intel PCes. Now the situation is even worse, DELL is selling AMD thru a backdoor.

DELL's move may wake up the Intel execs into the cruel reality.

Anonymous said...

I don't see Alienware using Dell motherboards, that would be pretty dumb on Dell's part.

Anonymous said...

Wanted to add my comments on Rahul's Implications to Voodoo and our other competitors:


There will be huge interest in the PC gaming space again. Dell has legitimized the gaming space, it’s clearly very important to them to be perceived as a leader in our space.

Why do you say that? Granted Dell will share the advertising $$ with Alienware and we will see more ads and commercials for PC gaming but not sure that will bring new customers on board..the ones who forgot they wanted to play pc games??...


The enthusiast companies like Voodoo will influence mainstream buying decisions more than ever.

I agree, who buys a plastic pc anyway? Even it is shaped like an alien and you get free shipping or free printer if you "buy by midnight tonight".

The smaller competitors in our space should also see a spike in business.

Disagree. I think Dell + Alienware will do to smaller competitors what Walmart did to ToysRUS, put them all out of business.

This new purchase of Alienware will eat most of the profits of average gaming pc companies (the ones that have ninja and dragon stickers on bulky plastic cases)and eat the profits of the entry and mid level offerings of high end gaming pc companies like yourselves which makes me concerned that you will not get the volume you once had which will lead to weaker partnerships with the channel, access to their R\D, etc.

Ten more companies will start painting their systems green and throwing neon lights in them only to call them gaming PCs.

Why would anyone start a gaming pc company now? I bet if you went to get a business loan to start one after this announcment of Dell\Alienware they would ask you if you were on crack.


Eleven companies will shut their doors realizing that they don’t understand the gaming market.


My point above but I think it will be the majority will go out of business.

Final thoughts: What has happen here is Ford (Dell) bought Jaguar (Alienware). How does that effect Ferrari (Voodoo, Falcon) and Porsche (Hypersonic, etc) only time will tell. I think Voodoo and Falcon will have to focus on the nose bleed PC enthusisit and they are out there for sure but I don't think voodoo pays the electric bill with selling the gold plated Omen..so maybe Voodoo you should start talks with Falcon and create Voodalcon PC...good luck.

[[Rodney]] said...

Your feed doesn't work.

Gives the error "XML Parsing Error: prefix not bound to a namespace
Location: http://voodoopc.blogspot.com/atom.xml
Line Number 38, Column 1:"

Probably why Sage didn't see a valid feed when I scanned your blog for one.

Angel Municio said...

Hi Rahul,

This doesn't have anything to do with Alienware but I have been following your blog since the Meron benchmark thingy (I own AMD shares) and I figured you could help me with something.

I'm a software engineer that loves very fast and responsive computers. I have been a big fan of computers since I was a kid and used to build my own computers to my needs. Now I have two kids and when I have some spare time I use it for Breathing. But I still want the perfect computer for doing my programming (I cannot play games anymore).

My problem is that the high end PCs are all targeted to gamers or CAD/3D. So basically, if I want to buy a fast computer I must spend most of my money on things that are not of much use for me (like greatest GPU, Sound card or Windows).

I think it would be great if someone (VoodooPC for instance), could come with a line of PCs for programmers. I know that many programmers pride themselves on doing their job on that old 386, but there are many that still love hardware and need to do full builds in under an hour and keep the IDE snappy at the same time. Also, most programmers value silence over frame rates but still want computers that start the their IDE under 5 secs and do incremental compiles instantly.

I'm sure there is a market out there of people just like me, willing to pay top dollars for the ultimate "ProgrammingStation". Are you a taker?

Urban said...

This is indeed an interesting development. It also kind of leaves Voodoo in a corporate judo position...that is, Alienware gaming junkies will be likely to want to jump ship now that Alienware belongs to "the man." I'm sure you folks at Voodoo would be more than happy to pick up those costomers, as is the corporate judo way. Besides the Alienware loyalists jumping ship, mergers are messy things, that often go wrong...all the more opportunities for competitors. (We just talked about this kind of thing in my senior undergrad management class)

Anonymous said...

You know a month ago if I was looking to buy a high end system I would have had a hard time choosing between VoodooPC and Alienware, now thanks to Dell, I don't even have to think about it: VoodooPC all the way.

Surya said...

Errmm...AFAIK a powerful programming computer would require a powerful processor, lots of ram and a big hard drive and a powerful gpu especially for 3d modelling and so on....sorta the same isnt it?

Anonymous said...

I agree with one of the posters -- that the Dell/Alienware merger should herald some serious additional consolidation in this space.

Falcon/VoodooPC makes sense, at least from a scale standpoint. As the poster says, the "Omen probably doesn't pay the electric bill". Aside from anything involving Voodoo, what other combinations are possible? Will HP and/or Gateway also look to pick up a "boutique" gaming company, or as Rahul also suggested, will they merely "slap neon green on a PC" and call it a gaming system? Or, will they completely ignore the space?

Anonymous said...

Rahul, please comment about Microsoft Vista and its delays. And also probably its relevance (delays/64-bit) to Core Duo 32-bit processors. I believe Vista supports 32-bit, but probably you could elaborate completely about this situation.

Rahul Sood said...

Anonymous said...

Pretty interesting post, Rahul. Like another reader of your blog, I don't fully understand how the Dell-Alienware deal could be helpful to Intel in the long run. Could you elaborate on that sometime?


Well, Intel now has Dell, Apple, and Alienware to work closely with. I'm not sure what the long term financial implications are. Obviously Alienware is a huge AMD customer and that probably won't change unless their arrangement with Dell changes.

A lot of people at Intel also seem to be unhappy with a person who doesn't understand how chips work running the show. As you'd know, Otellini is the first big boss of Intel who doesn't have a PhD in some aspect of chip design.

Yes, I've noticed.

Moore, Noyce and Grove are legends in CMOS design and technology and Barrett is also considered an excellent tech person.

Sure, but Intel started to do poorly under Barrett.

I've heard people who're good technically used to be worshipped within Intel before, but now under Otellini's regime, its only the techie people who're smart talking who're revered.

Interesting.

What do you think of Intel's efforts to diversify? I understand diversification is good for Intel, since the processor business is maturing, but is it good to diversify at the cost of the processor business itself?

I'm not sure what to make of it. All I know is Intel's Israel team is incredibly talented. If they're smart they will allow that team to guide the company.

Also, is the big beast that is Intel on its way down? In the two years or so of Otellini's regime, we've seen half a dozen cancelled projects, many bad products from Intel's stable and discontent within the company itself.

Their next couple of quarters will be brutal - they all but admitted it when they showed what they will have coming out in 5-6 months. So don't expect a miracle - but all indications say they are back on the rails later this year.

If I've said something controversial and you'd prefer not to comment about it, that's okay. I'd understand!

This blog is controversial in itself. I prefer to tell it like it is, and I think all of our vendor partners (including Intel) respect that.

Thu Mar 23, 11:49:19 AM
Deepak said...

Did you notice that Intel has made two very interesting comments during IDF?


I noticed a few.

INTEL HAS ADMITTED BY ITSELF THAT AMD's CURRENT CHIPS ARE AS MUCH AS 50% FASTER THAN INTEL's CURRENT CHIPS FOR SERVERS and 12% FASTER THAN INTEL's CURRENT CHIPS FOR DESKTOPS!!!

They did indeed.

And AMD sells its chips cheaper than Intel too.

Not all of them.

I wonder how Intel will manage to sell their chips for the next 6 months or so with such bad performance numbers compared to AMD. Intel had better know their marketing well.

Honestly, I don't think they care about the next 6 months. Afterall why would they lay their cards on the table like that? They are probably bracing themselves for their quarters - but at the same time they're preparing for the future.

f their new chips get delayed, and I won't be surprised to hear that, they're probably going to be in big trouble.

They're huge, they have boatloads of cash. They won't be in trouble, they're still a big giant.

Besides, like many other people, I don't believe the 20% number is fair at all.

Maybe it's not fair, but AMD is going to have to work VERY hard, 24/7 to stay in the performance game. AMD knows this, they are aggressive - and very smart.

Thu Mar 23, 12:07:14 PM
Surya said...

So when are you quad sli systems coming out Rahul?


We had them out at launch. Check the VoodooPC website look at the OMEN a:121s.

Thu Mar 23, 12:29:06 PM
Anonymous said...

Interesting commentary in reuters makes most sense of all. Proprietary cooling of Alienware systems is now available to Dell... More of an intellectual property play I would say.


Interesting you mention that. Did you know that VoodooPC (yes us) own a piece of the company that makes the proprietary cooling using in the Alienware machine? Of course we don't control what they do, but we certainly know the technology is good. There's some trivia for you :)

Thu Mar 23, 01:46:39 PM
Sharikou, Ph. D said...

DELL's move may wake up the Intel execs into the cruel reality.


Man, you're a drama king.

Thu Mar 23, 02:31:45 PM
Anonymous said...

I don't see Alienware using Dell motherboards, that would be pretty dumb on Dell's part.


Dell doesn't make motherboards, Intel makes Dell motherboards - although they are pretty Dell.

Thu Mar 23, 03:28:26 PM
Anonymous said...

Why do you say that? Granted Dell will share the advertising $$ with Alienware and we will see more ads and commercials for PC gaming but not sure that will bring new customers on board..the ones who forgot they wanted to play pc games??...


No, the ones who know Dell but don't know PC Gaming. There are many people who go to Dell's website and see the XPS and wonder "Wow, I never knew you could get a PC for gaming..."

I agree, who buys a plastic pc anyway? Even it is shaped like an alien and you get free shipping or free printer if you "buy by midnight tonight".

Yeah, agreed.

Disagree. I think Dell + Alienware will do to smaller competitors what Walmart did to ToysRUS, put them all out of business.

Perhaps you may be right. I have already seen a few shut down.

This new purchase of Alienware will eat most of the profits of average gaming pc companies (the ones that have ninja and dragon stickers on bulky plastic cases)

100% agree.

and eat the profits of the entry and mid level offerings of high end gaming pc companies like yourselves which makes me concerned that you will not get the volume you once had which will lead to weaker partnerships with the channel, access to their R\D, etc.

I'm not so sure I agree here.

Why would anyone start a gaming pc company now?

..because they all think Dell will cut them a check. Kind of dumb if you ask me, but I'm hearing people suggesting that.

I bet if you went to get a business loan to start one after this announcment of Dell\Alienware they would ask you if you were on crack.

Yeah.

Final thoughts: What has happen here is Ford (Dell) bought Jaguar (Alienware). How does that effect Ferrari (Voodoo, Falcon) and Porsche (Hypersonic, etc) only time will tell. I think Voodoo and Falcon will have to focus on the nose bleed PC enthusisit and they are out there for sure but I don't think voodoo pays the electric bill with selling the gold plated Omen..so maybe Voodoo you should start talks with Falcon and create Voodalcon PC...good luck.

Thanks for the suggestions and support.

Thu Mar 23, 07:48:20 PM
[[Rodney]]
[[Rodney]] said...

Your feed doesn't work.

Gives the error "XML Parsing Error: prefix not bound to a namespace


Fixed, thank you.

Thu Mar 23, 10:28:32 PM
Angel Municio said...

I'm sure there is a market out there of people just like me, willing to pay top dollars for the ultimate "ProgrammingStation". Are you a taker?


Interesting proposition. Thanks for the suggestion. What programmer wouldn't want to power a 30" display at 2560x1600 though? :)

Thu Mar 23, 11:20:23 PM
Urban said...

This is indeed an interesting development. It also kind of leaves Voodoo in a corporate judo position...



:)

(We just talked about this kind of thing in my senior undergrad management class)

Sounds like a great class.

Thu Mar 23, 11:57:24 PM
Anonymous said...

You know a month ago if I was looking to buy a high end system I would have had a hard time choosing between VoodooPC and Alienware, now thanks to Dell, I don't even have to think about it: VoodooPC all the way.


Thank you!


Fri Mar 24, 08:45:47 AM
Surya said...

Errmm...AFAIK a powerful programming computer would require a powerful processor, lots of ram and a big hard drive and a powerful gpu especially for 3d modelling and so on....sorta the same isnt it?


Yeah, usually.

Fri Mar 24, 10:25:16 AM
Anonymous said...

I agree with one of the posters -- that the Dell/Alienware merger should herald some serious additional consolidation in this space.


This is anything BUT a merger. It's an acquisition.

Falcon/VoodooPC makes sense, at least from a scale standpoint. As the poster says, the "Omen probably doesn't pay the electric bill". Aside from anything involving Voodoo, what other combinations are possible? Will HP and/or Gateway also look to pick up a "boutique" gaming company, or as Rahul also suggested, will they merely "slap neon green on a PC" and call it a gaming system? Or, will they completely ignore the space?

Who knows what Gateway is thinking. Everyone is not sure what to think of it.

Fri Mar 24, 10:44:01 AM
Anonymous said...

Rahul, please comment about Microsoft Vista and its delays. And also probably its relevance (delays/64-bit) to Core Duo 32-bit processors. I believe Vista supports 32-bit, but probably you could elaborate completely about this situation.


Check my latest blog entry.

Sharikou, Ph. D said...

Rahul, can you comment on
this Michael Dell interview
? I wrote
a short report here
. There were two interesting parts, one is Dell's comments on "a bunch of new parts" by Intel, the other is future competitive server products. I noticed that server is a small piece of Dell's business (about 12%).

Sharikou, Ph. D said...

I would comment on Intel's leadership. Intel started as a group of "traitors" who took Fairchild Semi's CMOS idea and made the DRAM chip. Andy Grove was a device physicist, Gordon Moore was a top engineer at Fairchild, Craig Barret was a semiconductor physicist, none of them know anything about processor design or deep understanding of computing. Intel doing CPUs was by accident. It was asked by a Japanese company to make some calculators. One Intel guy worked on DEC PDP-8 thought they could create one processor and then write software to do all the calculator work, instead of making different kinds of special circuits. But the Intel guys couldn't really do it. Then Intel hired a guy from Fairchild, and he designed the CPU, the 4004.

So it's not surprising that Intel execs know zip about CPUs, it started as a DRAM company, CPU knowledge had to come from outside. All Intel Core stuff today is pretty much
Bob Colwell's P6
. Bob Colwell worked on VLIW architectures in a startup and joined Intel in 1990.

As I wrote here, Intel suffers from defective genes which has been perpetuated thru inbreeding.

Intel's Core design team in Israel are
newbies compared to AMD's top guys from DEC, IBM and SUN
.

AMD's Opteron is basically Alpha EV7 for x86. The Athlon MP was basically Alpha EV6, and Intel's Bensley is an imitation of Athlon MP.

As for Craig Barrett, I found it surprising that being a device physicist, he was touting about 30GHZ CPUs in 2001 -- we all know CMOS power consumption is proportional to the sqaure of frequency.

Anonymous said...

Truth be told, Rahul, this is great news for VoodooPC. Dell's terrible customer support will give the Alienware brand less prestige.

Dude, Dell is hardly a leader in the gaming market. Other than making people think their machines are good when they are in truth, not, Dell is far from a leader.

Rahul Sood said...

Sharikou, Ph. D said...

Rahul, can you comment on
this Michael Dell interview?


Well besides all his cagey responses - I think the truth will come out eventually as to why he made the acquisition, etc. In fact, if I feel brave enough I might even come up with my own analysis.

I noticed that server is a small piece of Dell's business (about 12%).

Yeah? I thought commercial was 70% of their business or more. I think their server business is higher but at the moment they aren't competing well in that space.


Friday, March 24, 2006 11:40:28 PM

Sharikou, Ph. D said...

Intel doing CPUs was by accident.


Well many things were created by accident, but in the case of Intel I think they've done pretty well.

So it's not surprising that Intel execs know zip about CPUs,

Who cares if they do know tons about CPUs. You'd think those that know tons about CPU would work under the title of CTO and under yes?

Intel's Core design team in Israel are newbies compared to AMD's top guys from DEC, IBM and SUN.

Perhaps, but their core design team in Israel is incredibly talented. They are beyond talented actually, and they really understand how to build a true platform.

AMD's Opteron is basically Alpha EV7 for x86. The Athlon MP was basically Alpha EV6, and Intel's Bensley is an imitation of Athlon MP.

No doubt AMD has great architecture, I think even Intel would agree that AMDs architecture is hard to beat.

As for Craig Barrett, I found it surprising that being a device physicist, he was touting about 30GHZ CPUs in 2001 -- we all know CMOS power consumption is proportional to the sqaure of frequency.

Yeah, it seems odd no doubt.

Saturday, March 25, 2006 12:33:05 AM

Anonymous said...

Truth be told, Rahul, this is great news for VoodooPC.


I agree.

Dell's terrible customer support will give the Alienware brand less prestige.

Perhaps, again it depends how things flesh out. I am pretty sure I know what to expect over the long term.

Dude, Dell is hardly a leader in the gaming market. Other than making people think their machines are good when they are in truth, not, Dell is far from a leader.

Well, Alienware is a perceived leader, and Dell bought Alienware. You cannot knock what they have built. I certainly won't keep my blinders on, I sleep with one eye open at the moment.

Anonymous said...

Good day Rahul, et al.
I work at another Canadian PC manufacturer and read your blog regularly. I too am passionate and enthusiastic about technology and would welcome the opportunity to meet with you some day to trade stories. Give a shout if you are headed towards Vancouver sometime.

That aside, I am certainly curious to see how this Alienware/Dell announcement will pan out in say 3 or 4 quarters. Techically and financially.

Also interesting, I had the opportunity to speak with Anand Chandrasekher a couple of weeks back - the day CNet unofficially announced the deal in fact - and he is either a great actor or Intel had no clue that this was afoot. He seemed taken aback when I mentioned it; not the reaction I expected.

Do you think Dell could have pulled that off without Intel knowing? I would think that Mike and Anand would be on each others' speed dials and while privacy is one thing, a tight business relationship is quite another.

Rahul Sood said...

Anonymous said...

Good day Rahul, et al.
I work at another Canadian PC manufacturer and read your blog regularly.


Great stuff.

I too am passionate and enthusiastic about technology and would welcome the opportunity to meet with you some day to trade stories. Give a shout if you are headed towards Vancouver sometime.


Certainly, I'll be sure to look up "Anonymous" in the phone book when I come to Vancouver ;)


That aside, I am certainly curious to see how this Alienware/Dell announcement will pan out in say 3 or 4 quarters. Techically and financially.

Same, but I'm not too worried about it.

Also interesting, I had the opportunity to speak with Anand Chandrasekher a couple of weeks back - the day CNet unofficially announced the deal in fact - and he is either a great actor or Intel had no clue that this was afoot.

Intel had no clue that it was afoot.

He seemed taken aback when I mentioned it; not the reaction I expected.

Yep, what most people would think.

Do you think Dell could have pulled that off without Intel knowing?

Yes, and they did.

I would think that Mike and Anand would be on each others' speed dials and while privacy is one thing, a tight business relationship is quite another.

I'm not sure about the speed dial thing, but I am pretty sure Dell did this under wraps.

Anonymous said...

hi Rahul

i am sending you a link to show patriot memory indeed got some fast memory for gaming - just fyi.

this is reference to the comment you had on "cosair has the best proven components" in the market and i think otherwise..i agree on their exposure on the gaming market (fully participation on all gaming events, gaming tradeshows, etc) but quality wise, patriot and corsair are the same, if not even better.

http://www.patriotmemory.com/reviews/index.jsp

- from a very Enthusiastic patriot memory gal lol

Any Donkey said...

Gamers will want the Cell processor once PS3 hits the street. Intel and AMD will be at least a generation behind.

Anonymous said...

It seems every sell side analyst is falling over backwards to downgrade AMD because of 1) Q2 pricing impact from Intel, 2) weak end market PC demand, and 3) Conroe fears in Q3? Any update on your part on all of the above.

It seems from your last few posts, you are hedging on your "AMD going to do better than Intel attitude in 2006" you had right after Conroe and the first AMD downgrade after IDF.

Is AMD in major trouble in 2H if they don't have anything beyond the AM2 A64 5000+ if Conroe launches in Q3? Or is Intel going to do a Nvidia/ATI and not produce enough volume. Why can't Intel switch all their fabs to Conroe away from P4 and put 100% volume in Q3?

Anonymous said...

This is what you wrote on the Think Equity downgrade:

Mark my words, Intel will *only* regain share when they start inventing and producing better products. There is no doubt that they have woken up from their long slumber, but it will take many months before we see any cool new products from the boys in blue.

The bottom line is I humbly believe Think Equity wrongly downgraded AMD. When AMD reveals their next quarter results, I suspect the poor chaps who believe in such research will be wondering what the heck just happened. Unfortunately reports like this are better utilized to hold fish & chips than base crucial investment decisions on.

Let me make a recommendation to those of you looking to understand the dynamics of the tech industry: Watch the hardware sites, read the performance benchmarks, and check out the enthusiast system builders like VoodooPC to see what we believe is the best, cutting edge hardware.

Ultimately gamers guide the industry, it’s surprising but true. Speaking of which, it looks like Dell may be acquiring Alienware. Use your imagination what that might mean for AMD.
---
Do you stand by those pro-AMD sentiment/attitude statements above now? Now that PC demand seems to be weakening, Intel cutting prices, and Conroe getting traction (new benchies from China). AMD stock is down almost 20%, I hope for your credibility sake you don't bash sell siders and that AMD announces great earnings AND Q2 guidance! next week. What is your current thoughts on Q1 and Q2 guidance NOW?