HP + Voodoo: The Back Story

By Rob Enderle September 28, 2006

Whenever there is a merger like this, many of us get interested in the back story. I was able to speak to executives from both firms and an interesting story emerged on why they want to do this.

For HP: Margin, Leadership, Advocacy, and Image

The performance gaming market is unique, while the regular PC market is largely commoditized now with razor thin margins. The performance side enjoys much stronger margins more in line with where the industry was 5 or more years ago. This is largely because the vendors in this industry tend to be closer to their customers and these customers value the extra care and unique offerings to a degree that they are willing to pay more for them.

In addition, performance gamers tend to be influencers. They know more about hardware and are often asked by both their peers and even corporate buyers for their opinions on hardware and vendors. What many in the tech industry often forget, but HP clearly saw, is that gamers are also often employees and executives and their extra interest in technology makes them potential powerful advocates.

The companies that sell these products tend to be on the leading edge of trends like customization, unique industrial design, and performance. These trends eventually make their way into mainstream consumer lines and sometimes even corporate lines. As a result, learning how to do them right early should have a strong payoff for the company long term.

It is also interesting to note that an increasing number of large companies and government agencies are buying from companies like AlienWare because, for certain tasks, they want the highest performance for the dollar and, against traditional workstations, PCs tuned for high performance provide more for the dollar. This was one of the core benefits Alienware brought to Dell and inside Alienware; the fastest growing group was the one that sold to these large organizations.

There is something trendy and special about products from companies like Alienware, VoodooPC, and Falcon Northwest. These machines have a unique look, are often very custom, and appear technically ahead of the pack.

The folks that run these companies have a passion for PCs that is often unmatched in the larger branded vendors and are much more willing to take technical risks. With their company brands they carry a trendier message, one that can take a company like HP (which is more known for its corporate buttoned down image) and potentially help it drift a little to the wild side where it needs to be for consumer electronics.

VoodooPC: The Chance to do Something Incredible

Game companies often lack the capability to do advanced research and development which flies directly in the face of their need to provide incredibly advanced hardware to their customers. With IBM’s exit from the PC space, HP now has the largest research and development capability targeted at personal computing. In addition, they have research and development resources targeted at other technology areas where someone focused like a laser on performance could possibly make use of.

For instance, HP does some of the most advanced work with regard to cooling large numbers of hot processors in very tight proximity to each other. They have actually worked with AMD to create ultra low powered high performance processors which could be creatively used to create amazing new hardware that no one else could bring to market.

In this market it is all about creating the “amazing” and VoodooPC wanted to get its hands on the kind of technology that no one in their market could touch, this gives them the opportunity to do something spectacular and they have an incredible desire to do spectacular.

Looking to the Future

I’ve seen some of the products that are already in the works from this soon to be combined entity and “spectacular” somehow just doesn’t seem to be a strong enough word anymore. It will take about a year, but when you see what I know is coming, be prepared for a product, and perhaps a line, that is so incredibly advanced that even Apple will look dull by comparison. That’s magic, well maybe Voodoo, and HP clearly could use a little magic right now.

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