Thursday, March 23, 2006

Dell Acquires Alienware

What does high-volume Dell get buying low-volume Alienware?

  1. An opportunity to use volume-driven low-cost Dell parts in very high profit machines, increasing the margin per unit.
  2. A new place to drive the growing emphasis on the XPS line, another higher-margin area at Dell, which could use some relief from the $399 commodity special.
  3. A back-door intro to selling AMD-based machines, since AMD is by far the gaming processor of choice right now. Dell does this in a wonderfully gace-saving way that does not rile Intel, Dell's monogamous chip partner until this news.
  4. With a skunk works called Alienware, Dell can safely learn all it needs to know about taking AMD machines to market in the high-volumes that drive the core business. However, I am still not convinced that Dell can or wants to jump into the AMD mass-market.
  5. A brand name for brand-conscious buyers for whom Dell is unacceptably down-scale, even XPS.

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