Dell has agreed to purchase gaming PC maker Alienware, in a rare acquisition designed to improve Alienware's supply chain and boost Dell's standing among PC enthusiasts.
Financial terms of the deal were not disclosed. Alienware will operate as a wholly owned subsidiary of the world's largest PC maker, said Nelson Gonzalez, chief executive officer of Alienware. Gonzalez will now report to Jim Schneider, Dell's chief financial officer, but the company will operate separately from Dell, he said.
A Dell representative confirmed the deal, but said the company was deferring comment until later on Wednesday. A Dell representative in Australia had downplayed the possibility of a deal earlier this month. The transaction should be finalized about 30 to 45 days after regulatory hurdles are cleared, Gonzalez said.
There will be no cross-marketing of Dell and Alienware PCs on their respective Web sites, at least initially, said Jess Blackburn, a Dell spokesman. Some Dell-branded products that Alienware doesn't sell, such as monitors, might be sold on Alienware's site, but that hasn't been finalized.
Analysts had been skeptical about the deal when it was first rumored, and some remained skeptical after it was announced.
"I still think it's a bad idea, and a bad fit," said Stephen Baker, an analyst with NPD Techworld. Alienware's customers buy from that company in part because of its image as a technology-driven company that understands the needs of gamers, while Dell is viewed by those customers as a stodgy corporate supplier.
Even though Gonzalez said Alienware will operate separately and not promote Dell on its site, "Alienware customers are smart enough to understand" that Dell will own the company, Baker said.
The deal also could mean that Dell has to rethink its consumer PC strategy, said Roger Kay, principal analyst with Endpoint Technologies Associates. The company has sunk a lot of effort into building its XPS lineup of high-end desktops and notebooks for gamers and multimedia enthusiasts. Now, it looks like those systems compete with Alienware in certain areas, he said.
Alienware sells very powerful and very expensive PCs to the top tier of the gaming market. Dell, on the other hand, has a stronger identity with casual gamers who want a good PC but don't want to pay Alienware prices. Both companies have recently tried to appeal to gamers that fall in between those two groups, with Alienware reaching down and Dell reaching up, Kay said. It's unclear how those strategies will continue.
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