Deal to Buy VoodooPC Will Propel H-P Into
Gaming
YORK, Pa. (AdAge.com) -- With fewer than a thousand computers
shipped monthly, it's unlikely that many people had heard of
VoodooPC. That is, until last week, when Hewlett-Packard announced
its intent to buy the high-end hardware maker in a move that gives
H-P serious street cred among video-gamers and techies.
Voodoo -- and its custom-computer competition including Alienware,
Falcon Northwest and Hypersonic PC -- makes the street rods of the
computer industry, with tricked-out chassis and high performance
under the hood. These PCs are desired for their high speed and
silent processing, followed closely by their unique looks.
Gotta-have-it types
And although high-end computer sales are only a small part of the
overall computer market, estimated at around 3% of sales, the
segment targets an important customer base of "gotta have it"
types. PC makers rely on that group to gauge trends and to
"overplay" machines. ("Overplaying," also called hyperclocking, is
a term for when gamers run the processors higher and/or faster than
recommended by changing settings manually to get better faster
play. PC makers get enough feedback to know then how much their
machines can really take without having to stress test them in the
labs.) The segment is also one of the few high-margin areas in an
industry with notoriously slim profit margins.
Custom game-centric machines use top-shelf components -- brand-name
CPUs, graphic cards and even power supplies -- and souped-up paint
jobs in order to justify fat price tags on PCs that cost from an
entry-level mid-$2,000 to highs of $10,000 or more.
H-P's move, which follows a similar one by chief competitor Dell,
which acquired Alienware in April, solidifies the value of these
brands not only in the gamer market, but also their cachet to a
wider audience. Because the Voodoo brand is "phenomenal" in the
gamer enthusiast market, H-P will strive to keep its cachet intact,
said David Roman, H-P's personal systems group VP-marketing and
communications. But, he added, "over time we are going to build the
H-P gaming brand; although what that is, we don't know yet."
Gaming division
H-P plans to create a gaming division anchored by the Voodoo
hardware, and intends to use the expertise of the Voodoo team and
utilizing both their R&D departments to create more HP
video-game products. Marketing plans for Voodoo and the H-P gaming
division are still being formed, but the media strategy -- not just
for gaming products, but all of HP -- will continue to shift
online. Already this year, online media spending accounts for 25%
to 30% of the total budget, compared with less than 10% last year,
Mr. Roman said.
Even as H-P announced the Voodoo acquisition, and a handful of new
products at a blowout press event in New York last week,
Chairman-CEO Mark Hurd was testifying before Congress about the
company's boardroom leak-investigation-turned-scandal. So far, the
brand remains largely untouched by the scandal, and it has yet to
affect marketing.
Mr. Roman did admit that scaling back on advertising -- and
visibility -- was discussed. But, he said, the idea was dismissed
as not feasible during the crucial back-to-school and pre-holiday
selling season. "We've got a business to run," he said. "We're not
changing anything."