Michael Dell sees computer gaming becoming a $4 billion per year industry by 2010, but does Dell have a future in computer gaming?
It's clear that Dell is in the process of re-engineering. Earlier this year the Cost cutting measures have gone all the way up along the supply chainacquisition of Alienware, a Miami-based maker of gaming PCs, was a clear sign that Dell wanted to expand and branch out from the "cheap PC" market (a market that it invented). A further example of this is their long-delayed XPS 700 PC. While Dell became a household name by selling some of the cheapest PCs around, it is now finding out that even at the enormous volumes that it can make and ship them, it's hard to make much money from them. Also, the pressure to keep prices as low as possible hasn't been a good move from the point of view of reliability - when you have thousands of people having power supply unit issues with some models, and millions of batteries being recalled, it's clear that these cost cutting measures have gone all the way up along the supply chain.
So, having devalued the generic home/SOHO/business PC market to the point where it's nearly impossible to make a large enough profit satisfy investors, Dell now sees that gamers have deep pockets and it’s going after them. At the Austin Game Conference last Thursday, Michael Dell said that his company is positioning itself to be a leader in computer gaming PCs.
"Things like multi-core processors, acceleration engines for physics and graphics, wide-screen displays, web cams: there are a lot of great things happening on the hardware side that can really make the gaming experience quite exciting," Dell said. But it's also clear that Dell is not entirely sure what gamers want.
"I want to know what kinds of things they're looking for in hardware, and they like to discover what's happening with hardware, new features and new capabilities, so they can make sure they're enabled in next generation games."
As a company Dell can learn a lot about what gamers want by examining what they learned through launching the XPS 700. It's pretty simple really. Gamers want to exchange money for a system. They don't want huge waits, complicated back and forth with sales and customer services reps or to be given something different to what they thought they were getting. They're also going to want access to cutting-edge technology as soon as possible. By this I mean that gamers will actually want this technology in their homes, not see it on a web page or have it on order. The XPS 700 has been a perfect example of Dell's "overpromise and underdeliver" attitude towards customers. To win favors in gaming circles, this is something that is going to have to change. If not, Dell will be forced out of the market by companies who understand the value of a customer and how important it is to generate goodwill and have people say nice, positive things about your company.