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Is it time for Dell to file for Divorce?

by David Ross on 14 September 2005, 00:00

Tags: VoodooPC (NYSE:HPQ)

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Is it time for Dell to file for Divorce?

Voodoo PC

I founded VoodooPC in 1991, and in 1999 I stepped down as CEO so I could pursue my passion of designing new products. I have been the CTO of Voodoo ever since, and as such I get to play with new technology all the time. If you go to our website you’ll see that we normally don’t engage in “logo branding” our partner companies. We normally try to stay on the fence when it comes to choosing technology – but when there is a serious performance difference, we will come out and say it. I’m not one to pull punches nor am I easily influenced. I believe in remaining completely unbiased and telling it like it is – thus the reason we’ve hosted virtually un-moderated forums on our website for years.

In the marriage between Intel and Dell I always wondered who wears the pants in the family. For years I thought it was Dell, but now I’m not so sure. Dell is an operationally excellent company, and they know exactly how to trim costs and gain market share. Their business is an exact science, and due to the volumes Dell sells, Intel most likely offers generous MDF to keep them profitable so they can continue to grow their business.

Dell is dull, and when companies like Apple, Alienware, and VoodooPC employ strategies that influence early adopters, a company like Dell must realize that there could be consequences down the road. Being “cool” may not seem important now, but in order to influence future industry leaders buying decisions Dell must have buy in from early adopters.

Merely getting a guy to act cool and use words like “Dude” doesn’t make for an influential company. Heck, hiring Sheryl Crow as their spokesperson doesn’t change things for me, I’m guessing it’s the same for anyone else.

Dell also has the unique problem of being too big – they still have to please investors, and therefore they must continue to grow their market share past seemingly unreachable levels.

Dell can’t win true enthusiasts over if they stay married to one company either. When I say enthusiasts, I’m referring to the people who share similar interests to me. These are people who grew up playing video games, graduating from an Atari 2600 all the way to an X-BOX. They’ve owned multiple PCs in their lifetime, from Apple //Cs to Commodore 64s, Amiga 500s, etc. These people influence the decisions of others when it comes to purchasing technology. These people love gaming or simply love technology and what it can do for you.

Around two years ago, Dell entered the gaming market in order to gain back some early adopters. In the meantime, many thought that our business would be over. They figured that Dell would eventually commoditize this market like they have in every other market they’ve entered, and companies like Voodoo would end up moving into another direction. Thankfully, this hasn’t happened. Dell legitimized our space, and created mainstream awareness around PC gaming. By using their incredible marketing muscle, many people who normally would never have heard of Voodoo or Alienware have done their research and made their decisions accordingly. I would say overall we welcome the competition, and as long as we continue to stay ahead of the curve, we will remain a leader in our space.

Dell has successfully entered the market, no question, but as long as they continue to use Intel exclusively, they’ll never win the hearts and minds of serious gamers or enthusiasts. Nvidia certainly helped them by making the nForce4 chipsets compatible with Intel. It was probably the single best thing that’s happened to Intel in the last year because without SLI technology they didn’t stand a chance. Even with SLI, it’s clear that the AMD FX is the mack-daddy of all CPUs. The FX pimp slaps any of the “Extreme” alternatives in so many ways – its cooler, uses less power, therefore quieter, and faster.

Yep… Intel made a serious U-Turn from being a successful, innovative CPU manufacturer to a company that seems to have lost their way in their own big-ass organization. They should have dumped their desktop parts years ago the first time guys like me told them that their Pentium M was a better solution. Instead, they continued to make hotter and louder CPU solutions for the desktop while developing the Pentium M only for notebook. They tried to force everyone to change to BTX, the biggest waste of time form factor ever. They caused a huge stir in the cooling market, forcing people to design new cooling solutions overnight. It was very confusing and frustrating.

Thankfully, while all of this was happening, AMD was concentrating on improving their already impressive product line. AMD has been building low and mid voltage CPUS in all areas, including their Athlon 64, and Opteron 64 CPUs. They recently launched the Turion 64 processor, a chip that by itself performs admirably. In the near future, when the Turion 64 is coupled with newer chipsets, the competition had better wear some rubber gimp suits and prepare for the whipping of a lifetime. The Turion 64 has a very impressive future ahead of it; it’s poised to deliver blistering performance in all areas, including gaming, battery life, business apps, etc. We already launched two notebooks AND a desktop media center based on Turion 64, and they’re all extremely impressive.

I’m not sure if anyone realizes how serious this is for the industry. Perhaps it’s time for a divorce. Either way, I’m just going to sit back on the sidelines and continue to design the ultimate products for VoodooPC. If anyone has any ideas, drop me a line, I’d love to hear from you.

Voodoo PCRahul Sood
President & CTO
VoodooPC

www.voodoopc.com

About Rahul Sood

Rahul Stood

Rahul Sood's love for computers started at the young age of 11. Much to the shock and dismay of his parents, he ripped apart his brand new Apple //c and painted it red before turning it on. His parent’s dreams of having a doctor for a son were shattered when college drop-out Rahul founded what is now one of the most respected high-end computer companies in the world, Voodoo Computers.



HEXUS Forums :: 7 Comments

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Interesting piece, but I'm going to disagree with it for fun.

First of all, it's hilarious to see VoodooPC bracketed with Apple as a company that influences early adopters. Unless of course, you think spray painting a Clevo clone notebook (as sold by a thousand other companies) with some disgusting shiny gloop and ramping up the price is innovative or qualifies as "design(ing) the ultimate products."

In general Mr Sood's fixation with "being cool" is fairly silly. Dell may not have wiped out companies like Voodoo with the XPS desktop series (though I bet the XPS Gen 2 laptop probably hurt their notebook sales - it's three times better than any clone gaming notebook). But in the grand scheme of things the enthusiast market is pitifully small, and given that the XPS desktop is closely based on Dell's precision workstations, it probably hasn't cost Dell much to test the water in this market.

Dell's meat and drink is the mass market where coolness doesn't count for much and price and value rules. Its crushing success is proof positive of that.

Obviously, not having the option of AMD processors is a serious impediment to the prospects of the XPS in the gaming market. But in truth, it's the server space where Dell's lack of AMD hardware will hurt the company, if anywhere. The gaming / enthusiast market doesn't even come close to being big enough for Dell to torch its special relationship with Intel.

Right now, things may look a little uncomfortable for Dell given the problems Intel is having with its desktop processors. But it might be worth bearing three points in mind. First, the market is moving towards mobile in the consumer space - already notebooks outsell desktops in that sector in North America and Intel has a strong product for mobile. Secondly, Intel has massive resources and it's pretty likely it will close the gap to AMD when Conroe and Merom appear next year, and who knows what will happen with the chips that follow those. If that happens, Dell will reap the huge benefit of having kept faith with Intel. Finally, the fact is the AMD doesn't even come close to having the manufacturing capacity to supply a massive outfit like Dell.

Overall, Dell seem to know what they are doing - if it was in their overall interest to sell AMD processors, you can be sure they would.

Overall, you've got to take your hat off to MR Sood for single-handedly creating a successful company like VoodooPC - that's an impressive achievement. But what he does with VoodooPC is so removed from what Dell do that the two companies may as well be in different industries. I don't think his views on the enthusiast space are terribly relevant to Dell's overall operations.
IMHO Dell are still catering for their target market - big business. you compare the turnaround time on their workstations, servers and business desktops to that of machines designed for SOHO or Home use, and you'll see that an order for 50 workstations, 20 laptops and 12 servers will be delivered, with all requested custom features before that of a home user has wormed it's way out the other side of the order process.

Until AMD can show real businesses the cost savings associated with their processors, Dell won't be prepared to jump ship. Dell remains and probably will remain a very beige company in terms of design and innovation. fine they've gone for black/gray/bluuu led motif on their "newer", but they're still beige.
A big who cares. Dell has huge market coverage and saturation. AMD simply cannot supply enough CPUs for them, nevermind all the 'support' intel gives them when designing systems themselves.

And most people who wanted 'geek performance' wouldnt head Dell's way. Pfftt waste of time that article was.
scottyman
Until AMD can show real businesses the cost savings associated with their processors, Dell won't be prepared to jump ship.
isn't the real issue whether DELL can afford to operate a competitive business without Intel's support?...

cheers,

PD
While I agree with some of the opinions raised here, I will disagree with the belief that big businesses only care about how much it won't cost them.

The days of IT managers & directors throwing money around without researching performance & scability are long gone. That's why they employ people like me to guide them with thorough proven evaulations for potential hardware purchases & architectural decisions.

If it costs x more but performs y better, then don't believe that any IT director won't be interested in those numbers. They will. The larger the company, the more definitive the answers & solution must be.

Im an AMD fanboy, for which I will make no lies but when it comes to choosing what is best for a solution, Il choose what gives me the best performance vs cost.

If a dual opteron blade from IBM will accommodate 30 terminal server users and the equivalent dual XEON blade from IBM can load test to 40, Im interested and vice versa. Il take whichever works best and is the right price compromise.

When you times that by a factor of ten and you need to spot spaces for 400+ bodies, the mechanics mean that I can buy one to two less £3000 servers. That's a saving ANY IT director wants to hear.

As it was, the Opteron crushed the Xeon in our performance testing using Segue SilkPerformer. The Opterons won the day but that may not always be the case. Don't discount any serious IT architecture or systems departments sway in technical decision making or spend.