Deal to Buy VoodooPC Will Propel H-P Into Gaming

New Division Will Be Anchored by High-End Hardware Maker

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YORK, Pa. ( -- 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.
Because the Voodoo brand is 'phenomenal' in the gamer enthusiast market, H-P will strive to keep its cachet intact.
Because the Voodoo brand is 'phenomenal' in the gamer enthusiast market, H-P will strive to keep its cachet intact.

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."
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