The Big Business of Specialty Computers

At first glance, the consumer PC market can seem quite polarized. At one end of the spectrum are big players like Dell, HP, IBM, Apple and Gateway, and at the other are small companies that assemble standard components, house them in a generic-looking white box and sell the result cheaply. However, it is the middle ground that may be most worth watching.

The companies that rule this relatively small niche between behemoth brands and generic white boxes are specialty computer makers. They sell branded machines, but they are not giants. They target specific buyers, such as gamers or scientific professionals, rather than striving for mass-market adoption.

Although specialty computer vendors are not reaping as much revenue as an IBMor even a Gateway, they have found fertile soil nonetheless. In a difficult economy, how do these companies stay not only afloat, but also successful?

Target Practice

The key to specialty success, as companies like Alienware, SGI, Voodoo PC, Falcon Northwest and Premio PC have found, is that when shipping systems, quantity is not always the most important factor. Rather, becoming well known in a certain market reduces competitive pressure, increases customer loyalty and keeps revenues steady.

Premio PC targets the education market, primarily K-12 schools that have unique academic and financing needs separate from other education sectors like universities and colleges.

For scientific professionals and creative types, meanwhile, SGI provides systems that are up to tasks like aiding in brain surgery or assessing global climate patterns. On the creative side, SGI technology can tackle such tasks as translating large analog broadcasting files to a digital format.

The largest niche for specialty computing, though, might be gaming. Alienware, Voodoo PC and Falcon Northwest all are competing in this space, and each company has ardent fans.

Standing Out

When only a few companies are jockeying for position in a niche market, it is crucial to stand out from the pack. Toward this goal, many specialty computer makers in the gaming sector play up key strengths.

For example, Voodoo PC chooses to pursue industry awards to show the solidity of its products, rather than touting its systems’ benefits via advertising.

As Ravi Sood, Voodoo CEO, told the E-Commerce Times: “We go to win awards, that’s our primary driver for marketing. It’s easy to say you’re the best, and put out ads saying you’re the best, but without third-party validation of that fact, how can customers trust that it’s actually true?”

Affiliate Advertising

On the other hand, Voodoo rival Alienware chooses a different tactic. The company prefers to advertise often and spends a great deal of time garnering editorial reviews.

Three years ago, Alienware also launched an initiative to establish a solid affiliate program, which has been growing steadily ever since, said Kevin Wasielewski, vice president of marketing at the company.

Wasielewski told the E-Commerce Times that anyone who has a Web site, whether corporate or personal, can put an Alienware banner on that site. If someone clicks through and then orders an Alienware system, the affiliate receives a commission. The company is pleased with the success of its grassroots program — and is happy, too, that it can control its advertising message through the same network.

“We control all the banners,” Wasielewski said. “That’s unique in the industry. If we want all of the thousands of Alienware banners changed, we can do it with a few clicks.”

Strategy for Success

One benefit enjoyed by specialty computer companies is that because they are extremely familiar with their chosen market segment, they can innovate based solely on serving that customer base. Anyone who buys a Voodoo PC, for example, knows he or she will not have to worry about whether the graphics card is good enough for playing Star Wars Galaxies. Such assurance is a comfort to buyers and keeps them coming back.

Likewise, Premio PC marketing manager Debby Dodd told the E-Commerce Times that K-12 buyers have specific needs, and that by training a laser-like focus on those needs, the company can develop its systems in ways other computer companies might not.

“We work with school administrators, teachers and students,” she said. “This process has provided Premio with expertise in the area of distance learning, networking, software development and ultimately Web-based administrative tools for furthering the agenda of public schools HR-1, under ‘No Child Left Behind.'”

However, while focusing on a smaller market may keep sales steady and help direct innovation, it does not mean these companies will have better margins than the big players.

As Wasielewski noted: “We have a stigma that we’re high priced, but we use very high-end components. So when someone looks at a regular PC and at our PCs, they think we must have a huge margin, but we don’t. We’re pretty much in line with the rest of the PC market, which operates on very slim margins.”

Ones To Watch

As specialty computer companies work to win the hearts of their respective fan bases, they are being watched by more than potential customers. After all, because computers made by Alienware and Voodoo are snapped up by early adopters, buying trends can indicate future technology directions.

As Voodoo’s Sood said, “It’s the goal of companies like Nvidia and AMD to win the hearts and minds of early adopters because it helps them win branding, adoption and B2B business.”

Partnerships also abound in the specialty computing sector. Alienware has hooked up with game manufacturers and gaming leagues, and Voodoo has been collaborating with AMD.

“What truly drives this industry isn’t a Dell or an Intel or even a Voodoo,” Sood added. “It’s innovation. And anything you can do to enhance that is great.”