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Interview: Alienware CEO Lewis On PC Gaming Market, Perception

Gamasutra talks to Alienware president Arthur Lewis and SVP Frank Azor about the Dell-owned boutique PC maker's strategy, its views on the PC gaming market, the size of the base, and the role of an expensive high-end PC today.

Chris Remo, Blogger

July 13, 2009

14 Min Read

The true state of PC gaming is hotly contested, and hard numbers are increasingly difficult to find due to the increasing influence of digital distribution and alternative revenue streams. Nonetheless, there's no doubt that the segment is in flux. But computer manufacturer Dell still sees enough of a market to expand the reach of its high-end Alienware gaming brand, acquired in 2006, to a worldwide scope; the division will now sell to dozens of countries rather than six. And the company also seems to be addressing the general shift towards laptops, launching its new M17x gaming laptop with both Alienware and Dell branding. As a group that caters directly to the most dedicated consumers within an already hardcore segment, Alienware has to have a handle on where the market is going. Gamasutra sat down with president Arthur Lewis and senior VP Frank Azor to discuss where PC gaming is and where it's going, its effective market size, and the place today for a high-end boutique machine. What is the distinction between Alienware and Dell Gaming as a whole? Arthur Lewis: Alienware is Dell Gaming. There is no distinction. Dell made a pretty big bet on Alienware saying, "Hey, this is it. We're going big. We're going global. And the gaming brand is Alienware." What do you think the state of hardcore PC gaming is these days? A lot of people don't see the high-end side as a growth market. AL: The state of PC gaming is strong. If you take a look at last year, the industry was $12.7 billion, and I think that represented growth of about 20 percent. The growth on discrete video cards is also pretty high from Nvidia and ATI. If you take a look at the software sale, and you take a look at the hardware sales, and then I triangulate that with our sales, I think the state of the industry is very strong. Even framing it that way, though, there must be issues with the market. That perception definitely exists. Is there a marketing problem? AL: Yeah. I think, historically, if you take a look at PC gaming, there was never a ton of PR put behind it. It was just something you did, right? A lot of us who grew up with PCs and PC gaming, we didn't do it because there was an advertisement and we went out and did it. We decided -- I mean, [laughs] someone's going to shoot me for this, but we grew up playing on stuff like an Apple IIe, right? That was actually my first computer. It's just something you did, right? With consoles, there's a lot of marketing that goes behind it. You don't see a lot of advertising behind PC gaming. But take a game like Counter-Strike. I think there were more copies of Counter-Strike sold in one year in its heyday than any Xbox or PlayStation games. So, I do think it's somewhat of a perception problem. But our customers, the people who play their PC games, I don't think they suffer from that perception problem. But when you look at games like Counter-Strike or World of Warcraft, two of the most successful games ever, neither requires a high-end rig like an Alienware to run. AL: Sure. I think a lot has happened to change the industry. You used to have to spend probably $4,000 in order to get a PC that ran most games, now you can get a nice rig for $1,500 and that will play 99 percent of the games out there including World of Warcraft. It's also a question of, "How do I want to play those games? Do I want to see every blade of grass? Do I want to see every cobblestone? Do I want to see every grain of dust after there's an explosion?" I do think that there's been a shift in price bands, but I still think that there is a very important space for that enthusiast and hardcore gamer. Do I think that person needs to spend $4,000 now? No. Probably somewhere between $1,500 and $2,500, would be my guess. People do traditionally associate Alienware with higher prices. And honestly, these days, even $1,500 is on the high end of what you actually need to spend to build a solid system. Are you looking to aim downwards over time? AL: We're getting there. That is not true today, but I think as we grow and we get more into the enthusiast space, you'll see more products from us that are in the lower price band. Just taking a look at the M17x [laptop] at its starting out price point of $1,799 -- the kind of stuff that you get in there comes from the benefit of having the backing of a $60 billion enterprise. That is actually getting into price spans that are more realistic in today's day and age for people who want to play games and have some discretionary income, but not $4,000. I assume that being part of a mass-market company like Dell probably puts some pressure on offering affordable price points as well. That's largely how Dell made its reputation. AL: Yeah. I think it's just a question of whether there's a customer out there, right? We don't have a product for that customer. What do we need to do in order to get our roadmap so that we do have a product for that customer? Gaming is clearly a worldwide thing. So how do we address those customers' needs? A lot of it does have to do with price point. I think it's our job to say, "What are the product that are out there? And where is that seam that we can go in there and fill?" And that's what we're going to be doing as we grow the business. How much do you deal with the PC Gaming Alliance? AL: We're a founding member of the PCGA. What do you see as the role of that organization? I think a lot of gamers aren't sure exactly what their goal is. AL: I'll defer to the PCGA on what their role is, but primarily... With Xbox, you had a group of guys who were designing for one platform, and they were all of one mind. Same with Sony, and same with Nintendo. With PC game designers, [it's] all over [the map]. The PCGA, I think, gets everybody together to ask, "What are the main issues affecting us today? It is a certain engine? It is a certain issue like piracy? It is a perception issue where we need to kind of get everybody together and spend some money to change that perception?" I think their job is to kind of go out there and figure out what are the three, four, five issues that are affecting the industry as a whole, and how to bring everybody together to help solve these things. I think the ones that I just mentioned are three that jump out at me. Do you also work with developers on a more individual basis? AL: Absolutely. We have a team that's dedicated to working with game developers as well as with publishers. Primarily, we work with the developers to see how we can partner with them in terms of using AlienFX [custom keyboard lighting and configuration] to tie into the games, but also to ask, "What's the technology out there that you're seeing? What are you coding to?" Products that we have in our roadmap don't happen just because. They happen because we're talking to these guys. That informs the technology we put into our products to help people take advantage. Like I said, Microsoft and Xbox and Nintendo have one platform all the way up. Ours is kind of complicated. It's Windows, it's Intel, it's AMD, it's Nvidia, it's ATI, it's the game developer who’s coding to something else. It's a lot of things that we have to aggregate. Our product planning team does a really, really good job of going out there and talking to a lot of people and making sure that we have the right technology in our product. That's traditionally both the strength and the weakness of the PC. It's an open platform with no overlord, so to speak, but it also introduces a whole lot of added complexity. Do you see that situation improving through better cooperation between the various hardware and software providers? AL: That is definitely something the PCGA is involved in. And the answer to your question is yes. I think the only problem that we have with the solution is that it's being addressed in a lot of different silos. You know, I've been using Windows 7 now for three or four months, and it's a huge advancement over Vista in terms of compatibility. It's very, very stable code. But yeah, those are things that, as an OEM [original equipment manufacturer], we're the glue that keeps everybody together. We try and get everybody together in the same room, and we try to say, "Look, guys. These are the issues that we are seeing. Let's all try and come to a happy resolution here." What's [important] is the strength of our relationships with our partners, the strength of our relationships with our customers, and the strength of our relationships with the game designers. Whether or not we get there through a unified platform, probably not. There are just too many things going on. But what we try to do with our product is make sure that we've done the best job that we can to make sure that 99.9 percent of the applications that are out there are going to run on the product we sell you. I'm glad you asked about the PCGA and what they do, because I think it's important they get a lot of support. They really have a very unique perspective on what they're doing -- tackling those top three to five issues and going out there with the partners. We believe enough in them that we were a founding member. A lot of the questions you're asking, which are not easy to answer, Dell and Alienware can't answer by themselves. We need to get together as an industry, because PC gaming is growing. Frank Azor: That's the biggest question the PCGA has been able to kind of help answer. Prior to the PCGA putting together some of these research studies, the belief was that PC gaming is shrinking and suffering, largely because NPD was coming out with retail numbers without looking at digital distribution and subscriptions. There was the Horizons report, which went out and looked at the entire PC gaming software industry, including subscriptions, digital distribution, and retail, and many came to see, "Wow, it's actually growing, and it's growing exponentially." They were able to successfully go out and do that. I think already you see some of the perceptions shifting. Some of the companies are reinvesting into PC gaming, where we felt some abandonment a few years ago. That's a bit easier of an issue to solve. Some of the other ones they're trying to solve are going to be more challenging, and it's going to take some time. Do you have a working number you use to characterize the size of the PC install base that's willing to actually play games on the PC? AL: Yes. The way we look at it is based on discrete graphics cards. Right now, that number's just a little bit north of 200 million. We think that number is going to triple over the course of the next five years. That's interesting, because it seems like integrated graphics are quite common these days. I've spoken to people like Mark Rein of Epic and he's traditionally been very publicly critical of Dell for shipping so many systems with deceptively low graphical capabilities due to integrated graphics. When Dell bought Alienware, he said he hoped you guys would work to change that internally. AL: I think it's a matter of what customers are asking for in everyday applications. I think the number that I saw is that 33 percent of notebooks today are sold with discrete graphics, and that number is going to jump 75 percent over the course of the next five years. I'm a big fan of the notebook that Dell came out with. I think that the vast majority of them, even down to the Inspiron line, come out with discrete graphics. They're not up to 512MB, but they're at 256MB. So, even the low-end Inspirons come with discrete graphic options. I definitely think that's a market, absolutely. There's one thing in terms of what a customer knows they want, and another aspect of what they might not know they need. If they buy a PC that says it's got "high-end graphics" or something, but it's actually just a dressed-up older chipset, then they try out a game like WoW, and it looks bad, whose fault is that? AL: Yeah. That's something else that we're working on with the PCGA, to really try and figure out. Can I play WoW on a cheap PC? Yeah, I can. But that doesn't tell me the whole story, right? I'm going to play it with my settings lower, and the experience is going to be maybe not what I thought it was going to be. I thought I was going to have a much higher resolution. I thought I was going to see every blade of grass. How do we inform the customer? That's not an easy thing. The reality is that if you have discrete graphics, you can play a lot of games. It's just a question of the experience. How do we message that to the customer? That's not an easy nut to crack, but that's one we're going to work with the PCGA to figure out if we can get an alignment on, especially for the freshman enthusiasts. They want a certain experience, but they really don't know [how it works]. How do we educate those guys so that they don't have to go digging into a forum twenty threads deep to kind of figure out the answer to my question. How can we help them with that? So which do you think is better in the long term for the PC, the Blizzard or Valve route of aiming for as wide an audience as possible, or the Crytek route of pushing the graphical possibilities of the platform? StarCraft 2 and The Sims 3 are likely to be the biggest PC games this year -- some of the biggest games on any platform for that matter -- and neither requires that "every blade of grass" approach. AL: The way that we look at it is there are always going to be games that are going to challenge you from a spec perspective -- $1000 up to $4,000 depending on the experience that you're after. We feel pretty good that we understand the hardcore gamer, and we understand that they understand the market. It's really the enthusiast and the freshmen enthusiast that are just getting into it, that we want to explain, "We'll offer you something in a lower price span, but I want you to know that that experience is X. As you move up the stack, here's how the experience gets better." For somebody who knows technology, that's pretty easy to understand and pretty easy to get, but for people who are used to consoles, all this configurability is like, "Ah! What do you mean I have all these options? I don't understand! What's all this other stuff going on?" Well, even as a PC gaming veteran, it's more complicated. I remember when it was more like, "Do you have a 486? Do you have a sound card? It works." It's a challenge for the market these days. AL: [laughs] Right. Taking another tack, have you considered something like preinstalling Steam on Dell or Alienware machines? Steam is almost a console-like experience, in that all your games launch from the same place and you obtain them all the same way -- it's very easy to understand. FA: [smiles] PR rep: If smiles are on his face, there's something going on. AL: Content is part of our strategy. That's probably all we can say right now.

About the Author(s)

Chris Remo


Chris Remo is Gamasutra's Editor at Large. He was a founding editor of gaming culture site Idle Thumbs, and prior to joining the Gamasutra team he served as Editor in Chief of hardcore-oriented consumer gaming site Shacknews.

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