Dell to ditch XPS gaming PCs for Alienware

It is an overdue but risky move. Alienware's colorful boxes and slick technology catapulted it to the top of the now about $12 billion gaming-PC market. However, under Dell, which continued to market its XPS gaming machines alongside the acquired machines, Alienware fell to earth. "Alienware lost some mojo," says Ted Pollak, a gaming analyst at market watcher Jon Peddie Research in Tiburon, Calif.

Dave Kemick, a 20-year-old University of Pittsburgh student, says he quickly ruled out Alienware as he started looking for a gaming machine earlier this year. "Others have taken their place," he says of Alienware. Arthur Lewis, the recently named head of Dell's gaming-PC division who joined the company with Alienware, says the brand remains a "premier" name in the market. The consolidation allows Dell to put its marketing might under a single name, he says. Among other changes, Dell plans to end XPS marketing campaigns such as the ongoing tie-in with the popular computer game World of Warcraft. Dell doesn't disclose sales of the line. The gaming business is important to the PC maker's turnaround. Dell identifies gamers as a group whose purchasing decisions influence other PC buyers.

Gaming-PCs, which do double-duty as email, word-processing, or Internet machines, also have lost some ground to less-expensive game consoles. Sales of the $300 to $500 consoles from Nintendo Co., Microsoft Corp., and Sony Corp. last year for the first time pulled alongside sales of gaming-PCs. This year, console revenue is expected to surpass that of the PC-based game machines, says Mr. Pollak.

Dell in 2006 bought Miami-based Alienware, and H-P followed suit by buying VoodooPC, a smaller company also known for innovative designs. The two hoped to use their clout to consolidate a market dominated by small companies and do-it-yourself marketers.