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There was a lot of babble at this year’s E3 Electronic Gaming Expo in Los Angeles apropos M&A and alliance in the gaming space. But the allocution didn’t focus so abundant on who may be acquired next; rather, it concentrated on the almanac $15 billion account of deals done in the gaming amplitude aftermost year and what appulse all that money and alliance ability accept on the industry in the abreast future. We now accept nongaming tech giants, like Amazon and Facebook, absolutely vested in the gaming apple for the aboriginal time. The catechism again is: Can the companies they acquired accumulate innovating while now bound central the abdomen of a accumulated beast?
If history is any guide, addition and adroitness go abroad the additional a accord is done. The accepting aggregation tends to focus all its assets into monetizing the new technology it aloof acquired (usually for way too abundant money), so that it ends up falling abaft the curve. Eventually, accepting aggregation begins to apprehend that the technology or artefact it purchased is aback obsolete. The new assemblage is shut down, and a few years afterwards the company’s accountants agilely address bottomward the bulk of the accretion to zero.
While there are affluence of examples of tech M&A disasters (AOL and Time Warner, Myspace and News Corp, Skype and eBay—and now Microsoft) there are alone a few that can affirmation the accord was in any way absolutely acceptable for the new aggregation or for the industry.
Alienware, a architect of gamer-focused PCs, though, may accept airy that abrogating trend. Aback it was acquired by Dell a little over nine years ago, abounding in the gaming industry saw it as a bruised attack by a banausic association to buy its way into the “cool kids” club. In a way that is absolutely what Dell did, but instead of killing Alienware’s mojo, it seems to accept carefully larboard it abundantly to its own devices. Abundant of its administration backward with the aggregation afterwards the merger, as did its artistic teams.
If you attending at an Alienware artefact you’d be hard-pressed to accretion annihilation abutting it with a Dell. For starters, the company’s conflicting arch logo still dominates as proudly as it did afore the accretion with no Dell logo in sight. The aggregation still designs absolute altered computer chassis, like the triangle-shaped Area-51 desktop—which can atom through Windows 10 or any bold in encounters—to its tiny Alpha gaming desktop, which looks and plays added like a gaming animate than a PC. With its latest series, the aggregation has congenital the absolute gaming laptop and has continued its account by alms a stand-alone cartoon agenda that can bung in to the laptop aback added gaming ability is needed.
But the gaming apple is alteration rapidly. If Alienware is to break relevant, it needs to abide innovating—on its own. For example, its Alpha desktop is a abundant footfall avant-garde in abutting the animate gaming apple to the PC world, but it is ambiguous as to whether the Windows OS was absolutely needed. Without it, Alienware could lower the bulk of the Alpha, possibly low abundant to attempt in bulk with Microsoft’s Xbox [Fortune-stock symbol=”MSFT”] or Sony’s Playstation [Fortune-stock symbol=”SNE”]. Windows 10 will allegedly be added “gamer friendly” than its Windows 8.1 predecessor, but I’ll assets acumen until the new OS is clearly appear in a few weeks.
Frank Azor, who active up Alienware for Dell was the baby company’s fourth agent aback in 1998. We sat bottomward to allocution about how Alienware was been able to break creatively absolute aural the Dell ecosystem and how Dell’s accumulation alternation helped it become the baton in the gaming PC market. We additionally discussed the company’s approaching plans, from VR laptops to alike smaller, added able computers. The afterward account has been abridged and edited for publication:
Fortune: Tell me about aback you were aboriginal acquired. What was the activating with Dell at that point, and breadth did you end up?
Azor: So aback we were acquired in 2006, the antecedent action was “let’s attempt adjoin anniversary added because Dell had their XPS gaming artefact line,” but breadth Dell’s strengths were, we capital to anon booty advantage of that—like accumulation chain, engineering, and a agglomeration of added areas breadth Dell has been best in chic in the absolute industry. So we started amalgam those functions immediately. But it became a little arduous to attempt and abet together.
Well, we were active into issues breadth we capital to aggrandize geographically, and Dell was adverse issues like, “Yeah, well, we appetite to aggrandize with XPS gaming band there, so we can absolutely alone allow to do one.” So we were like, “We can’t booty a backseat. We accept business goals. We appetite to get into new artefact categories.”
So there were limitations to actuality absolutely separate?
There were. So the accommodation was made, “Alright, look, let’s booty XPS, and let’s go accord the gaming business to Alienware, and let’s focus XPS on added areas like exceptional articles and added things. So in 2008, we decided, “We’re activity to now absolutely accommodate with Dell, and we’re activity to become a adept brand, and a band of business aural Dell.”
How did that assignment with Alienware in Miami and Dell in Austin?
Well, anon thereafter that’s breadth we started saying, “OK, let’s move assets over.” A few association from Miami came over, and they started alive in Austin for us. For example, our automated architectonics
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