Who pays $2,800 for a gaming computer? Hard-core gaming enthusiasts, that's who. Alienware, a computer hardware company that specializes in custom PCs with the latest video chips and sound cards, sells almost 15,000 units a year. In 2001, the company posted $28 million in sales and expects to more than double that, to $70 million, this year. Nelson Gonzalez, Alienware's co-founder and CEO, says that gaming enthusiasts typically own one or more gaming platforms and, on average, buy a new PC every two years.
In 2001, PC game sales reached $6 billion, up from $5.4 billion in 2000, according to the Port Washington, N.Y.-based NPD Group, a global marketing company. Video game sales for the Microsoft, Sony and Nintendo platforms grew to $9.4 billion, up 43% for the year because of the introduction of Microsoft's Xbox and Nintendo's GameCube.
Gonzalez says that unlike Dell and Gateway, which market bare-bones systems that customers can upgrade, Alienware puts all the bells and whistles in its flagship computer, aptly called the Area-51. It sells for about $2,750. If a customer wants a more basic system, Alienware subtracts components. "We push the market in terms of hardware," says Gonzalez.
Gonzalez, 36, and co-founder Alex Aguila, 34, used $13,000 in savings to start Alienware in a Hialeah garage in 1996. Both were gaming enthusiasts who worked in the medical industry. The quirky name, Alienware, came from Gonzalez's fascination with the alien conspiracy genre. It's been a plus for the company, which plays up the concept with its alien logo, metallic colors and slogans, such as "the invasion has begun."
In addition to serving gaming enthusiasts, Alienware is also building computers for "non-linear editing," in other words, digital video editing. "They need a machine to edit their film," says Gonzalez. "That market is growing."
Now the company is taking its computers into the mass market. This spring Alienware signed a deal to put demo computers in Best Buy. Alienware will still custom-configure the systems and ship them from its Miami facility.
As Alienware ramps up sales, Gonzalez concedes that cash flow will be a challenge. Late last year the company, which has been profitable for the past three years, began looking for venture capital. When Gonzalez and Aguila saw how much equity they would have to give up, they decided to go it alone with the help of their Miami bank.
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