HP Gaming


This case study focuses on how a large company, Hewlett-Packard (HP) works through the strategic, branding, and organizational issues related to its new acquisition, VoodooPC. The case addresses some key issues related to acquisitions, especially how a large established company like HP navigates the sometimes complicated road of integrating a small, yet successful brand like VoodooPC.

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2023 Sage Publications, Inc. All Rights Reserved

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Exhibit 1: Industry Quotes

“Gamers are early adopters and high-performance enthusiasts who can test drive advanced technologies that could someday be broadly applied to other computing capabilities,” says Rahul Sood, Chief Technology Officer of the Gaming Global Business Unit at HP. “HP is focused on putting HP Labs technology into the hands of gaming customers and partners to push the limits of today’s gaming experience and define new possibilities for the future.”

Source: HP Press Release “HP Puts on its Game Face” April 4, 2007, http://www.hp.com/hpinfo/newsroom/press_kits/2007/gamingsummit/

“The bottom line: HP’s Blackbird 002 earns the highest rating this editor has ever given a desktop PC. Its design rivals the Apple Mac Pro, takes risks that benefit your upgrade path, it’s fast, and it’s competitively priced. If you can afford it, and you want a high-end gaming PC, buy this one. End of story.”

Source: Rich Brown, CNET Review of Blackbird 002, September 5, 2007, http://reviews.cnet.com/desktops/hp-blackbird-002/4505-3118_7-32592299.html

“HP may have just announced their groundbreaking gaming rig, but we at the Lab have had the pleasure of playing with one for the last few weeks. Our impressions? Epic. Forget consoles for a second and drill down on this mega powerful monster. In our tests, the Blackbird toasted its PREY benchmark, churning out a whopping 234 FPS. A kick ass liquid cooling system and a ton of overclocked hardware help make that happen. What’s inside? We’ll get to that in a second. But it’s the intricate attention to detail (HP and Voodoo must have analyzed the minds of thousands of gamers) that really made us swoon. Hidden allen wrenches, spades of LEDs, tons of ports, and a few secret compartments made us giddy beyond measure.”

Source: Claude McIver, Wired, “Review: HP Blackbird 002 Gaming PC”, September 6, 2007, http://www.wired.com/gadgetlab/2007/09/review-hp-black/

“That’s great for the wealthy enthusiasts of the world, but of course the reality is most people are unwilling to spend $3,000 let alone $5,500 on a new computer, regardless of how fast it is. Obviously, the Blackbird 002 isn’t meant for everyone. For now we’re left to wonder what will be the next offspring of HP’s VoodooPC acquisition. We know that a notebook is in the works, but we’re a lot more interested in seeing what they can come up with in the entry level and midrange gaming enthusiast markets.”

Source: Jarred Walton, Anandtech, “HP Blackbird Revisited” October 2, 2007, http://www.anandtech.com/show/2343

Exhibit 2: Blackbird 002 Photos


Source: HP.

Exhibit 3: HP Lab Technology Being Explored by HP Gaming

In collaboration with HP’s Global Gaming Unit, researchers have taken some of their most promising projects and turned them into gaming prototypes. Among these are:

“Panoply: a high-resolution, curved display that fills your field of view using multiple, inexpensive projectors that can make the single-player game experience compellingly immersive. Users calibrate the system with an automatic, camera-assisted process, which avoids the need for precise projector aiming. Beyond gaming, Panoply could be used for remote collaboration, home theater or scientific visualization. It is being considered for use in HP’s Halo telepresence product.

Mscape: a technology that allows multiple users to play a fantasy game in a real-world space on a variety of different mobile devices. Imagine a group of friends in a park—Mscape would let them overlay onto the park a virtual world where certain trees, perhaps, are mapped to hide treasure, a café becomes a castle, or fairies appear at predetermined points to reward players, change the rules or send everyone onto their next task.

Misto: put a high-resolution touch screen into a coffee table and what do you get? A realistic-looking digital aquarium, for one thing. But you can also play digital poker or backgammon with your friends. Or even your favorite old arcade game—Pong anyone? Misto is a research project that explores the social dynamics and fun that result when multiple users get together to play games in the same place.

Pluribus: a popular trend in computer gaming is watching master players strut their stuff. Today it is possible to project digital soccer or football at a scale that makes people feel like they are at a real game. But very bright, very large digital projectors are expensive, and existing multi-projector systems require costly, time-consuming manual tweaking. Pluribus uses multiple basic digital projectors to quickly and automatically create a single, large, high-resolution and super-bright image at a much lower cost than comparable systems. It is the only multi-projector system that automatically delivers vivid image quality, no matter how the projectors are configured.”

Source: Excerpted from http://www.hpl.hp.com/news/2007/apr-jun/gaming.html.

Exhibit 4: Interactive Entertainment Market Opportunity as Identified by HP


Source: HP.

Exhibit 5: Market Segments for Gamers

  • Power gamers represent 11 percent of the gamer market but account for 30 cents of every dollar spent on retail and online games.
  • Social gamers enjoy gaming as a way to interact with friends.
  • Dormant gamers love gaming but spend little time because of family, work, or school. They like to play with friends and family and prefer complex and challenging games.
  • Leisure gamers spend 58 hours per month playing games but mainly on casual titles. Nevertheless they prefer challenging titles and show high interest in new gaming services.
  • Incidental gamers lack motivation and play games mainly out of boredom. However, they spend more than 20 hours a month playing online games.
  • Occasional gamers play puzzle, word, and board games almost exclusively.

Source: Parks Associates, “Survey Reveals U.S. Gamer Market is Diversifying,” http://www.parksassociates.com/press/press_releases/2006/gaming_pr4.html

Exhibit 6: Selected Top 10 Industry Facts by ESA (Entertainment Software Association)

  • “U.S. computer and video game software sales grew six percent in 2006 to $7.4 billion—almost tripling industry software sales since 1996.
  • The average game player is 33-years-old and has been playing games for 12 years.
  • Thirty-six percent of American parents say they play computer and video games. Further, 80 percent of gamer parents say they play video games with their kids. Sixty-six percent feel that playing games has brought their families closer together.
  • Thirty-eight percent of all game players are women. In fact, women over the age of 18 represent a significantly greater portion of the game-playing population (31%) than boys age 17 or younger (20%).
  • In 2007, 24 percent of Americans over the age of 50 played video games, an increase from nine percent in 1999.
  • Forty-nine percent of game players say they play games online one or more hours per week. In addition, 34 percent of heads of households play games on a wireless device, such as a cell phone or PDA, up from 20 percent in 2002.”

Source: Excerpted from Entertainment Software Industry, “Industry Facts,” http://www.theesa.com/facts/index.asp

Exhibit 7: Dell’s Gaming Efforts (Excerpt from Ars Technica)

“Even after acquiring Alienware, Dell’s development of high-end gaming and entertainment systems targeted primarily at gamers continues. At a press conference in Los Angeles, the company announced three new machines, all of which are a far cry from the computer maker’s usual budget, beige box systems. There’s a new desktop, a laptop, and something in between.

First up is the Dell XPS 700 which is Dell’s latest gaming offering…. The XPS 700 comes with a very fast Pentium—either a dual-core EE965 running at 3.73 GHz, a 3.6 GHz Pentium D 960, or a 3.8 GHz Pentium 4…. The XPS 700 starts at US$3,520 with the dual-GPU configuration.

The Dell M1210 is nothing to write home about…and starts at US$1,300.

Perhaps the most interesting member of the new triumvirate launched yesterday is the XPS M2010, which in some ways hearkens back to the days of the giant ‘portable’ computers…. The XPS M2010 starts at about US$3,500, but I was able to get the price up to US$4,450 (if you go with the US$3,500 4 GB RAM option, you can get it to eight grand).

While the M1210 laptop is more typical of Dell’s usual fare, the XPS 700 and XPS M2010 are a definite step away from its typical, low-priced offerings. The PC maker has offered ‘high-end’ PCs before, but seldom has it gone out of its way to introduce new models with as much fanfare as these. Although it remains the #1 PC maker in the world in terms of units shipped, it has seen its growth begin to lag the rest of the market. In particular, it has seen increased competition in the US market from the likes of HP, Lenovo, and a surprisingly resurgent Gateway.

…. The market for US$3,500 gaming rigs isn’t that large to begin with, so does it make sense for the company to risk cannibalizing sales from another division? Apparently Dell thinks so.”

Source: Eric Bangeman, “Dell Continues to Lurch After Gaming Market,” Ars Technica, June 1, 2006, http://arstechnica.com/news.ars/post/20060601-6960.html

Exhibit 8: Gaming Market Segments


Source: Yuanzhe Michael Cai, “Electronic Gaming in the Digital Home: Gaming Advertising,” Parks Associates, 2Q 2007.

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2023 Sage Publications, Inc. All Rights Reserved

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