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Gaming Segment Is Reviving PC Biz

3/08/2004 02:00:00 AM Eastern

PC gamers may not comprise the majority of PC users or even a small minority, but these consumers, mostly guys, are playing a role in the revitalization of the PC industry.

While PC game titles have always accounted for the majority of software sales, new games, like the graphically intense Call of Duty, may help spur PC sales as gamers upgrade their systems so they can properly enjoy these games, said several PC vendors. These new games with their movie-like appearance and surround sound audio require high-powered CPUs, graphic cards and, to a lesser extent, a mobile platform. All of which gives this class of PC user even more reason to go out and buy a top-of-the-line personal computer.

Quantifying this potential increase is difficult because winnowing out the high-end PCs from those being bought for gaming is almost impossible, said Rick Schwartz, Gateway's senior product manager, consumer solutions. The best way is to look at machines equipped with high-end graphics cards, he added.

"There are only a small number of SKUs accounting for all the sales volume," he said, "adding gaming PC sales are probably similar to what is being experienced by Windows Media Center-equipped PCs."

Steve Baker, The NPD Group's, Port Washington, N.Y., IT research director, said the best way to estimate the size of the gaming PC market is to consider the fact that most of them cost in excess of $1,200, and about 8 percent of all PC sales take place in this price range. Of that 8 percent, a good chunk goes toward Media Center units and conventional high-performance computers, he added.

Schwartz has little doubt sales will increase, possibly in the high double-digit range this year. Although, he added, putting a finger on growth is difficult. Baker agreed, saying that calculating the growth is also difficult.

Tom Markworth, Hewlett-Packard's product manager for consumer computing, said the category is hot and should remain so.

"There are a number of factors that lead us to believe that this category will show solid growth through 2004. First, the PC category as a whole is much stronger than it has been in the last few years. Second, the video card industry will move PC gaming one step closer to cinematic quality realism with new product releases. Third, some highly anticipated titles, such as Doom III and Half-Life 2, will bring gamers into retail stores and cause many to consider new systems. Finally, the hardware performance of standalone gaming machines is starting to lag behind that of PCs," Markworth said.

Gateway is not the only PC vendor that is vying for the PC gamer dollar. A quick rundown of PC vendors shows all the top brands at least dabbling in the gaming segment. Dell has its XPS desktop and notebook lines; Hewlett-Packard launched the Compaq CPQ X last year, and eMachines will have a notebook that uses AMD's 64-bit Athlon processor, making it suitable for running games.

These products are competing with platforms from dedicated gaming companies like AlienWare and VoodooPC.

Like AlienWare and VoodooPC, the top tier manufacturers are not looking to attract the consumers who are willing to crack open and upgrade their own PC or build one from scratch. Instead HP and the others want to deliver a decently priced, high-powered system that will give someone instant access to the gaming world.

"Through the Compaq X test program, we learned that there is a significant market for pre-configured, high-end gaming systems. As you know, there will always be a number of gamers who will prefer to build their own systems. However, we learned that many gamers will consider and buy the Compaq X," Markworth said.

Baker said the entry of the top tier PC vendors into the gaming niche, and other segments, is smart.

"The niches have better margins and higher average selling prices, and when the big guys pay attention, it can help the category grow," he said.

Toshiba, which only makes notebook computers, is considering the category. This should come as no surprise since notebooks capable of playing even the richest computer games are now available at a reasonable cost.

"The most unexpected development in the gaming category is the popularity of gaming laptops. People now see that the laptops can deliver a good gaming experience," Schwartz said.

HP has not come out with a gaming-centric notebook, but Markworth said it would only be natural for the company to consider such a move.

"While we have no specific plans so far, we recognize that notebook components are becoming incredibly powerful and more gamers have a need to take their machines on the road. HP is the largest consumer notebook company in the world, so it only makes sense that we begin to consider whether or not to develop a gaming-centric offering in this space," he said.

Notebooks are hot because the portability factor is also high on many gamers wish list. Primarily because many go to LAN parties where they gather with friends and network their computers to play multi-role games, so having an easy to carry computer is a huge selling point, said Gateway's Schwartz and a Dell company spokesman.

Portability is also giving vendors more reason to look at alternative form factors for their desktop line. Shuttle Computers, which is a maker of chassis and motherboards for people interested in putting together their own computer, intends to roll out a line of shoebox-sized models packed with an Intel Pentium 4 with HyperThreading processor, a high-end graphics card, 1GB of RAM and 7200RPM speed hard drive.

Another category being driven by the gamers is "Modding," or modifying, a PC with accessories like lights, clear side panels and even memory cards that light up when operating. Unlike actual computer upgrade components that improve a device's performance, like heavy duty fans and power systems, these are strictly for show and do not require the end user to directly handle any of a computer's important components.

Several vendors said retailers should expect to see more "Modding" features built into computers. That is similar to what Dell is doing with its XPS notebooks that have removable "skins" for the notebooks casing.

"We want to go after the folks who are a step down from the hard core gamer who wants to build his own computer," the Dell spokesman said.