Playing with customer perceptions: How will enthusiasts react to the acquisition?

HP's and Voodoo's idea about establishing an innovative way to develop new PC technologies - and to "redefine the PC, as Ravi Sood put it - may be very convincing on paper, but the strategy is not without risk. The unknown variable is the user, who needs to be convinced to shell about more than $10,000 for a computer and perhaps even more with some unique HP touches, as Ravi Sood believes.

The argument to pay for a VoodooPC that is attached to the HP-brand, even just in the background, could become quite a challenge. Biohazard's Josh Smith mentioned that especially in the enthusiast computer space, "you have to be careful not to destroy the foundation you are standing on."

That foundation, which was described by McKinney as "DNA", could not be more different than what HP represents and time will tell, if such DNA can be simply acquired and successfully integrated into a larger organization.

The center of this challenge and the key to HP's success will be the customer. However, a customer who pays more $10,000 for a high-end system is very different from a mainstream customer. According to Smith, people who buy enthusiast systems are highly loyal, typically "support the underdog," are interested in the very best and value integrity. Through the acquisition, the perception of VoodooPC could be changing, as enthusiasts scrutinize the source they are buying from and VoodooPC could be seen as a part of common corporate America. For example, Smith believes that "any bad customer experience, which everyone had, will now be magnified and more intense for VoodooPC."

The close connection of the VoodooPC founders to their customers have saved them from the accusations of a sellout so far, at least according to the posts on Rahul Sood's blog, but there is a very real chance that HP's mainstream status could be diluting the VoodooPC brand, even if VoodooPC does not lower its prices. Conceivably, the perception of the company could transition from a boutique to a high-end builder, which will not be able to charge the premiums Voodoo demands today.

Of course, HP and VoodooPC see this differently and, perhaps aware of this situation, have taken steps to do everything possible to avoid a scenario in which Voodoo could become a mainstream product. Asked about Voodoo's status inside HP and Voodoo's ability to continue high-end PCs with the components necessary for such machines, Ravi Sood said that "[HP respects] our brand and customer experience and you will not see a VoodooPC in a retail store." He continued: "The brand will maintain the upper, upper, elite status, maybe it will become even more elite."

McKinney added that HP "did not acquire Voodoo for the revenue." He said that HP will not "merge and mess up both brands. Voodoo is a premium brand and will drive innovation from our HP Labs." To emphasize the separation, he said that Voodoo is highly respected within HP and receive unique ability to make decisions on what to build into a performance machine.

The impact on other performance PC builders

Of course, decisions made by Voodoo and HP will begin to have substantial impact on other players in the market. Randy Copeland, founder of Velocity Micro, a manufacturer that pumps out "thousands of systems every month," conceded that he tried to "make some sense out of the Voodoo announcement" when he first heard about. He told TG Daily that while Voodoo is now changing from a company that, due to its size, had no impact on Velocity Micro in the past to an organization that either could "go away as a competitor" or have a negative impact on him, if "HP can pull it off."

"OEM's always wanted to go into the gaming space, so this is nothing new," he said. However, he mentioned that just in case HP will be able to integrate Voodoo successfully, he "will not be sitting still." "We are doing very well right now and have a significant R&D budget to innovate," he said.

In fact, Velocity Micro may be in some sort of a safety zone, as it is perceived as one of the larger performance players and recently announced to move into retail by selling notebooks through Best Buy. If Voodoo will be aiming for the very high-end, the implications for companies such as Biohazard may be more serious. "It's like you are having Wal-Mart moving in at the end of the street," Smith said.

And as long as enthusiast users will perceive Voodoo as part of that Wal-Mart, there may be little change in the industry. Even in the crowded automotive space, there's enough room for those Paganis, Spykers and Koenigseggs to survive with highly-exclusive, low-volume models that try to appeal to buyers who want to be different. But if VoodooPC can become a boutique builder with a Wal-Mart-sized backing then users may not only be looking into a future of some interesting PC and HP into times of growing PC revenues, but small boutique builders may also have to rethink how to compete against an emerging Goliath.