U.S. technology giant Hewlett-Packard is conjuring up a little black magic by bringing Calgary-based computer firm VoodooPC into its fold.
Voodoo builds high-performance, highly personalized personal computers that are generally used by gaming fans or professionals who require more powerful systems.
As part of the deal, anticipated to close in 60 to 90 days, Voodoo and HP will create a new division focused solely on producing desktop and notebook PCs for the gaming industry under the HP brand.
But the Voodoo line itself will retain its existing marketing model - being custom built to a user's specifications - and there are no current plans for these machines to enter HP's retail stream.
|File photo by Larry MacDougal, Business Edge|
|VoodooPC founder Rahul Sood says his company will remain true to its Calgary roots despite the new relationship with HP.|
HP plans to make VoodooPC the centerpiece of its gaming strategy, says Phil McKinney, vice-president and chief technology officer for HP's Personal Systems Group.
"This will bring together the high-end gaming experience of VoodooPC with HP's research and development, global distribution and technology innovation."
Voodoo co-owner and founder Rahul Sood will become chief technologist of the unit, while co-owner Ravi Sood will become the unit's director of strategy. Other terms of the deal, including the purchase price, were not disclosed.
Gaming is quickly becoming a lure for major PC companies, with Dell recently purchasing Miami-based Alienware, another high-end computer maker known for best-of-breed products.
HP reported revenue totalling $90 billion US for the four fiscal quarters ended July 31, 2006.
In 2005, computer gamers in the U.S. spent more than $20 billion on their hobby.
That compares with $9 billion spent on movie tickets and $7 billion for rentals, according to the Consumer Electronics Association.
U.S. technology and market research firm Forrester Research says PCs remain the most popular gaming platform.
An estimated 40 per cent of all American adults play video games on a computer or a console, an Associated Press-America Online poll said earlier this year.
But even though the acquisition is likely to increase the reach of the Voodoo brand, Ravi Sood says the company will remain true to its Calgary roots when its expansion plans are unveiled.
"We will stay in Calgary. We will be hiring more people but we can't announce the number until the deal is closed," says Ravi. "But I can say we are looking for very passionate people doing it (their job) for the love of technology."
Voodoo, which was started 15 years ago, was initially financed on a credit card. Five years ago, seeing the potential in his brother's operation, Ravi joined the business.
"We decided to take the business and go global with an actual brand strategy and we funded it privately between myself and my brother," says Ravi.
"Our popularity grew worldwide and there was more demand for our machines than we could supply. Part of it was because we kept the brand as an elitist brand on the cutting edge of innovation. We chose to grow based on pure innovation."
The company employs about 30 to 40 people, with more than half of its staff focused on research and development.
"We've had many opportunities, especially in Calgary, for investors to jump in and grow the business. But the challenge is, our vision is, to reinvent the machine and push the boundary of what the computer can be," adds Ravi.
"HP is one of the largest patent holders in the world. HP Labs, these guys crank out at least 16 patents a day. My brother and his team wanted to hone in on these ideas and bring them to the gaming market," says Ravi.
The deal also comes at a time when HP is under intense scrutiny for investigative practices to plug media leaks from its boardroom, a situation that has seen the resignation of a number of senior officials.
But Randy Copeland, president and CEO of Velocity Micro Inc., a Richmond, Va.-based manufacturer of custom-designed computers, workstations and servers, says he doubts that the HP scandal had anything to do with the timing of the VoodooPC acquisition announcement.
"I assume it was coincidental that the announcement was made the day Patricia Dunn (now a former HP chairwoman) testified before Congress. I'm sure that deal was months (and months) in planning. I'm sure it was a coincidence that it hit that day," says Copeland.
Copeland says it's likely that prestige was what HP was looking for when it decided to make the deal.
"I don't think its going to have any significant effect. The fact of the matter is Voodoo is an extremely small player in the marketplace. I have respect for their products but they were an extreme niche player," says Copeland.
HP is getting a couple of smart guys, he adds.
"They've bought intellectual property. But it's not going to be a revenue generator for HP," he says. "It's an opportunity to pick up a boutique gaming brand inexpensively."
(Laura Severs can be reached at firstname.lastname@example.org)