The 22-Karat PC Voodoo's high-end personal computers deliver gold-plated profit margins by focusing on gamers.
(Business 2.0) – Folks who are serious about blasting through Half-Life or Battlefield Vietnam aren't going to do it on some $499 Costco special. They want a drool-worthy machine with at least one 3.4-gigahertz Pentium, a gigabyte of RAM, a 256-megabyte graphics card, and THX sound. And just to let everyone know they are really 1337--hackerspeak for elite--they want 12 layers of gleaming auto paint protecting the case. The price? About $5,000.
Who would pay that kind of money for a PC? Enough customers, apparently, to make a small Canadian outfit called VoodooPC one of the fastest-growing computer makers in the world. The 13-year-old company, owned by brothers Rahul and Ravi Sood, has carved out a niche selling to a rarefied clientele willing to pay $19,000 for dual processors, two video chips, and a liquid cooling system. It even sold a 22-karat-gold-plated desktop for $52,000.
Voodoo's origins are anything but gilded. Rahul started the company after dropping out of college in the fall of 1991. "Mom and Dad wanted me to be an accountant," he says, "but I wasn't into it." He preferred playing Wing Commander. To make ends meet, he launched a firm that built workstations for Alberta government institutions and companies. There was just one problem: He and his employees had more passion for playing Command & Conquer on the powerful boxes than for selling them.
Voodoo probably would have remained a no-name local PC maker if Rahul hadn't roped his older brother, Ravi--who did please his parents by becoming an accountant--into running the company. Ravi's idea: Focus on one key area. Rahul's response: Rebrand Voodoo as the PC company for the hard-core game geek.
It worked. During the past four years, Voodoo's sales have zoomed past $20 million. While that's only five hours of sales for Dell, the big dogs want in on the $1 billion high-end PC market. For good reason: The profit margin on your average PC has slid to 10 percent, while the Soods' gaming machines get as much as 30 percent.
Will the arrival of the megacorps drive off Voodoo and competitors Alienware, Falcon Northwest, and Hypersonic PC? The Soods admit that they can't compete on price. But given this market's low volumes, the economies of scale don't favor a Dell or a Hewlett-Packard either. And the Soods do have a fighting chance of out-Delling Dell with customer service.
How? When you finish customizing a Voodoo computer online, a company engineer calls to ask detailed questions: How many hours will you spend on the machine? What games do you play? Will you watch DVDs on it? Voodoo wants to make sure that the machine fits the buyer like a Savile Row suit. Rahul says, "We sometimes try to undersell you." That approach builds trust and positive buzz in the tight-knit gaming community.
And that's just the beginning. Voodoo claims that it will go to the ends of the earth to service its machines. Like the time in 2002 when it sent a tech support guy all the way to Sydney to fix a PC. Rahul says Voodoo won enough word-of-mouth sales from that one visit to more than justify the $828 plane ticket. -- OM MALIK