GamingNexus: With the PC gaming market so crowded (Dell/Alienware, Voodoo PC, Falcon Northwest, Monarch, etc) and with new companies like HP coming into the market how do you think Velocity differentiate itself from their competitors?I think the reason we’ve had such tremendous success is because I’ve looked through the market and come up with the right mix.
Falcon and Voodoo--no question they build great PC’s, they use the same components we do they have the same meticulous care and craftsmanship that we do.
But I also tried to look and find a little more value for my customers.
I’m very focused on finding value for my customers.
Falcon and Voodoo want to be the Ferrari and Lamborghini of the PC gaming space. I want to be the BMW or the Mercedes, which means that I’ve got fairly exotic and high end systems like those guys do, but I also have the BMW 3 series and we have more mainstream systems.
We do a lot more volume than those guys, which gives us manufacturing efficiencies. For example, the chassis we use are custom built by Lian Li, but it’s not from the ground up a Velocity Micro design. It’s a platform that Lian Li was already making and we went in and tailored it. We put in bigger, quieter fans better air ventilation, better filtration, and kind of made it our own but didn’t have to re-invent the wheel. We buy it by containers. Some weeks we get a container, sometimes it is every other week. But we are doing a tremendous amount of volume and we don’t have to put a fancy paint job on it because it’s an already beautiful aluminum case. All through our purchasing process we find a lot of value there. We run a very tight ship, a very lean operation, we don’t have a lot of fluff or a lot of fat and everybody has to do a lot of jobs here. We do all of those things with the thought of creating a better value for our customers.
If you look back over the years, a lot of the PC Magazine reviews have said it really well. We had a $5400 PC that won and Editor’s choice award over Falcon and Voodoo and in that review they said “Call us Crazy for calling the $5400 PC a value but when you compare it to the $7000 system from the other guys it really is a great bargain” and that’s really where we want to try and stay. We want to be a good value in the ultra high end space.
GamingNexus: Is most of your manufacturing then done in the United States or do you outsource some of it?
No, 100% of everything is done right here in this building in Richmond Virginia. We have a fully integrated facility and in three weeks we’ll be moving to a newer, much larger facility here in Richmond that is 34,000 square feet. It’s going to be state of the art everything. We’ll still do the assembly process as opposed to assembly line, which means that we build one system at a time by one system builder. So it’s the same way the really high end boutique guys do it.
There’s one other thing that I forgot to mention about the differentiation area, and that’s our service and support. Because we are a little bit larger than these other guys (although we still aren’t a multinational OEM), we’ve dedicated and continue to throw resources into our technical support. All of our tech support is 24/7 and is all done in this building here in Richmond, Virginia by my employees who all have previously worked on our production floor. So in order to work in our technical support area you have to have been a production guy on our production floor first. It gives us a tremendous advantage. Our hold times are very short because it’s something that I’m committed to. And when you get on the phone with someone, you’re talking to someone who’s built the PC you’re talking about and really knows what they are talking about. It so dramatically changes the tech support experience. It’s basically an extra set of dedication to our customer that really sets us apart.
GamingNexus: So there’s nobody reading a script out of a database?
No, there aren’t any scripts of any kind other than to say “Thank you for calling Velocity Micro.Hhow can I help you”.
GamingNexus: With the clock speed race between Intel and AMD winding down, where do you see the innovation in PC performance coming from?
I still think we have a long way to go in terms of PC performance as far as I’m concerned. The clock race per se is winding down but I don’t think the performance race is going to end any time soon at all. You know Conroe is coming out in the next few months and the performance on it is tremendous. AMD is not sitting still and they are coming up with new systems that can certainly at least crunch the benchmarks better and I think it’s going to take a while for things to level out again. You have things like the AGEIA processor, the physics processor, things like SLI and Quad-SLI. RAM technology is getting better and there’s a lot more RAM going into systems today. By the end of next week we will exclusively sell DDR2 memory. The clock still continues to be important from a performance standpoint and then it goes back to the other things. You’ve got Blu Ray coming out, you’ve got other new optical technologies coming that are competing. You’ve got graphical technologies that are constantly getting better. Another big important factor is the software. We are getting better and better software, which is going to require more from our systems. More cores, more GPU’s, so I don’t see the PC as finished yet and I see much more improvement coming over the next few years.
GamingNexus: Do you sell more Intel or AMD systems or is it a fairly even split?
At the moment we about 80% AMD and 20% Intel. About two years ago it was reversed and we were 80% Intel and 20% AMD. My expectation is that we’ll move back to at least 50/50 by the end of this summer.
GamingNexus: One of the big stories in the PC gaming world was Dell’s purchase of Alienware. What was your initial reaction when you heard the news? How do you think the acquisition impacts Velocity?
It was major news for us, and it clears the way for us to become the new number one in the boutique space, especially in terms of volume. I think it was a great move for them to partner up, and I don’t bash either of them for the decision. But it does change the way people see Alienware and the way people see Dell, too. It also changes the way people see Velocity. Since that merger was announced, how many national retailers have called us and how many venture capitalists and angel investors, media, have called. The focus/spotlight on us has just been a ten fold increase because basically the Alienware space is going away and being absorbed into just a little blip on the Dell radar screen. So people are coming to us. Or sales have increased dramatically, and like I said those retailers are looking for a way to compete against this juggernaut that Dell is becoming, and we are the clear choice to offer them an easy solution.
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