Dell's (DELL) laptops increasingly seeing niche gamers

Dell, Inc. (NASDAQ: DELL) is just starting to get a foothold on its turnaround, but until that is in full swing (possibly later this year), the company is at least seeing the increasing demand for laptop computer systems lead to increased demand for high-end gaming computers. These PCs are generally top-end systems that feature the latest in graphics hardware plus the best processors, both of which are needed for the latest in 3D computer games.

Although Dell's XPS high-end desktop product segment (along with its Alienware brand) are both sought after among the gaming crowd, competitors are not standing still either. Larger rival Hewlett-Packard Co. (NYSE: HPQ) has both the Blackbird and Voodoo gaming PC segments and knows that fatter margins are to be had in this niche PC segment as well. With the average desktop computer selling for under $1,000 these days, computer makers are anxious to try and relive a little of older times by selling these high-end desktop systems for more than razor-thin margins. The good news is that they're succeeding, but at the same time laptop systems are cannibalizing traditional desktop PC sales as the normal performance gap between the two segments continues to narrow.

Is the future holding only laptop systems for HP, Dell and others? As the head of Dell's Alienware group puts it, "We always knew instinctively that if we could come out with a notebook as powerful as a desktop, it would be greatly accepted and would probably overtake our desktops." That may be happening soon, and as margins evaporate into thin air on normal desktop systems (and become lower on standard laptop systems too), manufacturers will need to seek out these lucrative niches, and even build new ones that customers don't yet realize they need.