No. 1 PC maker Dell said Wednesday it bought boutique computer outfit Alienware in a move the companies said would boost their position in the growing market for gaming PCs.

Based in Miami, Alienware will become Dell’s first wholly owned subsidiary, said Bob Pearson, Dell’s vice president of corporate communications. The price wasn’t disclosed.

Mr. Pearson and Alienware co-founder and CEO Nelson Gonzalez vowed the smaller company’s products won’t change. In addition, they said Dell’s gaming line won’t compete with Alienware’s products, which have a cult-like status.

Alienware enjoys the same reputation with technophiles as do certain underground bands among music aficionados. Hard-core gamers and others who like computers with high-end graphics are proud to own machines unfamiliar to the common masses.

There’s always the risk that Dell’s purchase could erode Alienware’s fan base.

“Dilution of the Alienware brand is a big concern,” said Current Analysis analyst Samir Bhavnani. “Alienware has a Ferrari image, while Dell has a Ford image.”

Mr. Pearson said Dell, based in Round Rock, Texas, will allow Alienware to operate independently, maintaining control of everything from development to pricing. Mr. Gonzalez will remain CEO. But such good intentions might not last, Mr. Bhavnani warned.

“When a company goes from private to public, there’s a shift of metrics” and priorities, the analyst said.

To be sure, Alienware has likely been preparing for this day a long time. In the February 13 issue of Red Herring, Mr. Gonzalez said the company was ready for outside money, possibly an IPO (see Alienware’s Corporate Push).

“We’ve grown at a tremendous rate. If we want to expand into the commercial space, we need bigger investment in our infrastructure,” Mr. Gonzalez said. The company reported sales of $173 million for the fiscal year that ended last September.

The CEO posted a lengthy, somewhat emotional letter on Alienware’s web site soon after the news was announced.

“We believe that this acquisition will offer our customers the best of both worlds—an Alienware that takes advantage of the world-class business practices and operational efficiencies [of Dell] while preserving the DNA of the Alienware brand and product strategy portfolio,” Mr. Gonzalez wrote.

No Dell Logos

He added that there won’t be any Dell logos on Alienware machines. That will make the company stand apart from Lenovo, which added its name to IBM’s ThinkPads when it acquired Big Blue’s PC division (see Lenovo-IBM Deal Finalized).

On the Dell side, Mr. Pearson insisted that Alienware sales won’t eat into sales of his company’s XPS gaming line.

“This is an important growth category,” Mr. Pearson said. “[Cannibalism] is not a risk since it’s a growth category.”

The Dell spokesperson said there won’t be a split in product classification with Dell being lower end than Alienware. But the companies may end up competing in certain spaces.

Alienware last fall started pushing new models of laptops for businesses. It saw government contracts rise from $8 million in 2004 to $18 million in 2005.

But Dell’s strength is the commercial space, Mr. Bhavnani pointed out, which could put a damper on Alienware’s expansion into other markets.

Different Styles

Regardless, the companies and the analyst all noted that Alienware’s and Dell’s core customers are as different as a racecar driver and a soccer mom would be in the auto market. Prices—Alienware’s desktops start at about $900, the same as Dell’s highest-end machine—aren’t expected to change immediately.

Dell’s strong connections with suppliers could help lower Alienware’s costs, which in turn could increase its profit margins.

Mr. Gonzalez hinted at even deeper cooperation between the two.

“Alienware and Dell have tremendous optimism in the future of the PC platform as the center of the digital home,” he said, alluding to the “controller-slash-media center” he told Red Herring about last month.