InformationWeek

PCs For Less

By Bob Francis

C vendors say corporate accounts may see an acceleration in price cuts as major players speed plans to transfer component price reductions to their customers.

Dell Computer Corp. acted last week by reducing prices on its OptiPlex business PCs by as much as 13%. "You begin to talk to Dell about how they can custom-configure systems for you and give you price cuts shortly after their own component prices come down, and you wonder why other companies can't do this as well. But the other vendors seem to be moving in that direction, too," says Britt Mayo, IT manager at Pennzoil Co. in Houston, a longtime Compaq customer.

Dell reaped the benefits of an 18-month price war on PC memory modules when the company's low inventory levels let it beat larger competitors, such as Compaq, IBM, and Hewlett-Packard, to the market with price cuts on newer inventory. Compaq doesn't want that to happen again. "Our new low-inventory method will allow us to pass component costs quickly on to our customers," says Eric Shuster, director of PC options at Compaq. Officials at IBM and HP say they a re adopting similar manufacturing plans.

But Dell isn't standing still. The Round Rock, Texas, direct manufacturer recently opened a new plant in Austin with additional manufacturing efficiencies. Says Michael Dell, chairman and CEO of Dell, "This new plant gives us even more flexibility in terms of pricing."

Richard Zwetchkenbaum, a senior analyst with International Data Corp. in Framingham, Mass., says Dell "has been able to deliver high-quality systems with new technology quickly and at a low price. That's too appealing for many users to pass up."

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