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HP Tries To Push PC Sales

It's introducing an upgrade plan that could reduce companies' cost of replacing older machines
One day after reporting flat PC sales during its most recent quarter, Hewlett-Packard said Wednesday it's introducing a new upgrade plan that could reduce companies' cost of replacing them.

HP will take as much as $40 off the price of new corporate desktops and up to $110 off the price of PCs aimed at small and midsize companies under a new "PC migration service bundle" program. Companies can pay as little as $689 for a new d530 desktop that lists for $730, and $389 for a d330 machine, normally priced at $499, under a sales program in which HP installs the new machines and credits customers for the trade-in value of old PCs. The incentive is available directly from HP or through resellers.

HP also introduced IT services designed to assess companies' desktop security, and set up PCs in a wireless network.

"Gone are the days of the beige box," said John Thompson, VP and general manager for HP's commercial PC business in the United States, Canada, and Latin America, at an event in San Francisco to introduce the programs and new business PCs.

Computer makers and No. 1 chipmaker Intel have been desperately trying to convince companies to upgrade their aging fleets of desktop PCs, as sales of the machines have declined after a buying flurry in the '90s. During HP's second quarter ended April 30, its personal systems group earned $21 million, compared with $33 million during the first quarter. Revenue was $5.1 billion, essentially flat from the prior quarter.

Thompson says 164 million business PCs worldwide--and about 30 million in the United States--are more than three years old. That's about 40% of the installed base. With Microsoft preparing to end support for some older versions of Windows this year and hardware failure rates reportedly higher on machines older than three years, buying new PCs could yield productivity improvements that offset their cost. Of course, "not everyone looks at it that way," he says.

Gartner last week predicted that second-quarter PC shipments would increase 6.4% from a year ago, to 30.7 million units worldwide. But the market researcher revised its full-year estimates downward, to 136.9 million units, a 6.6% increase from last year. In February, Gartner predicted a 7.9% rise in shipments.

HP, which merged with Compaq a year ago, has been under pressure from low-cost leader Dell Computer to lower its PC prices. Thompson says HP has reduced PC prices by 10% since the merger was completed.