Although K6 systems were just introduced in June, Digital is already cutting prices up to 20 percent. For example, Digital says a Venturis model with a 200-MHz K6 processor is priced at $1,329.
Digital is the only major PC maker in the United States that is using the K6 processor. The K6 offers performance that is on par with fast Pentium and relatively low-end Pentium II processors from Intel.
"AMD has already been selling at a discount to Intel, and there have been a lot of price cuts in the industry. Basically, this means that Digital is good at pounding on suppliers and getting better prices," says Dean McCarron, an analyst with Mercury Research.
Intel-based systems from Digital are getting price cuts too. The Venturis FX-2 5200M with the 200-MHz MMX Pentium, 32MB of memory, a 2GB hard drive, and a 12X CD-ROM drive will sell for an estimated $1,524, plummeting 21 percent.
The Venturis FX-2 5166 with a 166-MHz "classic" (non-MMX) Pentium processor, 16MB of memory, and a 1.2GB hard drive has an estimated price of $1,034, a 6 percent reduction. Celebris models with MMX Pentium processors are also getting price reductions of up to 14 percent.
Digital has to keep trimming costs on all of its systems to keep pace with the industry. Compaq Computer recently cut prices up to 22 percent on its DeskPro systems, and Hewlett-Packard responded with reductions of up to 24 percent across its entire Vectra family of small-business, commercial, and workstation computers.
Digital says its supply-chain management, as well as a build-to-order manufacturing program with MicroAge, have helped push prices down to levels competitive with the likes of Compaq.
The company says it has also gained efficiencies by reducing the number of configurations it has to hold in inventory and by using common components in as many systems as possible.