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HP, Compaq in cheap bundle battle

Compaq ships consumer printers to challenge Hewlett-Packard's strategy of bundling peripherals with low-cost PCs.

Compaq Computer has begun shipping consumer printers that will come with a rebate when purchased with low-cost PCs, as part of an effort to challenge Hewlett-Packard's strategy of bundling peripheral devices with computers.

Hewlett-Packard is now offering a consumer PC bundle for $999 which includes a monitor and a rebate of $150 with a printer.

Compaq is expected to offer similar deals. The Houston-based PC giant will get low-end inkjet printers from Lexmark, according to a Compaq spokesman, who said details of the strategy will be announced on May 19. Compaq previously competed in the high-end printer market in the early part of the decade but left because of broad losses.

HP, the printer market's overwhelming leader, has lately been bundling its consumer Pavilion models with printers and other devices. The strategy has helped it become No. 2 in the home PC market.

With the purchase of HP Pavilion 3265 or 8250 consumer PC models, a monitor, and one peripheral from a selection of printers, scanners, or multifunction devices, consumers can get a $100 to $150 rebate.

At Circuit City, for instance, a system with 233-MHz Pentium MMX, 32MB of memory, a 2.1GB hard disk drive, a CD-ROM drive, modem, 14-inch monitor, and color ink jet printer is being advertised in some areas for $999.

"I think [Compaq has] recognized that HP is in a unique position in this business," said Jef Holove, communications manager for Home Products Division, of HP's peripherals product lineup. Customers are becoming more interested in going to just one company for service and support needs, he said.

Consumers who purchase a Compaq Presario 2254 or 5000 model along with a 14-inch monitor and a color ink jet printer will be eligible for a $75 rebate, according to Twice, an online trade publication. The purchase of a larger monitor will bring a bigger rebate.

Twice also reported that Compaq will offer a 15-inch flat-panel monitor for $999, an unprecedentedly low price that breaks the $1,000 price point before most analysts had expected, and new PC models based on Advanced Micro Devices K6 processors.