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HP cuts server prices amid glut

Hewlett-Packard discounts its entire Windows NT-based NetServer lineup up to 20 percent due to a glut that's prompting price cuts and eroding margins.

Hewlett-Packard (HWP) today cut prices on its entire Windows NT-based NetServer server line up to 20 percent amid a general glut in product that is prompting more price cuts and eroding margins.

Overly aggressive sales forecast for the current quarter have resulted in relatively abundant supplies of Intel-based desktops and servers. Compaq Computer, which is holding the most excess inventory, has already started rolling out discounts and product promotions to weed out excess supply. While pricing pressure seems to be falling most on lower-end systems, no Microsoft-Intel product segment appears to be immune.

HP CEO Lewis Platt and other executives have said that the company doesn't face the same inventory problems as Compaq, but that it will keep pace with any price cuts. Bill Murphy, director of Internet marketing at HP, said that the accumulating price cuts were causing "a disruption in the market."

Combined with price cuts earlier in the month on server memory systems, some NetServers are now 23 to 27 percent lower than they were at the beginning of the month.

The largest discounts come on the 266-MHz Pentium II version of the server. Those models were dropped 12 to 20 percent in price and range in price from $2,629 to $4,899. The NetServer line ranges in price from $1,749 to $4,899.