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Compaq cuts server prices

Compaq reduces prices by as much as 22 percent while boosting memory configurations, in an effort to stay in front of the competitive PC server market.

Compaq Computer (CPQ) reduced prices on low-end and midrange servers by as much as 22 percent while also boosting standard memory, in an effort to stay in front of the competitive PC server market.

The Houston manufacturer cut the cost of its ProSignia 200 and ProLiant 800, 1600, 2500, 3000, and 5500 models, designed for office groups ranging to 100 users. The price action is Compaq's first in the PC server segment (servers running on Intel processors and Microsoft's Windows NT operating system) since November, when it last introduced new models.

Compaq also said it would double the standard memory configuration of ProSignia and ProLiant servers (with the exception of the 5500) purchased by the end of April, in effect passing along savings owing to the continued doldrums of memory pricing. For example, a ProLiant which normally comes with 32MB of memory will come with 64MB.

In a related move, Compaq cut prices on 4.3GB and 9.1GB hard drives by as much as 20 percent. Not all of Compaq's servers come with a built-in storage.

Compaq heads the growing PC server market, claiming a 32 percent share worldwide over the third quarter of 1997, according to International Data Corporation. Sales grew at a rate of 54 percent during that period, outpacing the overall market rate of 43 percent but remarkably losing ground to Dell and IBM.

Today's cuts are designed to preserve that lead, a Compaq spokesperson said. "Compaq always tries to be the price-performance leader," the spokesperson said.

The price cuts may also presage the coming introduction of Intel's "Deschutes" Pentium II chip to the ProLiant line, an industry source suggested. All of the ProLiants currently incorporate the aging Pentium Pro processor, which has a top speed of 200 MHz but is capable of "four-way" processing. The Pentium II can be faster but limits servers to "two-way" configurations. The Deschutes chip, due this spring, will be a four-way processor.

A ProSiginia 200 with a 233-MHz Pentium II chip, a 4.3GB hard drive, 64MB of memory, and 512KB of secondary "cache" memory, falls to $2,059 from $2,640, a 22 percent price cut.

Higher up the food chain, a ProLiant 2500 with a 200-MHz Pentium Pro chip, and 64MB of memory drops from $4,310 to $3,750. A similarly configured ProLiant 3000 with the addition of 512KB of cache memory now costs $4,430, down from $4,763.