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Dell cuts notebook, PC prices

The company slashes prices up to 18 percent, reflecting its formidable manufacturing system.

Dell Computer has cut prices on business notebooks and desktops by as much as 18 percent, reflecting its lean-and-mean manufacturing model which continues to bring price pressure to bear on the PC industry.

Dell, like Compaq,

Dell Latitude CPi
Dell Latitude CPi
Hewlett-Packard, and IBM, has become a bellwether for pricing trends as it perfects its direct sales model and just-in-time manufacturing system.

The price cuts on its Latitude line of business notebook PCs make it a price leader in this crucial category.

Dell typically is very price competitive at the high-end and mid-range of the market, but less so at the low end where Compaq and Hewlett-Packard ship more systems.

For instance, the new price for one high-end Latitude model with Intel?s fastest mobile Pentium II chip, puts it below $3,900 for a system with a large LCD screen, a massive 13 gigabytes of hard disk storage, and 128 megabytes of memory.

Systems with these features from other top-tier vendors are typically priced over $4,500 or even $5,000.

Both Latitude notebooks and OptiPlex desktop systems are affected.

In the first half of 1999 price pressure in the business computing market is expected to increase even more, according to Martin Goslar, senior PC market analyst with Cahners In-Stat research group. This is because corporate buyers are now starting to eye models that are similar in price to low-cost of consumer PCs, forcing PC makers to follow suit with their corporate desktops, he notes.

Dell, as usual, is touting its direct sales model as the reason. By selling direct to customers, Dell does not buy its components as far in advance as traditional manufacturers. Products from traditional manufacturers pass through distributors and dealers before getting to customers.

As a result, Dell claims it can take advantage of the latest price cuts. Currently, components have been losing approximately 1 percent of their value per week, according to various sources.

"Our build-to-order, direct business model gives us fundamental competitive advantages, including the ability to quickly pass on...lower component costs," said Brian Wood, vice president and general manager, Dell Enterprise, in a statement.

The sleek Latitude line of notebooks will get the largest price cuts at the high end.

For instance, a CPi D300XT model drops from $4,696 to $3,846, falling 18.2 percent. This comes with an Intel Pentium II processor running at 300 MHz, 128MB of memory, two 6.4GB hard drives (for a total of 12.8GB), and a 13.1-inch active-matrix display.

A Latitude CPi D266XT falls from $3,496 to $3,047, down 13 percent from the previous price. This packs in an Intel 266-MHz Pentium II processor, 96MB of memory, a 6.4GB hard drive, and a 12.1-inch screen.

The Optiplex line of corporate desktops saw similar percentages applied to its 400- and 450-MHz Pentium II-based desktops.

An OptiPlex G1 falls 18.2 percent, from $1,978 to $1,618. This includes a 400-MHz Pentium II chip, 4.3GB hard drive, and 4MB of video memory.

A 450-MHz GX1 model has been reduced in price from $2,505 to $2,205.