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IBM cuts notebook prices

IBM releases fastest slim notebook, cuts prices, and claims to No. 1 in the notebook market.

There are now three contenders for the notebook crown, and IBM is introducing new models and cutting prices to drive home its claim.

IBM today released a model it touts as the fastest Pentium-based ultraportable notebook on the market as well as a new consumer notebook, debuts that follow the past weekend's across-the-board price cuts to 21 percent. ThinkPad 560 prices were cut $500 to $600 in the dealer channel, the largest of the cuts.

Big Blue is brandishing a survey which states that IBM achieved a market-leading 29 percent market share in the notebook arena in September and a 40 percent market share in the dealer channel, the main conduit for business notebooks. The report contrasts with two different studies that emerged yesterday, showing Compaq and Toshiba, respectively, to be the market leaders.

Discrepancies notwithstanding, executives and analysts agree that the notebook market is becoming increasingly aggressive and forcing each of the major vendors to rethink their current strategies. Price competition, all agree, will continue.

The ThinkPad 560X, released today, is the first slim notebook to contain a 233-MHz Pentium MMX as well as a 4GB hard drive, according to Steve Ward, general manager of IBM mobile computing.

"We keep pushing the latest technology to the platform. We are the first to put a MMX 233 in an ultraportable," he said. An ultraportable is typically very slim, with a thickness of only about one inch. "No one else has an ultraportable faster than 166 [MHz]," Ward said. The 560X also comes with 32MB of memory and a 12-inch screen and costs $4,200.

Separately, IBM is pushing more deeply into consumer notebook PC territory by offering a broader lineup of notebooks, as it adds the inexpensive 310 line to its 380 and older 365 series. For the consumer market, IBM has released the ThinkPad 310, a 133-MHz Pentium notebook that will retail for around $1,900 at super stores and other computer retailers.

Although IBM has sold notebooks to consumers in the past, the 310 marks a renewed effort in this market. Compaq has realized a significant portion of its recent market share gain in this sector, Ward pointed out.

Unlike consumer desktops, consumer notebooks are not characterized by their ability to run multimedia applications or games. Instead, users want a productivity tool and are focused on price. "They are on a tight budget," he said.

Like Compaq, IBM tries to couple notebook sales with sales of servers and desktops, which can boost sales. Toshiba, on the other hand, has only begun moving into desktops and servers, products that can be "wrapped around" corporate sales of notebooks. "There is a definite correlation," Ward said, "Our strategy is to be the most integrated of any of the notebook manufacturers."

IBM's claim to notebook supremacy comes from a study from Audits & Surveys Worldwide. According to IBM, the company's latest poll shows that IBM leads the overall notebook market with a 29 percent market share and a 40 percent share in the dealer channel.

"We have really focused on the business channel. We are not as strong in retail," Ward said in the explaining the disparity.

The results contrast with a study released yesterday by Computer Intelligence which reports that Compaq achieved a 28.8 percent market share in the dealer and retail channels in September, compared to a 25.3 percent share for Toshiba. IBM was third in this survey with an 18.2 percent share in the combined retail/dealer channels.

Toshiba, for its part, released preliminary numbers from International Data Corporation which show that Toshiba led the third quarter with a 21.2 percent market share.

Ward credited IBM's market gains to the company's technology record. Not only has IBM generally been first to adopt new technologies, but also it has enjoyed a better supply and repair reputation than in 1996, he said. Compaq, for example, had publicized problems with certain Armada models.

In an attempt to capitalize on its momentum, IBM imposed price cuts on existing ThinkPad models, Ward said. ThinkPad 560 notebooks were reduced 14 to 21 percent, a cut that amounts to $500 to $600, depending on the model. ThinkPad 380s were cut approximately 19 percent, while ThinkPad 700 models were cut 14 percent.

The cuts were sent as suggested cuts to computer resellers, said a spokesman for IBM. Typically, the reseller cuts get translated to equivalent street price cuts.