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HolidayBuyer's Guide
Tech Industry

New Year's resolution: Trim PC prices

Dell, HP and IBM get 2003 under way by lowering the prices of their business desktops, with some discounts reaching as high as 19 percent, according to a new report.

PC makers are kicking off 2003 with price cuts on desktop PCs built for businesses.

Dell Computer, Hewlett-Packard and IBM have all reduced the prices of their business desktops, with some discounts reaching as high as 19 percent, according to a new report by ARS, a company that tracks PC pricing.

The research company said that it is too early to report the start of an outright war on prices but that the three vendors have stepped up the price competition.

"Although ARS is not yet prepared to declare a price war, it should be noted that the majority of these models are current offerings, which indicates the year is starting off with intensified pricing strategies from all players," Toni Duboise, ARS desktop analyst, wrote in the report.

Dell cut prices on its OptiPlex desktop configurations by between $29 and $100, ARS said, averaging a 6 percent drop. Meanwhile, HP reduced prices on its Compaq Evo D310, D315 and D510 desktop models by between $4 and $166, ARS said, averaging a reduction of about 8 percent.

HP's prices are now much closer to Dell's, the ARS report shows. An Evo D510 model 470043-211, configured with a 2.4GHz Intel Pentium 4 chip, 256MB of RAM and a 40GB hard drive, dropped by $130, or 12 percent, to $939, according to ARS. Dell's OptiPlex GX260 model c2.4, with the same specifications, dropped by $49, or 4 percent, to $946, the report said.

IBM also sliced prices on its NetVista desktops by between $10 and $140, ARS said, resulting in an average reduction of 4 percent. A NetVista M42 model 830141U, configured with a 2.4GHz Pentium 4, 256MB of RAM and a 40GB hard drive, dropped by $40, or 3.9 percent, to $989, the report said.

HP appears to have made a New Year's resolution to gain back some market share from Dell, which topped it by a thin margin in worldwide PC unit shipments in the third quarter. HP held the top spot in the second quarter.

Since its merger with Compaq Computer, HP has generally become more aggressive on its PC prices. In the fall, the company dropped prices aggressively on its notebooks, with cuts coming as often as three times in a single month. Dell responded by offering business customers processor upgrades on its Latitude notebooks at no extra charge.

Price cuts can only be a good thing for businesses evaluating the purchase of new PCs. But companies typically view price as only one aspect of an entire package, which includes the PC itself, software, service and support, and the costs of administering the service and support over a lifecycle of several years.

On the service and support side, Dell's OptiPlex comes with a standard three-year parts-and-labor warranty with next-day, on-site service. HP and IBM each offer similar warranty programs for their Evo D510 and NetVista M42 PCs, respectively.