HP cuts notebook prices in sales push

HP is undertaking a major portable campaign, today adding its entire lineup to a reseller sales incentive program while aggressively cutting prices.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
3 min read
Hewlett-Packard is undertaking a major campaign on behalf of its notebook computers, today adding its entire lineup to a reseller sales incentive program while aggressively cutting prices nearly across the board.

With the exception of one model, OmniBook portables were reduced by as much as 15 percent, much needed for a company with a reputation for expensive products.

Having refined its product strategy over the past year, HP has been working to build up once moribund sales and is apparently beginning to see results. Second-quarter sales numbers are expected to show it has broken into the top ten of notebook vendors.

In the second half of the year HP will redouble its efforts, according to Greg Munster, director of product marketing for the company's mobile computing division.

"We're spending a lot of time just promoting our product, more than we've ever done before," he said.

One its current initiatives is the TopValue program for resellers, introduced for desktop systems earlier this year. Under this inventory-management scheme, resellers transfer electronic data to HP, providing the company with daily inventory volume and sales receipts. HP in turn gives resellers product discounts to five percent.

Moving the entire notebook line into the program signals HP aims to further boost its sales volume, Munster said. The company has also put in place incentives for HP's own sales force, hoping OmniBooks will benefit from the company's more established corporate desktop and server presence.

Additionally, HP has bought ads in Businessweek and the Wall Street Journal as well as online.

Pricewise, the company won't necessarily be a market leader but will monitor trends closely and react quickly, Munster said. "Price is a really important differentiator right now. Our strategy is being really responsive, [which] may mean we're going to be competitive with IBM, for example, and be five percent underneath them."

Analysts have been expecting HP's volume push, according to International Data Corporation analyst Randy Guisto.

"We anticipated a major volume push in the first half of the year. We now expect it in the second half," he said. "Earlier we said that they could become a top ten vendor by Q4. [But] I wouldn't be surprised if they didn't pop up as a top ten vendor in the second quarter." April to June sales, although complete, are not yet tabulated.

Meanwhile, as it becomes a mainstream notebook vendor, HP may elect to develop its product strategy around the form factors other companies adopt. The company will likely begin to emphasize the slimline 4100, according to both Guisto and HP executives who have previously talked with CNET NEWS.COM.

A top-drawer 4100 with with a 266-MHz Pentium II chip, a 4.0GB had drive, and a 14.1-inch screen falls to $3,999. A 233-MHz version with a 13.3-inch screen now sells for $3,199.

This may spell the end of the road for the miniature OmniBook 800. The price of that 3.9 pound, 166-MHz Pentium MMX system was reduced a whopping 37 percent today, to $2,299.

Guisto, without commenting on HP's will to keep that model going, said that sales for the OmniBook 800 have not been stellar. "It is time to get an update."

Elsewhere, the OmniBook 2100 with a 233-MHz Pentium MMX and a 12.1-inch dual-scan screen drops to $1,799. The upper-crust, .75-inch thick Sojourn comes down to $4,999.

Separately, Dell announced it has incorporated Intel's mobile Pentium II processors into its entire line of Inspiron notebooks. Inspirons target small and medium businesses and consumers looking for performance.