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IBM has $999 business PC

Big Blue plans to announce price cuts to 10 percent on business-class desktop PCs, resulting in its first sub-$1,000 business PC.

IBM (IBM) plans to announce price cuts of up to 10 percent on business-class desktop PCs, resulting in Big Blue's first new business model priced below $1,000.

Hewlett-Packard and Compaq have also been aggressively cutting business PC prices in the last few months, driving low-end business PC prices below the $1,000 mark for many of the top-tier vendors.

Price reductions on IBM's 300XL, 300PL, and 300GL models--the latter now a sub-$1,000 machine--became effective yesterday and will be officially announced by the beginning of next week.

A company spokesman attributed the move to supply efficiencies due to the success of IBM's channel assembly sales plan.

A channel assembly sales strategy is essentially a hybrid of the direct sales scheme, where manufacturers sell directly to customers, and channel sales, where manufacturers sell preassembled computers to resellers, who then sell to consumers. Under the channel assembly plan, IBM sells semi-built computers (typically containing the processor and little else) to resellers, who then configure the componentry according to consumer specifications and preferences.

Allowing the reseller to perform final assembly means that the customer can get a more customized product. At the same time, resellers carry only parts, not completed systems, and therefore have to worry less about fully assembled computers that don't sell. Products sold under these programs are typically designed to accommodate a variety of components.

Featuring a 166-MHz Pentium MMX processor, 16MB of memory, and a 2.5GB hard drive, the 300GL falls to an estimated starting price of $999. It becomes IBM's second sub-$1,000 PC, following the belated introduction of a low-priced Aptiva model using a Cyrix chip earlier this month. IBM is following in the shadow of Compaq Computer and others who have been exploiting this surging market segment.

A middle-of-the-road 300PL with a 166-MHz Pentium, 32MB of memory, and a 4.2GB hard drive will now be priced starting at an estimated $1,299. Starting prices for a 233-MHz 300XL with 32MB of memory will begin at $1,699.

Also today, IBM said it has begun shipping ThinkPad 770 notebooks manufactured under its Authorized Assembler Plan, the official name of its channel assembly scheme. (See related story)

Senior writer Michael Kanellos contributed to this report.