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Dell trims workstation prices

Dell lowers prices by up to 11.7 percent, increasing the pressure on major vendors such as Compaq who are suffering from a glut of systems.

Dell Computer (DELL) cut prices on its line of personal workstation products by up to 11.7 percent, increasing the pressure on major vendors such as Compaq who are suffering from a glut of systems.

Dell said a WorkStation 400 model with two 333-MHz Pentium II processors, a 9.1GB hard disk drive, 256MB of memory, and two 19-inch monitors for use in financial or desktop publishing markets will now sell for $6,185, a cut of 11.7 percent.

A system with two 300-MHz Pentium II processors, a 4GB hard drive, and a 19-inch monitor will now sell for $5,707, a drop of 6.8 percent. A system with a single 333-MHz Pentium II processor is now priced at $4,758, a drop of 8.1 percent.

Dell officials said the price cuts are the result of normal component cost savings--including Intel processors and memory chips--that are being passed on to customers. However, price cuts are also being driven by excess product inventory.

Compaq, IBM, and Hewlett-Packard are all experiencing excess system inventory in distribution and reseller channels. Two weeks ago, for instance, Compaq said it was cutting prices on a wide range of systems and monitors to clear out inventory.

A spokesperson for Dell, which sells directly to customers, said it is not cutting prices to clear out inventory.

Industry sales in the first quarter slowed as part of a normal seasonal sales cycle, but some PC vendors sharply overestimated demand because growth is being slowed by larger economic trends such as the turmoil in the Asian markets. International Data Corporation expects PC sales growth will slow to 15 percent domestically and 13.2 percent worldwide, compared to 19 percent and 15.2 percent for 1997, respectively.