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New prices, leasing for Compaq laptops

Compaq continues to strengthen its market position against IBM and Toshiba.

Compaq (CPQ) cut prices across the board on its Armada line of notebooks by up to 24 percent, as it continues to strengthen its market position against IBM and Toshiba.

The company also launched a leasing program for its Armada 1500 series of notebooks that is aimed at easing small to medium-sized business buyers into the market for portable computers.

Compaq Armada price cuts
CPU Old price New price
1530DMT
$2,499
$1,999
1540DMT
$2,799
$2,299
1550DMT
$2,999
$2,499
1580DMT
$3,499
$2,799
1590DMT
$3,699
$3,299
4131T
$2,499
$1,999
4150
$2,499
$2,199
7330T
$3,799
$3,299
7350MT
$4,499
$3,799
7710DMT
$3,699
$2,799

In conjunction with the leasing program, the price cuts may help Compaq put further pressure on current notebook market leader Toshiba. As an example, an Armada 7710DMT with 150-MHz MMX Pentium processor was priced at $3,699 and now costs $2,799, a reduction of 24 percent. An Armada 1530DMT that was priced at $2,499 is now priced at $1,999, a reduction of 20 percent.

Compaq is further running several other promotional campaigns such as offering a free 8X CD-ROM for the 7710DMT and free 16MB memory upgrade for some Armada 1500 models through October 31, 1997.

According to International Data Corp. (IDC) figures for notebook PC shipments in the U.S. market in the second quarter of 1997, Toshiba fell to a 17.8 percent market share from a dominating 23.7 percent in 1996. In contrast, IBM (IBM) saw its share grow to 14 percent. Compaq remains in third place, but has been making steady improvements, according to the survey.

Compaq has already been doing well in the reseller and retail channel in the U.S., where small and medium-sized businesses often get their equipment. The new leasing program may solidify the company's position with smaller customers. The company says leasing is the preferred means for acquiring notebooks because it leaves businesses more flexibility to upgrade or change notebook units, the company claims.

Other benefits of leasing include avoiding the risk of obsolescence because the notebooks can be returned to Compaq at the end of the lease, and in some cases, writing off lease payments as a tax deduction, according to Compaq.

"What's pushing leasing right now is rapid lifecycles," said Lorraine Cosgrove, research manager, for International Data Corporation's asset management service. "A business has to ask, 'How critical is it to always have the latest revision of a product?', whether it be a processor or application."

Compaq says lease rates for the Armada 1500 series will range from $96 per month for an Armada 1530 to $139 per month for an Armada 1590 on a two-year lease. Rates for a three-year lease range from $70 per month to $99 per month.

The price cuts come as Compaq prepares later this month to launch new notebooks in the Armada line with "Tillamook" processors from Intel. The Tillamook chips are Pentium MMX processors running at 200 MHz and 233 MHz.