Computer maker one-upmanship is driving down prices, as IBM today followed Compaq's 11 percent cut with a 20 percent price reduction on its Pentium II-equipped business PCs.
The moves extend a wave of price cuts in the commercial PC market, where IBM is seeking to reverse stagnant market share and Compaq is struggling to deal with surplus inventories of unsold machines, all while growth in corporate demand for systems appears to be slackening.
While an IBM spokesman deflected talk of a price war, IBM's latest lineup of corporate PCs now starts at US$839, $20 less than the least expensive model offered by Compaq, which on Wednesday cut the prices on certain corporate machines (the cheapest is now $859) and made the unusual move of offering free monitors with some purchases.
IBM cut prices on its monitors but did not match the free monitor promotion. But in some ways, IBM took the pricing fight a step further than Compaq by reserving its steepest cuts for PCs built around Intel's newer Pentium II processors.
While falling prices have long been a feature of the personal computer industry, the start of 1998 has been marked by an unusual level of discounting, analysts said.
What we've seen is an increased frequency of price declines," said Joe Loiselle of International Data Corp. "And the cumulative effect has been more intense price reductions."
