Dell slashes prices across most product categories

Prices are falling at Dell Australia. The company has started spring by cutting prices across a range of its enterprise and small-medium business products, looking to remain the price leader among hardware vendors.

Dell's direct sales model allowed the company to take the cost savings from its supply chain efficiencies and pass them along to customers, said Bruce Anderson, a Dell spokesman. Additionally a stronger Australian dollar coupled with falling component prices have enabled Dell to cut its prices.

From today, the company's corporate and institutional customers can save up to $270, or 20 percent, on OptiPlex desktop computers (Dell OptiPlex 160L down from $1,320 to $1,049) and up to $280 on certain Dell Precision (Dell Precision 360 down from $3,439 to $3,169) workstation configurations. In the server room, customers deploying two-way and four-processor servers will pay $400 less for all PowerEdge servers. Dell's notebook, the Latitude D600, has been reduced from $2,961 to $2,529 -- a price reduction of $432.

There are currently no price reductions on its storage products.

The company has been feeling some pricing pressure from its rivals on the server side of its business, said Gordon Haff, an analyst with Illuminata. IBM recently announced it is offering current Dell customers in the US a 15 percent discount on IBM equipment if they switch vendors, and both Sun Microsystems and Hewlett-Packard have shown a willingness to compete on price at the low end of the server market, he said.

"All of Dell's major competitors have been getting price aggressive, and if Dell doesn't lead on price, it doesn't have an awful lot going for it," Haff said. Price is an extremely important factor in the buying decisions of server customers, but if prices are the same among low-end servers, customers will opt for servers with features that Dell doesn't offer, he said.

In the PC market, HP has become more competitive on price than ever before, but Dell's supply chain efficiencies allow it to regularly beat HP on price, said Toni DuBoise, an analyst with ARS.

By building its PCs when they are ordered, Dell is able to match PC prices with component prices, instantly taking advantage of fluctuations in the price of memory or storage, DuBoise said. By contrast, HP has to build its PCs with the components available, and then ship those PCs to distributors and resellers, losing the opportunity to quickly respond to price changes, she said.

(Howard Dahdah contributed to this report.)

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