HP follows Dell, Compaq price cuts

Following hot on the heels of Dell Computer Corp. and Compaq Computer Corp. which slashed prices earlier in the week, Hewlett-Packard Co. (HP) last week cut prices on desktop PCs by up to 40 percent, according to figures from International Data Corp. (IDC).

HP dropped its recommended resale price for Vectra desktop PCs containing a 1.5GHz Pentium 4 processor by 40 percent in the U.K. Many other Vectra models were reduced by lesser amounts.

Although Intel Corp. had earlier cut the price of some models of its Pentium 4 processor, these are not the only components to have fallen in price, and the recent wave of PC price reductions are more likely to be a game of follow-the-leader among the PC manufacturers, according to Eivind Malm, PC pricing analyst with IDC in London.

"Intel had quite a few (price) movements just before Christmas and they have started again on their high-end Pentium IIIs and Pentium 4s. Some of it (the price cutting by PC manufacturers) has been due to that (the Intel price reductions) but there have also been falling prices on TFTs (thin film transistors), " Malm said.

"The processors and the price movements have been a big part of it, but it's more to do with them following the price movements by Dell," he said.

Although both HP and Compaq have said they are not interested in being drawn into a price war with Dell, "Over the last quarter, these vendors have aggressively followed Dell's lead," Malm said.

IDC, based in Framingham, Massachusetts, is owned by International Data Group Inc., parent company of IDG News Service.

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