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HP slashes prices to burn-up market share

Marc Ambasna Jones ZDNet.co.uk

Published: 04 Jul 1997 16:40 BST

Hewlett-Packard has made what it claims is a "pre-emptive strike" on the PC market by cutting prices on its entry level and mainstream Vectra PCs. HP has made cuts by up to 20 per cent, weeks ahead of Intel's intended chip price cuts and rival PC makers.

Jos Brenkel, HP's European director of marketing for PCs said the company is aiming to have "an eight per cent share of the total PC market by 1999." HP is currently joint third in Europe alongside Dell with a six per cent share, behind Compaq and IBM. However in servers it is second with 13 per cent of the market and in desktops it commands an eight per cent share.

"We're taking share from companies like Olivetti, AST, Digital and in some countries, IBM," added Brenkel, who said that two companies it is definitely not taking share from are Compaq and Dell. "We have sustained growth for the past five years but where we have normally followed the market with price cuts, this year we are making a statement by leading the price cuts. We want to show people we are getting serious about this market and we are acting like a leader."

HP is a professional PC maker only and does not deal with the consumer market. Brenkel suggested that the consumer market is on a go-slow in growth, whereas the professional market is a growth area, especially with a lot of Unix users switching to Windows NT. It's a view supported by Dataquest which predicts a 10.9 per cent growth this year, most of it in the professional PC market.

The most dramatic price cuts are in the Vectra VE and the VL lines where Intel 200MHz Pentium MMX-based machines will be cut by 20 per cent.