Hewlett-Packard wants to be known as the PC maker with the lowest prices.
Although it faces fierce competition from Dell Inc. and Gateway Inc., which are also known for selling inexpensive PCs, Hewlett-Packard Co. says it can do better.
The Palo Alto, Calif., computer giant, which has battled with Dell for the rank of worlds largest PC maker in the past, is taking another run at its competitors with a new line of desktops, including an inexpensive dual-core processor machine, all aimed at holiday PC buyers. Meanwhile, it has been offering its HP Pavilion desktops direct to customers for just under $250, after rebates—whereas its retail and small and medium business desktops are typically closer to $350 to $400—prompting HP to believe that, on any given day, it can match or beat rivals such as Dell on prices for PCs that most consumers want.
“We believe our prices are extremely competitive. We think if customers will really compare, well be competitive with Dell day-in and day-out,” said Sam Szteinbaum, general manager of HPs North America Consumer Business in an interview with Ziff Davis Internet News. Although it “varies day-to-day and week-to-week, our goal is to be within 3 (percent) to 5 percent below what ever their offers are.”
Despite at least some concerns about energy prices and potential to affect consumer spending—not to mention purchasing by small and medium businesses—HP has been offering, via its HPShopping.com commerce Web site, two rock-bottom priced Pavilion desktops, which start at $249 after rebates. One comes with an Intel Corp. Celeron processor and the other offers Advanced Micro Devices Inc.s Sempron chip. Its Pavilion a1100e, for example, offers a 1.8GHz Sempron 3000+ processor, 512MB of RAM—which includes a standard 256MB allotment with a free 256MB upgrade—along with a 40GB hard drive and a CD-ROM drive. The Pavilion a1100y, also $249 after rebates, comes with the same basic configuration, including the RAM upgrade, and Intels 2.8GHz Celeron D 336.
The machines lack extras, such as speakers, memory card readers and floppy drives and they do not come with monitors or free shipping—ground shipping charges start at $99 for a desktop from HP—but, if nothing else, theyre likely to catch buyers eyes and raise interest in HPs other PCs, Szteinbaum said.
Dell, on the other hand, has said it focused too intently on low-priced systems during its second quarter, which ended in August. It doesnt appear to be pushing sub-$300 desktops as aggressively, now and has been pursuing the high-end of the market with its new XPS brand for performance machines. Still, an informal survey by Ziff Davis Internet on Wednesday sighted Dells least expensive desktop, the Dimension 2400, for $349 before shipping charges on its Home and Home Office Web site. Dell is offering the desktop with a 2.4GHz Intel Celeron processor, 256MB of RAM, an 80GB hard drive and a CD-burner. When upgrading the Pavilion a1100y to match the Dell machine, it comes to $319, after rebates and before shipping, giving HP the upper hand.
But price competition between the two gets closer at the $500 to $700 level, where many consumers and small businesses purchase desktops.
Dells Dimension 3000 desktop starts at $549 without a monitor and for $599 can be purchased with a 15-inch flat panel display, thanks to a special upgrade offer. The machine comes fitted with a 2.8GHz Pentium 4 processor, 256MB of RAM, a CD-burner and an 80GB hard drive. The Round Rock, Texas, PC maker uses a revolving set of rebates, including component upgrades and free shipping offers, in order to encourage sales.
HPs Pavilion a1110y, when configured with hardware and a flat panel monitor that matches the Dimension 3000, also costs $599 after rebates and before shipping. HP ups the ante by including a slightly faster Pentium 4 516 processor, running at 2.93GHz, and an extra helping of RAM with the machine, thanks to a special upgrade offer.
However, at the moment, Dell is offering to ship its desktops priced at $549 and higher for free, giving it an advantage, despite the fact that it would cost an additional $40 to bump the Dell machine to 512MB of RAM to match the HP Pavilion.
HP and Dell are also squaring off in notebooks, a red-hot category, where their least expensive models start in the $500-range.
HP Hopes to Gain
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Dell on Wednesday was starting its Inspiron 1200 at $499 after a $50 instant discount, but before shipping charges. The machine comes with a 14-inch display, Intel Celeron M 360 processor, 256MB of RAM, a 40GB hard drive and a combination CD-burner DVD-ROM drive.
HPs Compaq Presario V2000 and M2000Z notebooks, which offer an Intel Celeron M 360 processor paired with a 14-inch widescreen display or an AMD Sempron 2800+ and 15-inch display, respectively, start at $529 after rebates and before shipping. When configured to match the Dell system, they came to $579.
HP is also targeting retail, where the company says about half its consumer customers buy their PCs, with aggressive prices.
Customers “may shop online…but when they walk into the store, they can [make a purchase and] take it home immediately and they really value that,” Szteinbaum said.
HPs new retail lineup, includes Compaq Presario desktops for less than $400 after rebates, and an HP Pavilion a1200n line the include Windows XP Media Center Edition software and dual-core processors on some models.
The companys $359 Compaq Presario is its SR1610NX. It offers a 1.8GHz AMD Sempron 3200+ processor, 256MB of RAM, an 80GB hard drive, a combination CD-burner, DVD-ROM and a memory card reader. The machine rivals Gateways new eMachines T3104 desktop, which costs slightly less, offering a Sempron 3100+ and a 100GB hard drive for $339 after a $50 rebate.
The HPs Pavilion a1250n, for one, offers a dual-core AMD Athlon 64 X2, which includes a pair of 2GHz processor cores, along with 1GB of RAM, a 250GB hard drive, twin DVD-burner and DVD-ROM drives, a memory card reader and Windows XP Media Center Edition. The machine sells for $849 after a $50 mail-in rebate from HP.
The new Pavilion rivals machines such as Gateways GT5014 Media Center desktop, whose hardware and software are similar, aside from offering a dual-core Intel Pentium D 820 processor and a TV tuner card that allows it to record television programs. It sells for $899 at stores such as Best Buy.
Ultimately, “Were not trying to start a price war or trying to take prices irrationally low,” Szteinbaum said. However, “These are prices we believe we can sustain and can sustain profitably.”
Thus, assuming variables such as energy prices dont interfere, a $250 PC is here to stay from HP.
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