Hewlett-Packard has cut prices by up to 31% on some of its low-end
Intel-based servers and server appliances in North America.
With server sales hard to come by, hardware vendors are fighting to
match each others' prices and to offset losses suffered because of
discounted used equipment being sold in the reseller market. HP's
latest move in the server price war was to offer as much as 31%
reductions on lower-end products geared toward serving up Web
pages, e-mail, cached data and streaming media, the company said in
a statement.
From 12 February, the starting price for an LP1000r server with a
1Ghz Pentium III chip and 256Mbytes of memory sold in North America
will be $2,249 (£1,569), the company said. The highest-end LP2000r,
with a Pentium III chip running at 1.4GHz and 256Mbytes of memory,
is now priced at $3,986 (£2,781). HP made similar reductions on
other configurations of these servers, the company said. All prices
given are list prices; street prices should typically be 10% lower,
according to a spokesman for HP.
HP introduced the LP1000r and LP2000r servers at the start of 2001,
offering customers a pair of rack servers that ranged in price from
$2,500 (£1,745) for an entry level LP1000r to $5,400 (£3,769) for a
top-of-the-line LP2000r.
HP has also slashed prices on its wide range of server appliances,
which are simplified servers designed to handle a specific task
such as caching files or streaming media. The most expensive server
appliance that HP sells is the E-Commerce XML Director SA8250,
which was previously priced at more than $39,000. The appliance
will now start at $29,499 (£20,591). By comparison, a Web cache
appliance formerly priced at $16,000 has been cut to $12,499
(£8,725), HP said.
The price cuts follow similar moves by IBM, which has lowered the
cost on some of its Intel-based servers while adding new tools such
as its memory expansion technology to the products. IBM singled out
Dell Computer as its target with this latest pricing move and could
succeed with its strategy, according to one analyst.
"Both IBM and HP are constantly looking at where they stack up
against their competitors," said Gordon Haff, an analyst at
Illuminata. "It's always hard to undercut Dell, but what companies
like IBM are trying to do is come close with a little more
intellectual property on the systems."
As for the server appliance price cuts, Haff said that HP may have
missed the boat by bringing these products to market a little late.
"You really don't hear a lot about appliances these days," Haff
said.
Specialised servers were of value during the Internet build-out and
dot-com days, but they are playing less of a role now as companies
look to sell more flexible, general purpose servers, Haff said. A
general purpose server can handle the same tasks as a server
appliance but allows users to run various applications on that
server.
"The ultimate goal is to get the flexibility of a general purpose
server with the ease of deployment of an appliance," Haff said.
"You want servers that let you do what you need at the time, which
may vary from day to day."