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The average price for the HP Superdome with a 32-way system is now in the range of $600,000 to $700,000 (£423,000-£493,000), a spokeswoman said.
Gordon Haff, an analyst at Illuminata, said HP dropped prices "to make it harder for IBM with the p690". The cost of manufacturing Unix servers has dropped, and the savings were now being passed on to HP's customers, he added.
Given how far memory pricing has fallen over the last couple of months HP could afford to drop prices, but it was also pushed into the move by its competition.
Mark Hudson, worldwide marketing manager for HP's Unix servers, acknowledged that the release in October of the IBM p690 high-end Unix server had been one of HP's two motivating factors for reducing its Superdome pricing. IBM is selling the Regatta to compete with rival Sun's Sun Fire 15K, code-named Starcat. The other reason, Hudson said, was the drop in the price of components.
Hudson added that both IBM and HP were dropping prices to go after Sun's market share. According to analysts, Sun has been regarded as the leader in the market for servers that run the Unix operating system.
HP's price-cut announcement, as well as the company's decision last week to discontinue its e3000 line, is part of a general trend among technology companies to focus on their biggest profit centres.
The decision to cut prices was not directly motivated by plans to merge with Compaq, said Haff. "Having said that, if the merger does go through, both HP and Compaq will look very hard at their product lines and some trimming will take place," he added.