IBM Pentium II PC dips to $1,099

IBM (IBM) cut prices on business PCs by as much as 20 percent today, dropping the cost of a 233-MHz Pentium II system to $1,099, a new low for a top-tier vendor.

Following yesterday's price action from Compaq and cuts last month from Hewlett-Packard, Big Blue is lowering its prices to boost sales of business-class desktops.

The cost of an IBM PC 300GL with a 233-MHz Intel processor Pentium II chip and a 2.5GB hard drive falls 12 percent from $1,249 to $1,099. A more powerful 333-MHz system with 64MB of memory and a 4.2GB hard drive drops 20 percent to $2,057, down from $2,571.

For models incorporating the Pentium MMX chip, a 166-MHz version with 16MB of memory and a 2.5GB hard drive now costs $839, down 6 percent from $889.

The move reflects IBM's attempt to keep up with its rivals in the increasingly important market for business desktops, which both Compaq and HP have identified as a major focus for 1998. Big Blue has recently nudged its corporate market share higher, according to resellers.

The prices cuts stem from efficiencies gained in the continuing transition to "channel assembly," according to IBM. Under the company's Advanced Fulfillment Initiative, in which the resellers who take customers' orders install the components of a PC, the goal is to reduce costly inventory to two weeks' supply.

"We're not done with this," an IBM spokesman said. "You're not going to see the full results right away. There's a few more things we've got to do."

Separately, IBM cut monitor prices by as much as 14 percent. A 15-inch model drops from $339 to $279, while a 17-inch model goes from $529 to $499. As monitor prices continue falling, the larger screens have begun to replace the 15-inch models as the desktop standard.