HP slashes technical workstation prices

Looking to expand the market for its Unix-based technical workstations, Hewlett-Packard Co. last week slashed prices by up to 37 percent on its most popular models.

The price cuts come 16 months after HP began consolidating its workstation manufacturing facilities and restructuring its business operations. The strategy included outsourcing PC circuit board manufacturing and revamping supply-chain management.

The restructuring has enabled HP to reduce greatly the cost of manufacturing its Unix workstations, which run HP's reduced instruction-set computer (RISC) chips, said Larry Anderson, a marketing manager with HP's Workstation Systems Division.

HP made the biggest price cuts on an HP J-Class workstation, Model J2240, the list price of which has dropped from $55,900 to $35,500. The workstation comes with HP's Visualize EG 2-D graphics subsystem and runs on dual PA-RISC processors.

"This move is a significant repricing, to the point where we are really repositioning [the product line] for a volume marketplace as opposed to a boutique" for high-end systems, Anderson said.

HP also cut pricing on two 3-D C-Class workstations, including a 29 percent cut on the Model C200, now about $22,000, which comes with 512M of memory and fx2 3-D graphics, and a 25 percent price cut on the C240, now $47,600, which comes with 1G of memory and fx6 3-D graphics.

Price cuts on 2-D and 3-D B-Class workstations range from 23 percent to 32 percent. Similar price cuts will show up on HP's General Services Administration schedule and various contracts, he said.

The reduced prices are likely to lead low-end-workstation customers to buy higher-performing systems rather than more volume, said Bill Dwyer, chief technologist for HP's government business unit. Users at the low end tend to shop with a certain price in mind and will buy as much performance as they can at that price point.

The new pricing is expected to benefit HP's resellers as much as it does the company's

direct-sales force, said Jay Moore, a senior research analyst for personal workstations at Aberdeen Group, Boston. HP has been willing to cut special deals for customers in the past, but resellers, buying the equipment from HP at a certain price, had less room to negotiate. The price cuts now "will allow their channels to sell more volume," Moore said.

HP's resellers in the federal market include Comark Federal Systems, Government Technology Services Inc. and Sylvest Management Systems.