Ringing up sales

Industry vendors are gearing up for the summer buying season with a host of special offers designed to capitalize on increased interest in network servers as well as the traditional heavy traffic on desktop computer contracts.

Federal agencies are in the market for beefed-up servers and networking gear because of their increased emphasis on World Wide Web-based applications, vendors say.

"Demand for servers and storage products has been unparalleled [compared with] the last couple of years," said Gary Newgaard, vice president of the federal region for Compaq Computer Corp. "It has to do with people doing Year 2000 readiness and increased demand on processor power of the server due to Web activity."

In response, Gateway Inc. has cut the price of its ALR 8300 server from $5,312 to $5,030. The system comes with a 500 MHz Intel Corp. Pentium III processor, 128M of RAM, a 9G hard drive, a 40X CD-ROM drive and Seagate Technology Inc. backup software.

Likewise, Dell Computer Corp. is offering its PowerEdge 4350 departmental server, with a 500 MHz Pentium III processor, 128M of RAM, a 9G hard drive and 40X CD-ROM drive for $5,001.

Compaq sees renewed interest in Unix- or Microsoft Corp. Windows NT-based servers equipped with Alpha processors, which are reduced instruction set computer chips designed to meet high-performance processing needs.

In the past 120 days, demand for Alpha servers has gone through the roof, Newgaard said. Government agencies traditionally have been big users of the technology, which Compaq acquired when it bought Digital Equipment Corp.

Bruce Klein, federal computer products district sales manager for Hewlett-Packard Co., agreed that servers seem to be topping the list of government buyers this season. "There's a whole move to the Web lifestyle, and government is investing in it and needs NT servers that can perform and handle the type of work they are trying to do," Klein said.

HP has put together special promotions on networking hubs and switches belonging to its new ProCurve product family. This year HP has increased its storage and network business with the government dramatically, thanks to its new products, which include the popular 24-port switch, Klein said.

But vendors also are offering special deals on desktop and portable computers, as many federal buyers shop for the latest and fastest systems.

Dell has put together a series of special bundles that cost up to 30 percent less than if the products are purchased individually, said Pedro Ferro, director of marketing for Dell Federal. Dell offers five bundles in its OptiPlex desktop family as well as two server bundles, two workstation bundles and one laptop bundle.

"We have had OptiPlex bundles before, but this is the first time we've had bundles across the entire product line, and they are much more aggressive in pricing," Ferro said.

Vendors also are focusing on popular new contracts, such as the Air Force's Information Technology Tools (IT2) blanket purchase agreement. All three vendors on the BPA - Dell, Micron Government Systems and Gateway - are offering specials on their IT2 desktops and servers.

Gateway has been ramping up its federal presence over the past six months, trying to re-establish its position in the government market. The company sees the Air Force BPA as the perfect opportunity to do so while providing federal customers with the best systems possible, said Phil Kennett, vice president of federal government sales at Gateway.

"We've taken our best-selling products and put them out there to increase penetration," he said. "This will hopefully get us even further into the market while getting the federal customers the top systems."

Gateway is focusing on the latest, fastest systems, including its new GP7-600 with a 600 MHz Pentium III processor. The GP7-600, with a 13.6G hard drive, an Iomega Corp. internal Zip drive, and Microsoft's Windows NT operating system and Office 2000, is down to $2,208 from $2,300. Gateway also has cut its GSA schedule prices an extra 4 percent, in addition to its IT2 and other BPAs.

Dell and Micron are not far behind, offering special prices on the DOD-wide contract for 450 and 500 MHz Pentium III systems. But in addition to its basic IT2 special, Dell has a "special promo offer" on the company's OptiPlex 600 MHz desktop at next week's Air Force Information Technology Conference.

While vendors expect to reap the usual benefits from federal end-of-year spending, they say several unusual factors must be factored in.

The final stages of Year 2000 projects are expected to have a lingering dampening effect on end-of-fiscal-year sales. But unlike previous years, 1999 has not seen a major processor announcement from Intel, an event that in the past has caused delays in purchasing from government buyers fearing being left out on technological advancements if they bought too soon, Newgaard said.