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Dell celebrates HP's poor Q3 with price cuts

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Dell put on a Texas-sized boot on Wednesday and kicked HP where it hurts with a series of consumer and enterprise product price cuts.

Dell will trim prices by up to 22 percent on desktops, notebooks, workstations, servers, monitors and, of course, printers. The reductions come one day after HP reported lackluster third quarter numbers, largely as a result of poor margins in its PC business. HP's reliance on channel sales hurt its ability to react to higher than expected memory costs. HP was forced to keep PC prices low even though it was paying more for components.

HP says it has already taken action to correct the "aggressive pricing," which would seem to indicate its PC costs will go up. Direct dealer Dell is heading in the opposite direction.

Corporate buyers can save up to $50 on desktops and up to $550 on workstations from Dell, the company said. Servers have also been reduced by 22 percent.

Consumers will see 6 percent reductions on desktops and 3 percent cuts on notebooks. Flat panels will also cost less and the Dell J740 printer is now priced at $79.

"The efficiency of the Dell model has enabled us to continually reduce prices and return savings to the customer," said Kevin Rollins, president and COO at Dell, in a statement.

Behind closed doors Rollins surely had some more descriptive things to say about the moves. That is when he wasn't laughing about HP's quarter.

Dell performed far better than HP in its most recent quarter. The company has long maintained that selling systems directly allows it to change the price on PCs as market trends demand. HP, by contrast, had to keep its PC prices level to meet reseller contracts, which caused it to suffer from high memory costs.

When HP acquired Compaq, the company vowed to move more and more of its business to a direct model. So far, however, analysts have not been impressed with the progression. ®

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