Hardware giant Compaq has laid out pricing in its bid to break into the networking market, but its claims that established networking manufacturers over-price, and that margins are too high have met with an angry response from the company's rivals.
Compaq IPG manager Ian Whiting said that Compaq would drive down manufacturing costs and would halve manufacturer margin on its net-working products.
Steve Jenkins, Bay Networks UK MD, said: 'Compaq is a low-end player. It is not offering an end-to-end solution.' Jenkins also forecast that attempts to drive down margin on networking products would be counter-productive. He said networking products needed time and effort to install properly, and that gutting the price would put pressure on resellers to cut corners. 'It is very different to the PC business,' he said. 'It is not just about who has the lowest price.' The Netelligent range comprises 100 individual networking products, the majority of which Compaq acquired when it bought Thomas-Conrad and Networth. But Compaq has also launched four new products, a fast Ethernet switch, and three network interface controllers.
Pricing has been set very low against rivals Bay and 3Com, with the Compaq 24 port managed 10Base-T hub priced at u855, compared with u1,115 for 3Com, u1,239 for Bay and u1,285 for Hewlett Packard.
Compaq has also cut prices on the Thomas-Conrad and Networth products it inherited.
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