HP cuts PC prices in effort to fend off Sun

Hardware Vendor moves to reverse fortunes in Unix market by strengthening sales team.

Hewlett Packard is preparing to make price cuts of up to 20 per cent across its PC range this month, following in the footsteps of its US operation which made similar reductions in December.

The cuts come as the vendor shifts 260 staff onto its Unix sales force in an effort to compete for contracts, particularly against Unix arch-rival Sun Microsystems.

The move is the latest example of HP's about-turn over Unix after a drift towards Windows NT. Internally, the company believes it has faltered in the Unix sector because of a weak sales force and, as part of its restructuring programme unveiled by chief executive Lew Platt last month, is moving staff from other positions into sales.

Nick Earle, vice president of enterprise computing at HP, said: 'We believe we have 20 per cent less sales staff than Sun does, which means we aren't even in a lot of deals. We are adding 15 per cent more staff, who will carry quota for Unix and NT server sales.'

One observer said Sun's focus on Unix was winning it share in the server market, but HP's recent announcement of the V2500 - with up to 32 processors or a bigger Numa configuration - would help it compete better on performance.

Of the 260 staff being added to the sales force, 150 will be in the US and 110 in Europe. There will be a mixture of direct and indirect roles.

Earle said HP was in the process of taking eight weeks out of its channel inventory, to reduce it to a four-week turnover period, which would be the guaranteed delivery time to customers next year.

He added that in the high-end Unix area, HP was dominant with a 35 per cent market share. But Earle admitted the sector for systems below $50,000 was being taken by Sun, particularly with a transition in HP's K-class range due in April.

The K-class provides more than half of HP's Unix sales, so discounting could affect revenue.