Compaq lays blame for escalating prices at Intel door

Compaq has raised the prices of some of its models after it claimed Intel reneged on its pricing agreement with the PC manufacturer.

The row between the giants has stemmed from an acute shortage of Intel Pentium II 266MHz and 300MHz processors. According to an email message sent to resellers by Fiona Harnden, Compaq sales manager for indirect channel sales: 'The increase is due to Intel de-comitting on these processors and raising the price to Compaq.'

The email message also implored resellers to encourage their customers to move up to higher specification machines, 'as the life cycle and availability of the 266 and 300 will be limited'.

The price hike struck a blow at the heart of the vendor's sales and marketing strategy, as Compaq had recently slashed prices of some 266MHz-based desktops. The typical buying price of the small form factor machine, launched four weeks ago, started at #835, but the latest Compaq email revealed it has now been bumped up to #900.

But an Intel European representative insisted the list price of the chips in question had not increased. 'We are selling the chips at $159 and $209 per 1,000 respectively,' he said. But he conceded that all agreements between Intel and its OEM partners are open to negotiation and the list prices he quoted were the official market prices.

The representative refused to comment on any specific arrangements that Intel had with Compaq. 'We won't comment on any relations with our partners.

It is not our policy to do that,' he stated.

Compaq declined to comment.