Look out shorts
By Ed Scannell
InfoWorld Electric
Posted at 1:17 PM PT, Nov 25, 1997
IBM will fuel the white-hot Pentium II-based price wars expected in early 1998 by introducing its lowest cost desktop system to use the chip in early February, according to sources briefed by the company.
The upcoming system, expected to be priced just below $1,500, will be a member of the company's new PC 300 P II desktop series. Currently, IBM sells Pentium II-based systems only as part of its higher priced XL series. The new system is expected to replace the company's existing low-end GL systems sometime over the next year.
"With these systems IBM is trying to make sure it will sit right on top of the Pentium II pricing it expects is coming from Dell and Compaq starting early next year and throughout the rest of the year, as (IBM) delivers its 300 and 350 MHz P2,'' said one source close to the company.
IBM will be largely reliant on the continued success of its channel assembly programs, Authorized Assembler program and Advanced Fulfillment Initiative, to allow it to drive prices down on Pentium II-based systems but still keeping its existing profit margins, sources said.
The low-end 233-MHz Pentium II-based system's base configuration will sport four drive bays and four add-in slots with a higher end model capable of holding six drives and six add-in slots. The unit will have at least 32MB of memory, and at least a 2.1GB hard drive.
The company will also roll out a 266-MHz Pentium II in early February with a similar base-line configuration although final pricing on that model has yet to be set. However, sources said the unit would be priced "two to three hundred higher,'" than the 233-MHz model.
The upcoming Pentium II systems will use the chassis as the models in the higher end PL systems, which will enable IBM to produce the systems faster and more cost efficiently.
"What they are doing with the new Pentium II is putting it into the NLX chassis so that both the [new PC 300 P II] and PL families will be easier to assemble, easier to manufacture, and ultimately cost less,'' said one source close to the company.
Given Intel's expected price cuts on the chip in next year's first quarter, along with others to follow over the course of 1998, sources close to IBM believe the company will be able slash prices on their Pentium II-based systems comfortably below $1,000 on many configurations by year's end.
On Nov. 4, IBM lowered prices on its existing GL series of desktops, which dropped the price of its entry-level Pentium-based Model 300 below $1,000, making it the company's first sub-$1,000 desktop unit.
IBM officials declined to comment on the upcoming desktop systems.
IBM Corp., in Armonk, N.Y., can be reached at ibm.com.
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