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It's a buyer's market as a price war rages

It's a buyer's market as a price war rages

As the economy continues to churn, network executives are finding a buyer's market full of great deals that are offsetting IT budget cuts.

The dynamic has put IT buyers in a position of strength as they work to build and maintain their networks.

Fresh signs of bulging buyer muscle appear almost daily, including reports from industry analysts that Intel will likely cut chip prices by nearly 50 per cent in a price war with rival Advanced Micro Devices, which could produce a ripple of lower hardware prices.

Storage giant EMC, which has long prided itself on commanding premium prices, is now pledging it won't be beaten routinely on cost. "The credo for our sales force is ‘You are not allowed to lose a deal on price without my permission'," Frank Hauck, executive vice president of global sales and services for EMC, recently told analysts. The company has cut its prices on support and equipment maintenance by 10 per cent for prepaid orders.

In addition, Hewlett-Packard is slashing prices on Xeon Netservers, offering trade-in incentives and a "buy four get one-free" deal, while Compaq and Dell have vowed not to let the other win a deal on price.

Analysts say prices on servers are down 15 to 20 per cent, a drop matched by the PC market, where manufacturers are trying to work through a large backlog of inventory.

The discounts have not translated to the software and services sector, with many IT executives delaying software projects based on budget constraints.

However, in telecommunications, used equipment for enterprises and service providers is available for pennies on the dollar, according to Lisa Pierce, director of telecom services at Giga Information Group. But, she says, the cost of services such as voice is already rock bottom.

Vendors engaging the enemy

- Intel is expected to cut chip prices by nearly 50 per cent in a price war with rival Advanced Micro Devices.

- Storage giant EMC has now pledged it won't be beaten routinely on cost. The company has cut its prices on support and equipment maintenance by 10 per cent for prepaid orders.

- Hewlett-Packard is slashing prices on Xeon Netservers.

- Compaq and Dell have vowed not to let the other win a deal on price.


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