Dude, You’ve Got Savings

Aug 21, 2003

By George Anderson

Dell has announced price cuts of up to 22 percent on computers, printers and
other items it sells.

The move is not unusual for the company, according to a Reuters report.

“No. 1 PC maker Dell regularly pulls PC prices down, using its direct-to-customer
sales method to undercut competition. In this case, the price cuts come during
the crucial back-to-school season.”

Hewlett-Packard, Dell’s chief rival in the market, recently reported its first
operating loss for its personal computer business. H-P attributed the loss to
price-cutting and a lack of flexibility in changing prices on PCs sold through

Moderator’s Comment: Does Dell’s business model/distribution
system provide it with inherent advantages over PC makers selling through distributors?
What lessons can other retailers learn from the Dell model?

Needham & Co. analyst Charles Wolf told Reuters, “A
quick response on HP’s part is virtually impossible, so it could really screw
up HP’s plans for the back-to-school season.”

Anderson – Moderator

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