HP challenges white box makers with sub $500 PC

Hewlett Packard is to offer its Brio PC to small businesses in the US for less than $500, in a move that sees the vendor going head-to-head with white box assemblers.

The free or very cheap PC craze seems to be getting under the skin of even the largest of PC vendors such as HP. Some companies have plans to push the idea in markets other than the retail sector.

The US has also seen the recent launch of a limited edition Compaq Deskpro EP Series model with a 15in monitor for $819. Gateway has joined in too with the launch of the Astro, its iMac lookalike, for $799.

HP is looking directly at SMEs with its latest model, even though it doesn?t appear to differ at all from the package offered to home users.

Tech Data and Synnex Information Technologies will be the channel experiment sites in the US.

High and low

Jean-Jacques Ozil, marketing manager of Brio at HP, said: ?Today?s small businesses increasingly place high-quality, low-price PCs among their top requirements. This PC enables HP to meet that need head on.?

Traditionally, HP targeted the Brio model for the home market, selling into business with its Vectra workstations, but the company has realised it is skipping a vital part of the market that has been fulfilled by the white box manufacturers and assemblers.

There are key questions as to whether the model used in the home can work for small businesses. Breaking into markets is never easy, no matter how big a brand name is.

Brian Pearce, distribution channels analyst at IDC, said: ?There is a hardcore demand for white boxes and B and C brands in the market, and it will take a long time for these brands to be worn down and blown away.

?The white box market is so buoyant because the players are so fast at taking technology, integrating it and selling it at low prices. The big name companies are usually about a quarter behind them.?

He added: ?It?s not impossible for HP to make an impact in this market as long as it can reach a good price point with a machine that makes sense. But it takes time to build a reputation: it could be a year before it can say an impact has been made.?

Cutting corners

HP is selling the Brio in two different models, priced $499 and $649. Neither comes with a monitor, although HP will provide a 15in display for $150 extra.

Corners have been cut to reach the price points, especially on the lower-priced model which comes with a 40X CDRom and 32Mb of Ram. But it does boast a 433MHz Celeron and 4.3Gb hard drive.

ISP scheme

The Brio is also being used to introduce a partnering scheme with Compuserve. Customers will be offered rebates if they commit to an ISP contract at $100 for a one-year commitment and $400 for three years. The move was doubtful for some time as both companies thought the transfer to the SME sector may prove to be more difficult than first anticipated.

?Most manufacturers are having to enter into that game because people want it. PC and internet service bundling is part of the channel?s move towards a more value-add model.

?There are many internet and web-centric models emerging in the channel. Mail-order companies are looking to gravitate that way but traditional resellers are also looking to become involved.

?But a contract of three years is going to be too long for many businesses. In this market, things move so fast that three months is a long time to be committed to something like this,? Pearce added.