Compaq shook up the entry-level server market last week by slashing the prices of its ProSignia 200 range by almost 20%. The Pentium II 233MHz Prosignia 200 will now ship at #960, while a Pentium 233MHz version with 2.5Gb hard drive is available at a special promotional price of #999. Neither price includes a monitor. The move is a reaction to IBM's launch into the entry-level server market, according to Phil Burnham, senior research analyst with Romtec. IBM has the efficiency to make a cut of around 30% at the moment and Compaq has to stay in synch with IBM to compete, he claimed. "By offering cut-price servers without hard drive or monitor, Compaq is using channel assembly without calling it channel assembly," he explained. Earlier this month IBM launched the Intel-based server Netfinity 3500, aimed at small businesses and departments within companies. The package includes Lotus Domino Intranet Starter Pack and a 22.7Gb hard drive and starts at #1,700. Dell remains unimpressed by Compaq's pricing policy. Steve Jackson, Dell's UK server business manager, described the ProSignia 200 range as a "very entry-level product", but admitted pricing is becoming more critical in the server market. "Servers, like desktops, are becoming very commoditised, creating a price-sensitive market. Customers are starting to look beyond the product feature set when choosing servers," Jackson said. Dell's entry level offering costs #1,340, and comes with a 2Gb hard drive and monitor. Jackson added: "I do not think prices will continue to fall with servers. You will see a reflection of the PC market, with a trickle down of technology from the higher end of the market at the same price level."
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