In particular, the race for market leadership between the two leading PC makers, Compaq and Dell, is causing the two PC stalwarts to devise creative savings opportunities for corporate buyersâ€"-in some cases resulting in 50 percent discounts.
In return, corporations in growing numbers are either going for the better deals or using them as leverage to enhance existing ones.
This is in stark contrast to what many IT administrators have said in recent monthsâ€"-that price alone has little impact on their buying decisions.
"In today's business environment, system pricing has taken on greater importance, particularly from top management's point of view," said Steve Davis, manager of server technical support at Rohm and Haas, a specialty chemical company.
That's exactly who Dell salesmen are targeting. The direct marketer is stepping up its pursuit of Compaq customers by offering deals that in some cases include price cuts of up to 50 percent and free hardware, software and services.
Compaq customer Brian Potts of Associated Food Stores said Dell representatives pushed to get an audience with him. "I made it clear to them that we were happy with Compaq and let them know it would take something tremendous for us to even look at them," said Potts, a network manager. "[But] we were wowed," particularly by the price, he said. "We ended up buying 12 servers, so far."
In recent months, Dell also has pursued Rohm and Haas, which largely relies on Compaq for its 18,000 PCs and 400 to 500 servers. "What Dell wants to do is bulldoze Compaq out of here," Davis said. "I don't think we'll buy their servers, but they may be gaining ground on the PC side."
Davis said that while Compaq's products are top qualityâ€"-he's in the midst of deploying dozens of new Compaq serversâ€"-the current economic slump has made the company more receptive to low-price offers. "Like everyone else, our company is looking to save on expenditures," he said, "so if Dell can present a good enough deal, I could see us going with them."
Even large corporate customers that traditionally stuck with one vendor are seeing opportunities in the Dell-Compaq battle to save thousands of dollars, said another IT manager for a large US corporation with more than US$50 billion in sales, who asked to remain anonymous.
"A lot of executives are finally recognising that leveraging a major contract with the vendor is a little cheaper in the long run, in both your ability to negotiate better pricing on hardware and also your ability to drive down support costs," the manager said.
Dell has been vocal in its strategy of gaining market share in the PC and server arenas by offering low-cost deals, even at the cost of losing profit margins. So far, the strategy seems to be working.
