IBM Lowers Prices on Some Older Computers

Associated Press

IBM cut prices of some of its older medium- and large-scale computers Tuesday, but analysts were split over whether the cuts were in specific response to the computer industry’s current slump.

International Business Machines also introduced several products, including a version of its System 36 minicomputer that is attached to an IBM Personal Computer. An enhanced model of IBM’s System 38 minicomputer also was unveiled.

IBM said the price cuts reflected “normal business reviews and are consistent with IBM’s practice of providing continuing improvement in price-performance.”

IBM frequently cuts prices of existing products after it introduces enhanced versions of those products, in order to keep the older equipment competitive.


One analyst, Robert T. Fertig, said the latest price reductions carried extra significance given the current sluggish sales being reported by many computer companies.

The cuts “are an attempt to stimulate demand, which has been relatively soft, especially in the intermediate systems,” said Fertig, president of Enterprise Information Systems, a research firm in Stamford, Conn.

George Elling of the investment firm Oppenheimer & Co. disagreed, saying “these appear to be standard price cuts.”

“I don’t think IBM has gotten to the point where they will slash prices in order to stimulate business,” Elling said.


Richard Imershein, director of research at the Gartner Group, another IBM tracker in Stamford, also did not tie extra significance to the price changes, calling them “reasonably consistent” with IBM’s normal practice.

One cause of the revision was the softness in minicomputer sales.

In that market, IBM said it lowered prices of its 4381 computer by between 6% and 8%, its 4361 model by up to 6%, the System 38 by between 7% and 20% and the System 36 by between 9% and 23%.

For example, the price of the smallest 4381 model was cut 8% to $340,400 from $370,000.


IBM also cut certain prices of its 308X large-scale, or mainframe, data processors by about 6%.