IBM to Discontinue Dealer Incentive Program on PS/2

International Business Machines Corp. is preparing to drop a dealer incentive plan that misfired by driving down the street price of its Personal System/2.

The program began Jan. 1 and was supposed to last for a year, but will be dropped after Sept. 30 because of complaints by some dealers, said Roger Savitt, an IBM spokesman.

Some dealers took the credits and bonuses that they received for achieving sales targets and applied the money to lowering their prices. That disturbed other dealers, who said the plan was eroding their profit margins.

To mollify dealers who like the plan, incentives will be made richer until the program ends. Savitt said IBM has not decided what to replace the program with.