"We've got laptops that are going direct from factories in China to the customer supply chain," said Ted Clark, Hewlett's senior vice president and general manager for notebooks.
Hewlett boasts that a custom laptop can go door-to-door in three days.
With tight inventories, Dell could squeeze out more of a cost advantage as prices on components dropped. But it is harder to get price gains on a US$500 computer than when they cost US$1,500. Compounding that, the rate that PC components are dropping in price has slowed from 1 percent a week five years ago, to about a quarter of a percent a week.
Despite its changing circumstances, Dell is hardly down and out. It still holds an operating profit margin advantage over Hewlett of at least 5 percent, Gardner calculated, though that has shrunk from 20 percent at the beginning of the decade.
Other analysts, like A.M. Sacconaghi of Sanford C. Bernstein & Co, think Hewlett will not try to match Dell's price cuts because Hurd is not ready to sacrifice profit for revenue unless the company starts losing significant market share.
Inside Hewlett, however, there is a feeling that it can beat Dell without resorting to price wars. Todd Bradley, the chief of the computer division, said, "The PC is not a commodity."
The company has started an ambitious marketing campaign to make that point.
RSS