What also surely prompted IBM to lower its pricing is that Hewlett-Packard Co. (NYSE: HPQ) last week started shipping the Cisco FC switches -- for well under IBM's original price points (see HP Moves Hard on Cisco).
SG Cowen Securities analyst Michael Jung, who published a research note yesterday detailing IBM's price cuts, says the evidence suggests Cisco's incursion into the SAN market will not be as rapid as it might have hoped.
"Four months after IBM initial pricing was announced... we believe IBM is still trying to find the right price customers are willing to pay to give Cisco a try," Jung writes in the note.
IBM made its biggest reduction on the Cisco MDS 9216 fabric switch. Originally $52,263, a 16-port 9216 is now down to about $36,000 list.
Table 1: IBM List Prices for Cisco MDS Switches
| Product/Option | Initial Price (02/17/03) | Current Price (06/17/03) | % Change |
| MDS 9216 (16 ports) | $52,263 | $36,000 | -31% |
| MDS 9509 (AC Power) | $85,468 | $75,500 | -12% |
| MDS 9509 (DC power) | $103,191 | $91,500 | -11% |
| 16-port Fibre Channel line card | $44,912 | $29,000 | -35% |
| 32-port Fibre Channel line card | $55,890 | $33,000 | -41% |
| Sources: IBM; SG Cowen | |||
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