Compaq Delivers New PC Solutions Tailored for Small Business Customers.

HOUSTON--(BUSINESS WIRE)--Feb. 2, 1998--

New Deskpro Models with Preinstalled Business Software and

Flexible Leasing and Service Programs Provide

Superior Integrated Solutions

Committed to providing customers with ways to increase their productivity and competitiveness, Compaq Computer Corporation (NYSE:CPQ) -- the world's number one(1) supplier of PCs -- today announced in the U.S. new Deskpro models aimed at small business customers.

The new fully featured Deskpro 2000 Small Business Edition (SBE) combines value, performance, preloaded small business software applications, and optional leasing and service programs to deliver the most comprehensive solution for growing businesses ever offered by Compaq. These integrated desktop solutions are available today through a network of trained and authorized Compaq Value Added Resellers (VARs) focused on small businesses. Prices for the new Deskpros models start at $1,679(2), with monitor included.

"Today's announcement demonstrates continued commitment of Compaq to provide the right set of products, services, programs and partnerships at the right price points to the high-growth small business segment," said Kenny Kurtzman, Vice President, Small and Medium Business Division, Compaq Computer Corporation. "Several months ago Compaq launched a small business server bundle, providing for the first time an easy and comprehensive integrated solution that combines the Compaq ProSignia 200 server with Microsoft BackOffice Small Business Server Suite. Now customers can get the world's number one selling desktop computer bundled with Microsoft Office 97 Small Business Edition, the popular office productivity software, in an easy-to-use, reliable and affordable configuration designed to help customers save time and sharpen their competitive edge. We also plan to continue offering superior solutions to address the growing requirements for this customer set."

"This product will be available initially through select channel partners who actively target small business customers. Compaq plans to offer small business desktop product bundles through all Compaq authorized reseller partners by the second quarter of 1998," said Lynn Schlemeyer, Vice President, North America, PC Products, Compaq Computer Corporation.

"The delivery of Microsoft Office 97 Small Business Edition preinstalled on reliable Compaq Deskpro PCs continues the Microsoft and Compaq tradition of delivering tightly integrated solutions," said Jon Reingold, Vice President of Desktop Applications Marketing, Microsoft Corporation. "Together, Compaq and Microsoft are helping small businesses enhance productivity and accommodate growth with technology that is affordable, easy-to-use, and gets results today and in the future."

New Models Incorporate Right Set of Hardware and Software

The feature-rich Deskpro 2000 SBE products offer the best combination of performance, popular office productivity applications, and industry-leading standard technologies needed to handle increased productivity requirements and expanding workloads in demanding, growing business environments.

All Deskpro 2000 SBE products are based on the proven reliable Deskpro 2000 platform and feature Intel Pentium with MMX technology or Intel Pentium II processors, high-capacity Ultra ATA hard drives, 32 MB of SDRAM upgradeable to 384 MB, and 512 KB of secondary cache to maximize performance in processor-intensive, multitasking environments. Designed for quick and easy servicing, the new models provide easy access to parts for simplified upgrades.

Each new Deskpro 2000 SBE PC comes preloaded with a factory-installed set of the latest software tools that are essential for customers wanting to increase their efficiency and productivity, while staying ahead of growing and changing business environments. The bundled Microsoft Office 97 Small Business Edition includes a powerful suite of applications including Word 97, Microsoft Excel 97, Outlook 97, Publisher 97, Microsoft Internet Explorer, Expedia Streets 98 and Small Business Financial Manager 97. In addition, Norton AntiVirus 4.0 software, which checks for and eliminates troublesome viruses and repairs files, is included to safeguard against costly and annoying business interruptions and aid in increasing productivity. Microsoft Windows 95 is also preinstalled on all systems.

To help small businesses control the costs of PC configuration, management and integration, and successfully manage multiple PCs from a single point on a network, the Deskpro 2000 SBE products include a robust, industry-standard and proven set of Intelligent Manageability features. For example, Intelligent Manageability's fault prevention capability provides early warning notification of pending hard drive failures, which enables preventive maintenance to be scheduled, avoiding unexpected delays.

Flexible Leasing, Financing and Service Options

Compaq is offering a variety of financing options intended to help small businesses maximize their budgets, carefully manage their cash flow and protect their technology investments. Through its financial subsidiary, Compaq Capital Corporation, Compaq is able to offer special promotional leasing programs starting as low as $54 per month with no money down for 36 months on equipment delivered through April 30, 1998(3). These flexible and affordable monthly leasing programs allow small business customers to add equipment as their needs grow and upgrade equipment as technology changes, without increasing their monthly payments.

Customers can also obtain prompt and responsive software support for more than 100 popular small business software applications through Compaq's Software Quick Support service offering. The service is available via a toll-free hotline, reserved exclusively for customers who purchase this service. Software Quick Support is value-priced with telephone call packages available for five, 10 and 25 incidents. Coverage options include 7:00 a.m. to 7:00 p.m. (local time) Monday-Friday, on all standard, non-holiday business days or 24 hours-a-day, seven days-a-week. Software title support is available for many areas such as accounting, account management, communication, database, spreadsheet, publishing, presentation, WEB page design and Internet browsers.

Designed to provide extensive investment protection, all Deskpro products are covered under Compaq's premier three-year parts and labor warranty.

Three Superior Models

To meet the varying requirements of small business customers, Compaq is offering three different configurations of the Deskpro 2000 SBE product line. For mainstream users requiring solid performance, the Deskpro 2000 SBE Pentium Processor with MMX technology models are available at either 200 MHz or 233 MHz in a desktop configuration. In addition to all the standard features, these models include a 16X Max CD-ROM(4), high-capacity 2.4 GB or 4.3 GB SMART II-compliant Ultra ATA hard drives, and S3 enhanced 64-bit graphics with 1 MB synchronous SGRAM, upgradeable to 2 MB. These models, with a monitor, have a starting price of $1,679.

The minitower Deskpro 2000 SBE Pentium II 266 MHz model is designed for customers needing increased speed and performance, and includes all the standard features as well as an embedded 3D Matrox high-performance graphics solution with 2 MB of SGRAM, expandable to 4 MB for graphic-intensive and multimedia applications, and a high-capacity, high-performance SMART II-compliant 4.3 GB Ultra ATA hard drive. The Deskpro 2000 SBE Pentium II model also includes a 24X Max CD-ROM(5) with Enhanced Business Pro Audio and is priced at $2,379, including a monitor.

Company Background

Founded in 1982, Compaq Computer Corporation, a Fortune 100 company, is a global information technology company. Compaq is the fifth largest computer company in the world and the largest global supplier of personal computers. With worldwide sales of $24.6 billion in 1997, Compaq develops and markets hardware, software, solutions and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, networking products, commercial desktop and portable products and consumer PCs. The company is an industry leader in environmentally friendly programs and business practices.

Compaq products are sold and supported in more than 100 countries through a network of authorized Compaq marketing partners. Customer support and information about Compaq and its products can be found at http://www.compaq.com or by calling 1-800-OK-COMPAQ. Product information and reseller locations can be obtained by calling 1-800-345-1518.

Historical financial results have been restated to reflect the pooling of Tandem.

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Compaq, Registered U.S. Patent and Trademark Office. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies. Microsoft is either a registered trademark or trademark of Microsoft Corp. in the United States and/or other countries. Intel and Pentium are registered trademarks and MMX is a trademark of Intel Corporation.

(1) According to International Data Corporation (IDC) for 3Q 1997.

(2) All prices herein are estimated selling prices and include a Compaq V50 color monitor; dealer prices will vary.

(3) Financing available through Compaq Capital Corporation to qualified commercial customers in the United States. Rates are subject to change and are based on credit rating, terms, and options. Other restrictions may apply. Eligibility for this program is subject to customers meeting Compaq Capital's credit approval and signing Compaq Capital's lease agreement. Availability of upgrade option based on maintenance of credit status. The $54 per month lease payment is based on a lease rate factor of 0.0355 for a 36-month term and an assumed customer purchase price of $1,513. Higher purchase prices will result in higher monthly payments. This program and its terms are subject to change without notice.

(4) 16X Max CD-ROM drive data transfer rates may vary from 150 to 2400 KB/s.

(5) 24X Max CD-ROM drive data transfer rates may vary from 150 to 3600 KB/s.

CONTACT: Compaq Computer Corporation

Hedy Baker, 281-514-0484

[e-mail]

OR

Miller/Shandwick Technologies

Kerry Kelly, 617-536-0470

[e-mail]