Compaq Expands Customer Choice Model; Offers New Prosignia Business Products in U.S. Retail Stores.

HOUSTON--(BUSINESS WIRE)--March 29, 1999--

New Prosignia NeoServer First Ready-To-Go Server

for Small Businesses

Building on its breakthrough Customer Choice Model, Compaq Computer Corporation (NYSE:CPQ) today launched new innovative products and services for small and medium business (SMB) customers and expanded its distribution reach by offering its award-winning Prosignia products in U.S. retail outlets, including CompUSA, Office Depot, OfficeMax and Staples.

This makes Compaq the only major computing company to sell aggressively priced business products through all major channels of distribution -- resellers, distributors, direct marketers, retailers and direct. To further strengthen its distribution channel strategy, the company also announced new and innovative programs designed to provide resellers with greater choice in servicing their SMB customers' needs.

"Compaq's Customer Choice Model is the first to successfully marry reseller distribution with direct," said Eckhard Pfeiffer, President and Chief Executive Officer, Compaq Computer Corporation. "No other vendor in the industry has demonstrated this level of commitment to help customers buy products and services how, when and where they want. In a short period, we have seen positive signals from key areas, including satisfied new customers, Prosignia direct and reseller sales, market share, industry recognition and competitors who appear to be emulating our model."

Since its introduction just five months ago, the Compaq Prosignia family has received overwhelming response from customers and the industry alike, with more than 15 industry awards, including the coveted "PC Magazine" Editors Choice Award(1). This recognition has helped propel Compaq to become the preferred brand among SMBs(2). Underscoring the success of its Customer Choice distribution model, Compaq ships competitively priced Prosignia products configured to customer specifications in five days or less on average(3).

Award-Winning Compaq Prosignia Family Now in U.S. Retail Stores

Providing SMBs unmatched access to leading, customized technology, Compaq now offers the Prosignia family through U.S. retail outlets initially including CompUSA, Office Depot, OfficeMax and Staples. Customers may purchase Prosignia products off the shelf at these locations. In addition, customers can order Prosignia products through one of more than 1,300 Built for You Kiosks. By extending the Prosignia into retail stores, Compaq raises the standard for delivering business-class products through virtually every distribution channel, while underscoring the benefit of Compaq Customer Choice -- providing customers the ultimate flexibility to acquire and implement technology that addresses their unique challenges.

"Years ago, Office Depot struggled, like many retailers have today, with trying to figure out, in this maze of products, what were the best products and who were the best partners to work with," said John Macatee, President and Chief Operating Officer, Office Depot. "We really saw it in our best interest to pick the strongest players in the field and Compaq clearly has been a very, very good partner for Office Depot. We consider them one of our best suppliers and vendors and they've been a great partner with us to provide us with the products that our customers need."

Compaq PartnerDirect -- The Inventoryless Distribution Model

In collaboration with key distribution partners, Compaq's new PartnerDirect program offers resellers the ability to purchase Prosignia products directly from Compaq. Through a dedicated telesales center, resellers can quickly purchase configure-to-order Compaq Prosignia models and third-party products and have them shipped to their location or directly to their customer. PartnerDirect allows Compaq to respond quickly to reseller partner-led orders for customized industry-specific solutions, ultimately reducing delivery cycle times and eliminating channel inventory. Initially under this program, Ingram Micro and Tech Data Corporation will co-locate with Compaq in its Houston-based manufacturing facilities to provide call center, third-party products and complex configuration support. This program allows Compaq authorized resellers to deliver to their customers the latest technology as efficiently as any direct manufacturer.

Advanced Technologies and Services for SMBs

With customer satisfaction a top priority, Compaq expanded its line of leading technology Prosignia products and services for the SMB market, unveiling new solutions that increase customer choice in configuring, implementing and maintaining technology.

Compaq's new Prosignia offerings include:

-- New Product and Configuration Choices: During the 1998 fourth

quarter, Compaq led PC server sales to U.S. small and

medium-sized businesses and also captured the leading position in

desktop shipments to medium-sized businesses(4). Compaq's new

product line-up for SMBs extends its award-winning and popular

Prosignia family to offer advanced, integrated hardware and

software solutions, plus breakthrough pricing, along with the

latest Intel processors for notebooks, desktops and servers.

Compaq also now offers the latest mobile AMD processors as

configuration choices on Prosignia notebooks.

-- The Compaq Prosignia NeoServer, Another Industry First: The

Compaq Prosignia NeoServer is the industry's first ready-to-go

server for small businesses that integrates hardware, software

and networking products. This solution offers a complete,

easy-to-install, easy-to-use and easy-to-maintain package for

file and peripheral sharing, Internet access, e-mail, automatic

data backup and remote access, and can network up to 25 PCs.

-- Software CTO for Prosignia Servers: Compaq underscored its

commitment to providing businesses complete solutions with the

introduction of software CTO (configure-to-order) for Prosignia

720 and 740 servers purchased through Compaq DirectPlus. Through

software CTO, Compaq will pre-install either Microsoft(R) Windows

NT(R) Server 4.0, Novell NetWare 4.2 or Novell NetWare 5.0 per

each customer's request and test each configuration for seamless

operation right out of the box.

-- Financing Flexibility: Four new programs from Compaq Capital

offer SMB customers greater financial flexibility to acquire the

technology needed to grow their businesses. Through the second

quarter, the DirectPlus Trade-in Trade-up Program(5) lets customers

trade in certain older portables and desktops and receive a value

of up to 10 percent off eligible new Compaq portables and

desktops leased or purchased through DirectPlus. This program

accepts trade-ins from Dell, Gateway, Compaq and others to help

customers more affordably migrate to the latest Compaq technology

and eliminate equipment disposal concerns(6). For companies in

business less than two years, Compaq Capital now offers a New

Business Lease. Often, companies just starting out find it

difficult to obtain credit. Through this program, young companies

can take advantage of the benefits leasing and financing provide

as a method to acquire needed Compaq hardware, software, and

services. Both Fair Market Value and $1.00 Purchase Option leases

are available for 18-, 24-, and 36-month terms through this

program. Beginning April 19th, customers approved for a Compaq

Capital lease will be automatically considered for an additional

line of credit, up to $7,500(5), for use on future leases. With the

Compaq Capital Credit Line, customers simply apply for a lease

once and continue to order equipment and softcosts up to the

approved credit line and term limits. Each acquisition will be

added to the customer's existing business lease with minimal

additional processing. Finally, Compaq Networking Bundled

Solutions program offers SMBs the ability to lease packaged

solutions, combining network hardware, software and service, with

one monthly lease payment.

-- Service Selection: Whether an SMB is looking to better manage IT

operations, or reduce the cost of doing business, Compaq services

can help. Compaq CAREPAQ services offer SMBs a "virtual" IS

department with the delivery of complete assessment,

installation, setup and warranty services. In addition, the

Compaq Solution Alliance (CSA) helps link SMBs to leading

software products, information and services that are applicable

to their businesses. Compaq's new service offerings include:

-- Compaq Business Support Center: The industry's first

round-the-clock technical service dedicated to SMBs. This

toll-free technical support hotline is available 24 hours a

day, seven days a week, including holidays, and offers free

support for setup, installation, configuration and

troubleshooting of in-warranty Compaq Prosignia products.

-- Compaq Online Services: Compaq extends its online.commerce

offering to help SMBs maximize the Internet to compete

nationally and globally with businesses many times their

size. Three new additions to online.commerce include a

business card page, a marketing Web site and a new

browser-generated electronic commerce storefront to enable

SMBs greater presence and market reach on the Internet(7). In

addition, the Compaq online.library provides easy Internet

access to top-selling business and technical reference books

published by Macmillan Computer Publishing and fulfilled by

Barnes and Noble through their Web site,

www.barnesandnoble.com. The books have been specifically

selected to help SMBs better understand and leverage their

technology investments.

Compaq Background

Compaq Computer Corporation, a Fortune Global 100 company, is the second largest computer company in the world and the largest global supplier of computer systems. Compaq develops and markets hardware, software, solutions, and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, enterprise and network storage solutions, 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 are available at http://www.compaq.com.

Compaq, Registered U.S. Patent and Trademark Office. Compaq Prosignia and Compaq Prosignia NeoServer are trademarks of Compaq Computer Corporation. Microsoft and Windows NT are either trademarks or registered trademarks of Microsoft Corporation. Intel, Pentium are registered trademarks of Intel Corporation. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies.

1 Compaq Prosignia Desktop 330 -- PC Magazine, March 23, 1999.

2 Based on a survey of 202 U.S. medium-sized businesses (100-499 employees) conducted by Access Media International during the first quarter of 1999 that addresses IT-related consumption, trends and future directions.

3 Customers must obtain credit approval prior to orders being shipped.

4 IDC Q4 Quarterly Tracker -- Market share data from medium business (100 to 499 employees) and small business (10 to 99 employees) segments as defined by IDC.

5 Limited-time offer -- to be eligible, customers must place orders through Compaq DirectPlus by June 30, 1999. Compaq reserves the right to change, alter or cancel this offering at any time, without notice.

6 Some restrictions apply. For further details call Compaq Capital SMB customer and reseller line at 888/277-5942.

7 Some restrictions apply. Limited time offer from March 30, 1999 to December 31, 1999. For further details, visit Compaq's Web site at: http://www.compaq.com/smb/onlineservices/