Compaq First to Offer Innovative Solution in Personal Storage Management; New Technologies: 120MB Diskette Drive, Rewritable Optical Drive, Scanner Keyboard.

HOUSTON--(BUSINESS WIRE)-- March 4, 1996 -- In a strategic move to further enhance its commercial desktop options offerings, Compaq Computer Corporation (NYSE:CPQ) today introduced the LS-120 Drive, the industry's first 120MB diskette drive, a breakthrough in drive technology for data transfer, back up and online storage which is designed to become the next standard diskette in the PC industry. Combined with other recently announced key innovative options, Compaq further differentiates its offerings by adding significantly more value that appeals to a wide variety of customers.

The new personal storage management technologies, such as the Scanner Keyboard, the industry's first-ever combination keyboard and document scanner, and the PD- CD Drive, a revolutionary new rewritable optical drive which includes full backup software support, will be sold separately or bundled with business personal computers. These new options reinforce Compaq's leadership position in offering the most advanced, innovative options technology to fulfill PC users' needs. The LS-120 Drive, PD-CD Drive and the Scanner Keyboard deliver a solution to easily archive data, maintain hard disk space, simplify tape backup and modify documents that were not previously accessible electronically.

"Our customers have told us that they are frustrated by trying to capture, store and manage their business information," said John T. Rose, senior vice president and general manager, Commercial Desktop Division, Compaq Computer Corporation. "With these new options for commercial desktops, Compaq is once again delivering a solution." "The new LS-120 and PD-CD drives offer users a choice of the best new removable storage technology available, and with the new Scanner Keyboard, users can now scan, organize and retrieve documents in a matter of seconds and eliminate the need for additional fax and reproduction equipment."

LS-120 Drive

The LS-120 drive is designed to be the new standard diskette drive in the PC industry, offering an affordable and easy-to-use solution for business users who need to transfer large files and applications, or seek an inexpensive back-up, archiving or online storage alternative. The new drive-- developed by Compaq, 3M and Matsushita-Kotobuki Electronics Industries, Ltd.--stores 120 MB of data, 80 times more data than current 1.44MB diskettes, and read/writes up to five times the speed of standard diskette drives.

The LS-120, which uses a standard IDE interface, is fully backward compatible to protect the investment PC users have made in their current installed base. In addition to the new 120 MB diskettes, the LS-120 accepts 720 KB and 1.44 MB diskettes and read/writes those diskettes up to three times faster than standard diskette drives. The drive is fully compatible with Windows NT and Windows 95 in acting as the PC's A drive.

The LS-120 drive is available as a standard feature on the Compaq Deskpro 5133 and 5166 LS models introduced today (see separate release: New Compaq Desktop PCs, Breakthrough Storage Technology Significantly Increase Business Productivity). It will also be available separately as an option for $210(a). The 120MB diskettes are available today and priced at about $15 per diskette.

PD-CD Drive

The Compaq rewritable optical PD-CD drive serves as two drives in one: a 4X-speed CD-ROM drive and a rewritable optical drive which provides fast, convenient access to 650 MB of storage per disk. The PD-CD offers PC users a very affordable, advanced technology to allow them to increase their business productivity.

The Compaq PD-CD drive also offers Arcada backup exec software, a feature which simplifies backup and virtually eliminates the need for tape drives or additional hard drives. The software, which is provided on one CD, offers a data compress feature and supports full and incremental backup. Aracada also provides multi-lingual and multi-OS support.

The PD-CD drive costs $559 and is available immediately as an option on all new Compaq ProLinea and Deskpro PCs. The Compaq PD-CD cartridges currently retail for about $80 for a package of two and can be used for more than 30 years, making the PD-CD an economical choice over adding additional hard drives to a PC.

The PD-CD drive accepts standard 4X CD-ROM discs or music CDs, and can also write and quickly and easily store to new PD-CD cartridges. A PD disk can serve as a transportable hard drive equivalent that can be shuttled between home and office, or stored for added security. Storing files on PD disks also provides additional space for software applications and facilitates operations where multiple users are accessing the same PC.

Scanner Keyboard

The Scanner Keyboard offers business users an efficient, cost-effective and space-saving device to scan important images and paper documents. It is offered as an option for use with any Compaq PC or other industry-standard PC with the minimum hardware requirements. It integrates document management software and Optical Character Recognition (OCR) technology, giving the PC the ability to accept paper documents, edit them and easily execute filing, copying and faxing tasks.

The Scanner Keyboard, based on technology from Visioneer, integrates a high-performance scanner into a keyboard featuring Windows 95-keys. The scanner supports an optical resolution of 200dpi horizontally and 400dpi vertically (through software interpolation). The scanner is imbedded in the keyboard and automatically activated by the presence of paper which immediately launches the scanning application. As the paper is scanned, the image appears on the screen and the included PaperPort software reads the document and transforms it into an electronic format. Utilizing PaperPort Links software, users can access their scanned documents from more than 50 popular applications, including fax, e-mail, document management and graphics imaging.

The Scanner Keyboard is compatible with 486-based PCs or higher, Windows 3.1, Windows for Workgroups 3.11, or Windows 95. The Scanner Keyboard works off a serial port; no ISA card is required.

The Scanner Keyboard is priced at approximately $350 and has a one-year limited warranty(b). It is available immediately in retail outlets in North America and is expected to be available through resellers by the end of the first quarter.

Options Pricing

In a separate announcement, Compaq today reduced prices on current options -- including monitors and memory -- by up to 20 percent. (See separate release: New Compaq Desktop PCs, Breakthrough Storage Technology Significantly Increase Business Productivity).

Company Background

Compaq Computer Corporation is the world's largest supplier of personal computers, offering desktop PCs, portable PCs, servers and options. The company reported 1995 worldwide sales of $14.8 billion. Compaq products are sold and supported in more than 100 countries through Compaq marketing partners and sold directly to customers through Compaq Direct Plus at 1-800-888-5858. Compaq provides 24-hour customer support and can be reached through the Compaq forums on America Online, CompuServe, Internet (http://www.compaq.com), and Prodigy, or by calling 1-800-OK-COMPAQ. Product information and reseller locations can be obtained by calling 1-800-345-1518.

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(a) All pricing listed herein is estimated street pricing; actual pricing may vary.

(b) Certain restrictions and exclusions apply.

Compaq, Registered U.S. Patent and Trademark Office. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies. Innovate Forum is a service mark of Compaq.

CONTACT: Compaq Computer Corporation

Rebecca Nahas

713-514-0484

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Miller/Shandwick Technologies

Scott Collins, Eric Grodziski

617-536-0470

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