Compaq Introduces New Memory Options Business Model to Deliver Competitive Pricing and Availability; Sterling Memory Initiative Provides Maximum 48-Hour Cycle Time Between Order and Delivery.

--(BUSINESS WIRE)--Oct. 7, 1996--

Editor's Summary

Compaq Today Announced: Sterling Memory Initiative: A new Compaq memory options business model designed to provide competitively priced memory within 48 hours of order. Program elements include:

o Build-to-Order Process: Assembly of DRAMs into specific memory modules the day the order is received;

o Rapid Cycle Time: consistent availability and reliability of memory shipments within 48 hours of customer's order;

o Competitive Pricing: rapid response to decreasing component prices and competitive pricing actions.

o Channel Improvements: Channels can dramatically reduce their inventory and improve profitability by decreasing their memory inventory.

o Price Reductions: Compaq also announced pricing reductions for its desktop, portable and server memory of up to 65 percent.

HOUSTON, Oct. 7, 1996 -- Demonstrating its commitment to provide its customers and resellers with competitively priced, on-time memory availability, Compaq Computer Corporation (NYSE:CPQ) today announced in the U.S., the Sterling Memory Initiative, a build-to-order logistics program designed to provide a maximum 48-hour cycle time between order and delivery. Sterling allows Compaq to rapidly respond to decreasing component prices and competitive pricing actions, and enhance memory availability to its customers. The name "Sterling" reflects the excellence and quality of Compaq's memory options business.

"Today's powerful processors and operating systems, such as Windows NT and Windows 95, drive the need for additional memory. This initiative is in response to our customers who require consistent memory availability with dependable compatibility at competitive prices," said Ross Cooley, Senior Vice President and General Manager, Compaq North America. "Sterling offers our channels a maximum 48- hour turnaround from the time they order. This is a significant benefit for our customers and provides a competitive edge for Compaq in the memory business."

Benefits of the Sterling Memory Initiative

Following are the three key elements to Compaq's new memory business model:

o Build-to-order implementation: Compaq will now hold raw DRAMs and assemble them into memory modules the day an order is received;

o 48-hour cycle time: within 24 hours of the channel's order, the memory modules are packaged and shipped overnight to ensure the order is fulfilled within 48 hours;

o Competitive pricing: based on the improved availability and reduced inventory resulting from the build-to-order process, Compaq is able to immediately respond to component and competitive pricing reductions.

"The Sterling Memory Initiative has allowed us to consistently respond to our customers' system expansion needs," said Pat O'Horo, Vice President of Systems Product Marketing at Tech Data, a leading distributor of PC products. "The 48-hour fulfillment ensures memory is available when our customers need it at a competitive price, resulting in a tremendous advantage for us and them."

"Sterling, combined with Compaq's real-world and compatibility memory testing, gives Compaq a strong competitive advantage in the marketplace," said Stella Kelly, industry analyst, Computer Intelligence. "Compaq further exemplifies its commitment to its options business by providing high-quality memory directly from certified suppliers whose modules meet Compaq's superior quality specifications."

Performance Benefits

Driven by today's powerful technology and computing needs -- and the need for reliable, compatible memory to maintain productivity -- Compaq memory must pass stringent testing procedures to better prevent errors and problems caused by the stress. Compaq purchases memory exclusively from vendors which meet the PC company's rigorous quality standards. Compaq then thoroughly tests and authorizes the DRAM for use in Compaq CPUs.

Commitment to Resellers

The Sterling Memory Initiative further demonstrates Compaq's commitment to its options business and its reseller channels. In addition to aggressive pricing and quality standards, Compaq sets itself apart from the competition by focusing on its PC options business as a competitive strength to deliver quality, leadership products -- from monitors to storage to memory -- that combine unmatched performance and solid customer value.

Initiative Worldwide Rollout

The Sterling Memory Initiative will be implemented in Canada in the fourth quarter 1996. The program will expand with select elements for the rest of the world in first quarter 1997.

Price Reductions

Compaq today also announced the following U.S. memory pricing reductions for its desktop, portable and server products effective immediately (a). -0-

Desktops (Note: Family product names to be included)

Model                      Old Price     New Price   Percent Savings
Fast Page DIMMs
 Deskpro XL P6
  16 MB DIMM Kit              $439          $264           40%
  32 MB DIMM Kit               875           495           43%
  64 MB DIMM Kit             1,861           932           50%
  128 MB DIMM Kit            4,375         3,693           16%

Fast Page SIMMs (Tin Leads, No Parity)
  ProLinea 4 MB FPM SIMM        83            56           33%
  Deskpro 8 MB FPM SIMM        186            99           47%
  ProLinea E 16 MB FPM SIMM    367           172           53%
  All SKUs 32 MB FPM SIMM      933           330           65%

Fast Page SIMMs  (Gold Leads, Parity)
 Deskpro XL
  4 MB FPM SIMM                166            61           63%
  8 MB FPM SIMM                250           121           52%
  8 MB FPM Kit                 333           121           64%
  16 MB FPM Kit                406           237           42%

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Portables

Model                      Old Price     New Price   Percent Savings

Armada 4100
 8 MB Kit                     $219          $133           39%
 16 MB Kit                     439           240           45%
 32 MB Kit                     799           447           44%

Armada 1100
 8 MB Kit                      219           133           39%
 6 MB Kit                      439           240           45%

LTE 5000
 8 MB Kit                      219           146           33%
 16 MB Kit                     439           252           43%
 32 MB Kit                     799           485           39%
 64 MB Kit                   1,595           941           41%

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Servers

Model                      Old Price     New Price   Percent Savings

ProLiant 5000
 64 MB DIMM Kit             $1,750        $1,111           36%
 128 MB DIMM Kit             3,722         2,364           36%

ProLiant 4500, 4000, 2000
 32 MB Expansion Kit           828           510           38%
 64 MB Expansion Kit         1,407           858           39%
 128 MB Expansion Kit        2,907         1,841           37%
 256 MB Expansion Kit        6,817         3,807           44%

ProLiant 1500;
 ProSignia 300 & 500
 32 MB Expansion Kit           703           395           44%
 64 MB Expansion Kit         1,453           858           41%

ProSignia 300, 500
 8 MB Expansion Kit            341           205           40%
 16 MB Expansion Kit           449           236           47%
 32 MB Expansion Kit           703           395           44%
 64 MB Expansion Kit         1,453           858           41%

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Company Background

Compaq Computer Corporation, a Fortune 100 company and the world's largest supplier of personal computers, delivers useful innovation through products that network people with information. Compaq is strategically organized to meet the current and future needs of its customers, offering Internet and enterprise computing solutions, networking products, commercial PC products and consumer PCs. In 1995, the company reported worldwide sales of $14.8 billion. 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.

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(a)All prices are estimated street prices; reseller prices may vary.

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

CONTACT: Compaq Computer Corporation

Rebecca Nahas

713-514-0484

[e-mail]

or

Miller/Shandwick Technologies

Jessen Wehrwein

617-536-0470

[e-mail]