Compaq Streamlines Distribution Logistics Model to Maximize Efficiency, Enhance Customer Satisfaction.

HOUSTON--(BUSINESS WIRE)--May 10, 1999--

As part of its plan to simplify business practices and improve execution, Compaq Computer Corporation (NYSE:CPQ) today announced a bold new North American Distributor Alliance Program that will forge broader relationships with fewer distributors to provide a more efficient method of distributing Compaq standard model business-class PC and server products that are built-to-order.

Through the Distributor Alliance Program, Compaq will reduce the number of destinations that it ships to by 70 percent. This will significantly reduce the complexity of product shipment logistics, so Compaq can more easily and accurately forecast and manage inventory levels, reduce transportation costs, focus channel resources and increase customer demand generation activities.

Compaq said that long-time distribution partners Inacom (NYSE:ICO), Ingram Micro (NYSE:IM), Merisel (Nasdaq:MSEL) and Tech Data (Nasdaq:TECD) will be participants in its Distributor Alliance Program. Beginning August 1, 1999, these companies are scheduled to be the exclusive two-tier distributors for Compaq commercial business products. They will market and sell Compaq products to channel partners and resellers in North America.

"The Compaq Distributor Alliance Program is a bold move that will reshape the way business computers are sold through the reseller channel," said Peter Blackmore, Senior Vice President and General Manager, North America, Compaq Computer Corporation. "By streamlining our logistics, Compaq is making the business less complex, more manageable, and more profitable for the reseller community, which remains a key advantage of Compaq over pure direct competitors. We believe that the efficiency gains of this program combined with more focused marketing programs will ultimately result in higher levels of customer satisfaction and enhance customer choice."

The Compaq standard model business-class products included in the new distributor program include Compaq Deskpro desktops, Armada notebooks, Proliant NT-based servers, Prosignia small and medium business products, Compaq workstations, and enhancements and monitors. The procurement and distribution programs remain unchanged for Compaq configured-to-order (CTO) products, high-performance enterprise servers and storage systems (Alpha, Unix, Himalaya), consumer PCs (Presario), and government and education products.

"This move by Compaq comes at a time in the industry when issues such as channel consolidation and outsourcing are forcing a new era in distribution," said Tony Amico, director, PC Channel Research, International Data Corp. "By essentially streamlining the distribution process and reducing operating inefficiencies, the Distributor Alliance Program could provide Compaq, the distributors and all related channels and resellers with the opportunity to become more profitable."

Distributor Selection Criteria

The distributors were selected based on several criteria including best-in-class configuration, distribution and shipping processes, proven and strong ISV relationships, complementary service capabilities, order management processes, and success in generating demand for Compaq products.

Alliances Key to Efficiencies

In addition to the new distributor program, supply chain efficiencies had been previously enhanced through Compaq's co-location program, which is already in place between Compaq, the distributors, and other key reseller partners.

Through co-location, channel partners share warehousing and manufacturing space with Compaq in Houston. They perform final assembly using third-party components and custom configuration on Compaq products as they come off the assembly line.

Co-location eliminates the need for partners to stock Compaq inventory at that site, as well as unnecessary shipping steps and touches in the supply chain. The results for customers are faster delivery times, additional configuration choices and improved customer satisfaction.

Compaq will continue its strong co-location alliance with CompuCom in serving major account customers. CompuCom, a leading corporate reseller, was Compaq's first co-location partner, and in this capacity has been working with Compaq to fulfill customized orders for large corporate product rollouts.

Channel Commitment

Compaq will continue to work closely with its traditional channel to help grow their businesses. These reseller partners will continue to receive hands-on account representation from Compaq, commitment for program funding and incentives, joint major account planning, and the ability to purchase configured-to-order (CTO) products directly from Compaq.

"Since its founding, Compaq has been a supporter and driver of the channel, initiating revolutionary changes to the model such as mass distribution, open sourcing and co-location. The new distributor program is the latest example of Compaq driving the next wave of channel change," said Mike Pocock, Vice President, North America Channel Sales, Compaq Computer Corporation.

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.

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

For further information, media may contact: Compaq Computer Corporation, Jean Alexander, 281/927-8405, [e-mail], or Shandwick International, April Lynch, 281/927-8613, [e-mail].

Compaq's Alliance Partners & Resellers Speak Out:

Inacom:

"The selection of Inacom as an Alliance Partner exemplifies our long-standing commitment to Compaq," said Bill Fairfield, President and Chief Executive Officer of Inacom. "After 17 years of investment in distribution excellence as a core of our business, Inacom now has the sophisticated facilities, talented people and comprehensive information systems to provide high quality and very efficient service."

Inacom (NYSE:ICO), headquartered in Omaha, Neb., is a global technology services company, supplying an integrated set of services to manage the lifecycle of information and telecommunications technologies to businesses. Since 1982 the company has helped clients as they design, procure, build, install and manage their distributed environments.

Ingram Micro:

"As leaders in our respective industries, Ingram Micro and Compaq have shared a successful partnership and have worked closely to drive industry changes that ensure that customers receive Compaq products and solutions from Ingram Micro quickly and efficiently. Our participation in Compaq's Distributor Alliance Program will help us to further extend our No. 1 market position as a Compaq solutions provider on a global basis. This program demonstrates our commitment to Compaq, our resellers and customers," said Douglas R. Antone, Executive Vice President of Ingram Micro, and President of Frameworks(TM), Total Integration Services(TM).

About Ingram Micro Inc.

Ingram Micro Inc. (NYSE:IM), headquartered in Santa Ana, Calif., is the world's largest wholesale distributor of technology products and services, and is a leading provider of assembly and integration services with sales of $23.6 billion for the past four reported quarters. The company and its subsidiaries operate in 33 countries and distribute more than 225,000 products to more than 140,000 resellers in 130 countries. Ingram Micro can be found at ingrammicro.com.

Merisel, Inc:

"We have built a strong partnership with Compaq, and both of our organizations have taken leadership roles in reducing costs and increasing efficiencies in the supply chain," said Jim Illson, President and Chief Operating Officer, Merisel, Inc. "We're proud to be part of Compaq's exciting new strategy, and we're confident that resellers will reap the benefits of the new distribution model through improved service levels."

Merisel, Inc., (Nasdaq:MSEL) is a leader in the distribution of computer hardware and software products. Based in El Segundo, Calif., Merisel is a Fortune 500 Company with 1998 sales of $4.6 billion. Merisel distributes a full line of 25,000 products from the industry's leading manufacturers to resellers throughout North America. In addition, the company provides a full range of customized, value-added services. Merisel also offers dedicated support to high-end resellers through its Enterprise Computing Division and the Merisel Open Computing Alliance (MOCA(TM)).

Tech Data:

"We have co-located with Compaq for more than a year and together delivered new supply chain efficiencies that will only get stronger through the implementation of the Distributor Alliance Program," said Anthony A. Ibarguen, Tech Data's president and chief operating officer. "We are very confident that the strategy Compaq is putting in place will ultimately benefit the entire industry. This move clearly embraces our FactoryDirect initiative and the benefits of integrated distribution for the reseller channel."

Tech Data Corporation (Nasdaq:TECD) is a leading distributor of more than 75,000 technology products and business services to more than 100,000 resellers worldwide. Founded in 1974 and based in Clearwater, Fla., the Fortune 500 company provides extensive pre- and post-sales service and support, as well as high-quality configuration and assembly services and a full range of electronic commerce solutions.

Network Management Group:

"The Distributor Alliance Program enables me to continue to procure products from the distributors and methods I choose, while building upon that flexibility with strengthened partnerships and supply chain efficiency," said Steve Harper, President, Network Management Solutions and President of Compaq's Small-to-Medium-Sized Business Reseller Advisory Council.