Compaq Unveils Customer Choice Model Adding Direct Sales to Channel Distribution.

NEW YORK--(BUSINESS WIRE)--Nov. 11, 1998--

Launches Prosignia Brand and Direct Sales, Offering

Unmatched Value for Small and Medium Businesses

As part of its strategy to extend its leading market share position, Compaq Computer Corporation (NYSE:CPQ) today launched a massive direct sales and marketing effort in the U.S. to deliver the utmost in customer choice and value to growing businesses who prefer to buy direct.

Integral to this effort, Compaq redesigned the economics of its channel and reseller distribution model to give customers the best of both worlds - a robust direct program offering outstanding value and a complementary reseller program harnessing the strength of the Compaq reseller network by providing the relationships and value-added support customers expect.

The first initiative in this business model is today's launch of the new Compaq Prosignia family of competitively priced desktops, portables and servers specifically designed to meet the needs of small and medium-sized businesses (SMBs). The result is a total focus on the customer by offering the broadest choice of products, services and solutions at compelling prices.

"These exciting new efforts are milestones for Compaq as we drive deeper into the heart of the direct marketplace," said Eckhard Pfeiffer, President and Chief Executive Officer, Compaq Computer Corporation. "Compaq has married reseller distribution with the direct method of delivering products to give customers more choices than they've ever had before in terms of products, services, solutions, buying methods and leasing options. No other company can match our ability to do business with customers the way they choose to do business; which, at the end of the day, is the ultimate value: customer choice."

Thousands of Configurations, One Simple Choice

The Compaq Prosignia family satisfies the needs of customers who prefer to buy direct by offering literally thousands of configure-to-order models priced at or below other direct competitors, coupled with breakthrough online services, competitive leasing programs and comprehensive service and support.

No matter whether customers prefer superb service and support along with high performance products, the greatest value for the money or flexibility in technology and solutions, Compaq can meet their needs every step of the way. The uniqueness of the Compaq model combines the ease and economy of delivering Prosignia products directly to the customer from Compaq with the value and security of service from the local value-added reseller (VAR). Due to its channel strength, Compaq is ideally positioned to deliver this powerful customer choice model to growing businesses.

"In today's market, customers want to expand their choices of how to buy computer products. While the vast majority of the SMB users are pleased with the local attention and service they receive from their value-added-reseller, others are seeking a closer relationship with the manufacturer," said Doug Antone, Executive Vice President of Ingram Micro, and President, Frameworks Total Integration Services.

"This new initiative from Compaq provides customers with that choice. The new terms and conditions and reseller agent program announced today were jointly developed by Compaq and its partners, and we believe they will drive new business for Compaq and the channel," Antone continued.

Compaq's added focus on direct sales enhances its existing direct selling programs through DirectPlus, Compaq At Home, Compaq GEM (Government/Education/ Medical) Online and the vast Compaq reseller network at www.compaq.com/buynow.

Fast-Growing SMB Market Embraces PCs, Internet

According to research from Access Media International, technology-savvy businesses with 500 or fewer employees are the fastest growing, yet least penetrated segment of the small business market. These businesses are characterized by their interest in using the Internet to grow their markets, their rapid adoption of local area networks, their preference for using the direct method for PC purchases and upgrades, and their reliance on VARs for networking, service and support.

Compaq designed its small and medium business strategy to meet these companies' needs at every angle:

-- Compaq Prosignia products provide the latest industry-standard technology and superb value for the money

-- Products are available direct from Compaq, or from more than 11,000 local resellers, giving customers the ability to buy their products any way they wish

-- Prosignia products purchased through DirectPlus will be shipped as fast as next day and on average within five business days

-- The hottest new Internet services are available to help businesses improve their productivity and lower their operating costs 

-- Flexible leasing solutions from Compaq Capital bring all the pieces together, including hardware, software, options and services, for one easily affordable monthly payment and one bill

-- Quick access to technical expertise is available 24 hours a day, 365 days a year

-- Separate hotline support is provided through the Prosignia Business Support Center, set up specifically for the new Prosignia family of products

-- Optional CarePAQ services allow SMBs the flexi tailored products to help growing businesses compete in the global marketplace by providing them with the best ownership experience and highest value for the dollar. Th, hard drives, removable media and multimedia tools. Each product is fully network tested, analyzed for qualiof a button, Compaq now provides easy access to optional Compaq Online Services with a built-in icon on the business community through the Internet. Compaqce of mind through security and back-up features. Customers can get these services by going to the Web at www.compaq.com/smb/onlineservices or directly through the Prosignia products with on-demand access.

Compaq Capital Leasing Flexibility

Compaq brings complete, bundled technology solutions to growing businesses - providing the products, services, distribution choices and affordable pricing that entrepreneurs demand. Compaq Capital's flexible financing solutions are the final element of the total solution, bundling together any Compaq commercial products and services, plus shipping, installation, reseller services, other manufacturers' equipment and more into one consolidated, easy-to-manage lease.

Compaq Capital's range of leasing alternatives provides small and mid-sized businesses the financial and technological flexibility they need to compete effectively, helping them get more technology for their money and upgrade easily and affordably over time. Application and documentation processes are quick and simple and are specifically designed to make leasing as easy as paying cash. Customers can lease Prosignia hardware bundles from $45 a month for a Prosignia 310(1) with a Celeron 300A/66 processor to $389 a month for a full network bundle(2)serving as a company's virtual information technology (IT) and support infrastructure.

Compaq Capital Corporation, founded in 1997 and based in Woodbridge, N.J., was formed for the distinct purpose of providing Compaq customers worldwide with flexible, Compaq-branded financing to fund their technology investments. Compaq Capital offers a range of leasing alternatives to meet the needs of small, mid-sized and large businesses worldwide. For answers on all leasing questions, customers and resellers can call Compaq Capital at 1-888-277-5942.

Prosignia CarePAQ Services

Compaq today unveiled CarePAQ Services for the Prosignia product family, aimed at providing a "virtual" outsourced IT department for the Prosignia customer. Through CarePAQ support, Compaq offers pre-packaged services, while providing customers a single point of contact for their basic and business-critical service and support needs. Compaq CarePAQ includes hardware warranty extensions, installation/startup services, software services and priority response for business-critical environments. These services may be selected at the time of purchase or added at a later date.

Agent Reseller Program

Prosignia products are available direct from Compaq beginning today in the U.S., as well as through all commercial channels that small and medium businesses prefer to use. These include DirectPlus at www.directplus.compaq.com or at 1-800-888-5858, through Compaq Authorized Resellers and Compaq SMB Solution providers and from direct channel solution providers such as CDW and Insight.

Recognizing that many customers value the role of local resellers in providing support and solutions, Compaq created the Agent Reseller Program Model as an attractive alternative to the resale of products, giving resellers a choice in how they obtain Prosignia products from Compaq.

"Compaq's new agent program allows resellers to offer easy access to Compaq's leading technology, enabling us to fulfill SMBs' product requirements seamlessly," said Steve Harper, President of Network Management Group Inc., an SMB reseller located in Hutchinson, Kansas. "This eliminates the burden of inventory management so we can focus on providing the value-added services our customers have come to expect."

Rather than buying a product, carrying it as inventory and reselling it to the end customer, agents can simply receive the commission from Compaq for their role in the sale without ever taking ownership of the product, while maintaining and strengthening their relationship with the customer. Customers can combine the ease of purchase of a "best deal" product with the expert attention, assistance and service of an agent. The Agent program also frees up resellers' credit lines with other suppliers and reduces their own credit risk.

Any Compaq Authorized Reseller can participate in the Agent Model. Compaq Prosignia products will be available outside the U.S. starting in the first half of 1999.

Company Background

Founded in 1982, Compaq Computer Corporation is a Fortune Global 100 company. Compaq is the second largest computer company in the world and the leading global supplier of personal computers. Compaq develops and markets hardware, software, solutions, and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, networking and communication 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 are available at http://www.compaq.com.

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

(CCC) to qualified commercial customers, subject to credit approval and execution of CCC lease documentation. Monthly lease payments referenced in this press release are based on 36-month fair market value lease, and do not include taxes, fees or shipping charges (though these items may be included in a lease). Offering subject to other restrictions and CCC reserves the right to change, alter or cancel this offering at any time without notice.

(1) Price includes a Prosignia 310 with a Celeron 300A/66 processor.

(2) Bundle includes a Prosignia 720 server, four Prosignia desktops and one Prosignia notebook, software, a Compaq Fast Ethernet HB2121 8-Port 100 Base TX Hub, two online service bundles with internet access, online.backup, online.briefcase and online.delivery, onsite installation for the Prosignia server, 180 minutes of software support and three years of onsite, four-hour response time for the server.