News release

Compaq Announces New iPAQ Home Internet Appliance Offer Coupled with New MSN Companion 2.0 Service Upgrades

Compaq Computer Corporation (NYSE: CPQ), a global enterprise technology and solutions company, today announced a $200 price reduction and six free months of the enhanced MSN Companion 2.0 service for its popular Compaq iPAQ™ Home Internet Appliance.

The Compaq iPAQ Home Internet Appliance IA-1 and IA-2 products already provide simple, convenient, instant-on Internet access, well suited for first-time buyers who desire Internet in a box. Now with MSN Companion 2.0, the Compaq iPAQ IA-1 and IA-2 devices enable broadband support as well as home networking, expanding the devices' appeal to families with increased demands for Internet access in the home. In addition, MSN Companion 2.0 makes the IA-1 and IA-2 ideal Internet access devices for existing MSN customers interested in an extra device dedicated to the Internet.

"Compaq continues to lead the Internet Appliance market, delivering increased value to consumers with lower prices, additional features desired by customers and the flexibility of choosing your own ISP," said Sean Burke, vice president and general manager for iPAQ Products and Connected Devices in Compaq's Access Business Group. "The IA-1 and IA-2 now support broadband and home networking, delivering a more affordable and dynamic Internet access device, and furthering our commitment to the connected home vision."

The new lower prices (only $399 and $299 for the IA-1 and IA-2, respectively) include six free months of MSN Internet service with no rebate hassles or long-term contracts. Combined with easy setup and user experience, instant-on and helpful tutorial, Compaq Home Internet Appliances are the easiest way available to get online.

"MSN Companion and iPAQ are a powerful combination, bringing convenience, reliable service and a number of compelling options to Internet families," said Ted Kummert, vice president of MSN Internet Access. "MSN Companion 2.0 is the perfect service for customers to access the Internet and easily stay connected to their communication and information needs."

With enhanced offerings such as multi-user logon, broadband and home networking support capabilities and no long-term contracts to sign, these next-generation devices provide a rich and even more convenient Internet experience that allows families to stay connected to the people and information they care most about via e-mail, instant messaging, chat or searching and browsing the Internet. Both models support up to nine individual accounts, and with the new multi-user logon capability, each family member can sign in from either their appliance or existing home PC (running MSN Explorer) to access their own screen name, private e-mail, and buddy list.

Users can now utilize most existing dial-up or broadband ISP accounts with their appliance for a nominal charge through MSN, and truly access the Internet on their own terms. ⁽¹⁾

For customers who purchased earlier versions of the IA-1 and IA-2, automatic software upgrades are provided as the latest features become available--at no additional charge--by MSN's award-winning Internet access service, so they too can take advantage of these new services.

Availability

The new iPAQ Home Internet Appliance offer for the IA-1 and IA-2 with MSN Companion 2.0 will be available beginning June 10 at participating retailers nationwide, on Compaq's Web site at http://www.compaq.com/athome, or by calling 1-800-888-0220,and through Compaq kiosks located in more than 10,000 popular retail stores.

For more information about the IA-1 and IA-2, please visit http://athome.compaq.com/showroom/static/iPAQ/intappliance.asp.