News release

Compaq Leads SMB Market Share Growth in North America for Combined Desktops, Portables and Servers

Compaq Computer Corporation (NYSE: CPQ) today announced it was the only company in the technology industry to increase market share in the small and medium business (SMB) market quarter over quarter. And, the company regained the Number 1 unit market share position for Q3 2001 in North America for industry-standard (Intel architecture) servers in the under $25,000 segment.

According to statistics released by industry research firm International Data Corporation (IDC), Compaq led in SMB shipment growth for total PCs, including desktops, portables and Intel-based servers. IDC figures also indicate that during the third quarter of 2001, Compaq achieved double-digit growth quarter over quarter of more than 11 percent in North America for total PCs—higher than any other major competitor in the SMB segment when several of its top competitors such as Dell, IBM and Hewlett-Packard lost market share.

"Our SMB market share gains in the third quarter and year over year are particularly significant given the general economic climate and our ongoing operational improvements, such as reducing overall inventory, decreasing delivery lead times and dramatically increasing inventory turns, that will make us an even more formidable competitor when the market recovers," said Jim Milton, senior vice president and general manager of Compaq North America.

"This momentum underscores the strong customer loyalty and preference for the advantages that the Compaq brand brings them—the highest levels of performance and reliability backed up by the most comprehensive and widely-used management tools—that translate into long-term cost savings for customers," Milton said.

SMB Marketshare Success

Since the NA SMB team was announced in April, Compaq has demonstrated success in increasing SMB market share in such a relatively short period of time.

Milton attributes this success to aggressive sales and marketing campaigns such as the "Business Tuesday" weekly product promotions and monthly product promotions. These initiatives are designed to increase sales over the telephone and Internet.

The Compaq referral program helps extend brand reach by having organizations—such as the National Black Chamber of Commerce and Latin Business Association—serve as agents who receive competitive commissions for recommending Compaq products and services to its members.

Building on direct and referral program sales initiatives, Compaq recently launched an innovative program for its solution provider network so they can provide discounted sales of bundled technology solutions from Compaq to create industry-specific solutions for customers.

"Our distribution model provides customers with choices in how they want to do business with Compaq," said Milton. "This diversity enhances the efficiency and effectiveness of our SMB sales and marketing programs. Compaq is committed to working with our channel and reseller partners who are playing a major role in our growing success in the SMB market."

Company Background

Founded in 1982, Compaq Computer Corporation is a leading global provider of enterprise technology and solutions. Compaq designs, develops, manufactures and markets hardware, software, solutions and services, including industry-leading enterprise storage and computing solutions, fault-tolerant business-critical solutions, communication products, and desktop and portable personal computers that are sold in more than 200 countries. Information on Compaq and its products and services is available at http://www.compaq.com.