Microsoft and Compaq Further Strategic Alliance To Simplify and Enhance the Internet Experience for Consumers

REDMOND, Wash . and HOUSTON, March 20, 2000 — Microsoft Corp. (Nasdaq
) and Compaq Computer Corp. (NYSE
) today announced that they are expanding their longstanding collaborative relationship by combining their services to better meet the needs of consumers in the Internet era. Under the three-year agreement, the two companies will strengthen Compaq.Net by seamlessly incorporating award-winning MSN TM services with Internet PCs from Compaq, the largest worldwide supplier of consumer PCs. The
“Compaq.Net powered by MSN”
service will offer Compaq customers a customized superset of MSN services deeply integrated with the Presario PCs to make signing up for the Internet and accessing the Everyday Web as simple as touching a key on the Compaq Internet keyboard.

This valuable consumer offering will be pre-installed on new Compaq Presario PCs beginning this summer, including MSN leading portal services MSN Hotmail®
web-based email services, MSN Search and MSN MoneyCentral TM personal finance online service, powered by Compaq servers. The new portal is available for early viewing at .

“Our Internet-focused effort with Compaq is yet another crucial milestone in delivering on Microsoft’s Everyday Web vision,”
said Rick Belluzzo, groupr vice president, Consumer Group, Microsoft.
“By making MSN services easily and instantly available through the world’s leading supplier of consumer PCs, we can achieve our goal of transforming the Web into a highly personalized experience for people everyday.”

“This agreement enables us to offer Presario customers the ultimate online experience in support of Compaq’s ‘Everything to the Internet’ vision,”
said Mike Larson, senior vice president, consumer group, Compaq.
“This alliance will enable Compaq and Microsoft to jointly develop future Internet services, offering consumers the easiest way to get on the Internet along with access to rich content and services.”

Better, Faster Web Experience

The joint online service being developed by MSN and Compaq is designed to improve the Internet experience for consumers in one complete hardware and services offering, with easier registration and more customized services. Getting up and running on the Internet will be easier than ever – users simply take the PC out of the box, and with a few clicks they can register the computer and connect to the Internet.

Compaq will optimize its line of Presario PCs to feature MSN Internet Access in the Internet sign-up process. From there, Compaq’s Internet keyboard, one of the industry’s first keyboards to provide easy, one-touch access to users’ favorite Web sites, will feature keys that link directly to the co-branded service.

Alliance Expected to Increase Subscriber Base

Under the agreement the two companies will participate in joint marketing programs, service development and promotions to increase the number of subscribers to the co-branded service. The co-branded service will extend beyond the Presario PC to innovation in other areas including Compaq Internet Appliances, wireless devices, home networking products and joint broadband initiatives.

About Compaq

Compaq Computer Corp., a Fortune Global 100 company, is the largest supplier of computing systems in the world. Compaq designs, develops, manufactures, and markets hardware, software, solutions, and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, and communications products, commercial desktop and portable products, and consumer PCs.

Compaq products and services are sold in more than 200 countries directly to businesses, through a network of authorized Compaq marketing partners, and directly to businesses and consumers through Compaq’s e-commerce Web site at Compaq markets its products and services primarily to customers from the business, home, government, and education sectors. Customer support and information about Compaq and its products and services are available at .

About MSN

MSN is the network of Internet services from Microsoft that helps people better organize the Web around what’s important to them. The network of MSN services, located on the Web at ( ), helps people easily stay in touch with friends and colleagues, make smart and secure purchasing decisions, and get more done. MSN offers award-winning e-mail functionality; personal communications services; wireless services information; customizable access to news; popular sites for personal finance, travel, automotive services, shopping and more; an online community; a Web search engine and directories; and top-rated Internet access.

About Microsoft

Founded in 1975, Microsoft is the worldwide leader in software for personal and business computing. The company offers a wide range of products and services designed to empower people through great software – any time, any place and on any device.

The information contained in this document relates to a prereleased product that may be substantially modified before its first commercial release. Accordingly, the information may not accurately describe or reflect the product when first commercially released. This document is provided for informational purposes only, and Microsoft makes no warranties, express or implied, with respect to this document or the information contained in it.

Microsoft, MSN, Hotmail and MoneyCentral are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Compaq, Registered U.S. Patent and Trademark Office. Product names mentioned herein may be trademarks and/or registered trademarks of their respective companies. This release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include implementation of a new model of distribution; the failure of systems associated with order fulfillment; changes in product mix; inventory risks due to shifts in market demand; continued competitive factors and pricing pressures; market responses to pricing actions and promotional programs; volatility of certain equity investments; component shortages; and instability in developing countries that may affect operations. Further information on the factors that could affect Compaq’s financial results are included in its SEC filings, including the latest annual report on Form 10-K, and the latest quarterly report on Form 10-Q.

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