Microsoft, Compaq enter into a new partnership

April 14, 1993|By Seattle Times

Two longtime partners in personal computing, Microsoft and Compaq, have agreed to a partnership that will put them in the forefront of emerging markets for hand-held, pen-based, voice-controlled and "plug-and-play" devices.

The pact represents Microsoft's most extensive agreement with a hardware manufacturer since its 12-year-old partnership with IBM dissolved last year. It also gives the No. 1 software maker a strategic means of answering Apple Computer's Newton and the AT&T-backed EO, pen-based personal communicators and information managers.

For its part, Compaq will have an operating system and software base to battle Apple's revitalized Macintosh, whose PowerBook portables and easy-to-use desk-tops have found growing acceptance in homes, small businesses and schools. The Microsoft alliance also will be fodder for Compaq against traditional rivals IBM and, more recently, Dell and Gateway, makers of low-priced, direct-marketed PCs.

Separately, Microsoft is expected to team up with Computer Associates to make the latter's mainframe software compatible with Windows NT, a networking version of Windows is scheduled for release later this year.

Large corporations "downsizing" from mainframes to networked PCs will be able to keep the same software and file structures under Windows as on their large computers. Computer Associates, with nearly $2 billion in annual sales of software, ranks second to Microsoft's $3.3 billion.

Apple was ranked recently the No. 2 maker of personal computers, behind IBM, in a survey by Dataquest, a market-research firm. But the margin was slim -- IBM had 12.4 percent of the market, compared with Apple's 11.9 percent -- and more recent estimates have put Apple at nearly 20 percent market share of new computers sold.

The Dataquest survey ranked Compaq third, with a 6.6 percent market share. Dell, based in Austin, Texas, and specializing in direct marketing, is fifth at 3.5 percent.

Microsoft has developed systems, including a pen-based version Windows, to work on hand-held computers. But the Newton and EO's pad, made by a small California start-up, have garnered far more attention. The EO can recognize and convert handwritten text to data files and can transmit files through wireless cellular connections.

Compaq has not announced a similar machine. But the agreement with Microsoft specified "hand-held computers and other new PC form factors."

Desktop Compaq computers will come with built-in compact-disc players, sound capability, networking and Microsoft Windows. Apple already markets machines with similar capabilities carrying the Macintosh interface instead of Windows.

The two longtime partners originally combined to put Microsoft's DOS on the first IBM-compatible computers in 1982, thereby creating an "open standard" for about 120 million PCs today. Since then they have engaged in numerous partnerships.

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