                   DIGITAL EQUIPMENT CORPORATION
                  PERSONAL COMPUTER BUSINESS UNIT
                       BACKGROUND INFORMATION
                           February 1995

Digital Equipment Corporation's Personal Computer Business Unit (Digital
PC) develops, manufactures, markets, sells and supports a complete line of
leading-edge personal computer products and services to companies,
institutions and individuals engaged in all manner of business throughout
the world. The company's products and services provide PC computing
solutions that meet virtually any need from home office and small office
applications, to power- hungry computational tasks on the desktop or on
the road. Digital PC servers help people work together by providing the
power and reliability necessary for a complete range of networked
applications, from basic print and file sharing to mission critical
enterprise-wide applications.

The Digital PC Business Unit employs 3,500 people worldwide. With
headquarters in Acton, Mass., it operates worldwide through three major
geographic areas. The Americas Operations, which includes all of North,
South and Latin America, is also headquartered in Acton, Mass. Europe
Operations, which encompasses Western Europe, Eastern Europe, North Africa
and the Middle East, is headquartered in Geneva, Switzerland. The
Asia/Pacific Operations, which includes all of Asia and the Pacific Rim,
Australia, New Zealand and Japan, is headquartered in Hong Kong. Each
regional organization maintains its own sales, marketing, and profit and
loss responsibilities.

BUSINESS STRATEGY SUMMARY

When it was formally established in July 1993, Digital PC set a goal to
become a key player in the high-volume personal computer market as quickly
as possible. Digital plans to achieve this end by adhering to a six-point
strategy that encompasses:

    -  competitive desktop, server and mobile product lines for all
       segments of the PC market;
    -  an indirect channel sales model that focuses on long-term,
       mutually beneficial partnerships;
    -  a support and service infrastructure for both customers and
       resellers;
    -  high-quality, predictable manufacturing and supply logistics
       that balance flexibility and cost;
    -  brand franchise growth through creative marketing, awareness
       and demand generation programs; and
    -  an autonomous organization, based on a high-volume, low-cost
       model.

The success of this broad ranging strategy can be seen in the fact that,
according to Dataquest, Digital PC risen in the PC industry worldwide
shipment rankings from #27 in 1992, to #15 in 1993, to #11 in 1994.

THE DIGITAL PC PRODUCT PORTFOLIO

Digital PC products provide comprehensive solutions to the entire spectrum
of general business and office applications and to the complex challenges
that customers encounter when implementing today's client/server computing
strategies. In addition, Digital PC is investing in research and
development in order to continue to innovate across its product line and
to bring ever higher levels of functionality, leading technical and
ergonomic design and maximum ease-of-use to its product portfolio. The
company is constantly improving every aspect of users' experience with
Digital PC products and services, beginning with the 'out-of-box'
experience -- the way in which products are packaged and presented, as
well as start-up menus and documentation.

Digital HiNote -- Digital PC has vaulted into the rapidly expanding
notebook computer market with its HiNote and HiNote Ultra computers. The
HiNote family combines Digital's renowned engineering expertise with
leading aesthetic and ergonomic design for powerful, lightweight and easy
to use notebook computers. HiNote Ultra redefines the leading edge of the
notebook computing class by incorporating desktop performance in a
four-pound, one-inch-high package -- the thinnest notebook computer
available. The unique fold-down battery and wedge-shaped floppy disk dock
provide a breakthrough notebook design. The HiNote family provides the
ultimate in performance and reliability in a lightweight and stylish
package, providing mobile workers with desktop computer performance and
the convenience of a mobile system.

Digital Venturis -- Available in both slimline and full-profile
configurations, the Venturis line is Digital PC's value-oriented desktop
family designed to meet the computing requirements of general business
users in standard office applications, as well as those of users in a
client/server environment. Ideal for the volume purchaser, Venturis
systems are simple to install, easy to use and easy to maintain, while
providing room to expand as computing needs evolve.

Digital Celebris -- The Celebris line is targeted at business professionals
who demand a balance of performance and price. The product line's enhanced
power and flexibility meets more demanding desktop computing challenges,
such as compute-intensive graphics, software development and financial
analysis. Celebris systems incorporate high-performance Intel i486 and
Pentium processors, PCI and IDE for faster system, disk and peripheral
performance and S3 64-bit graphics processing power. Celebris PCs are
upgradeable to meet changing computing demands.

Digital Celebris XL -- The Celebris XL line is comprised of Digital's
highest-performing desktop computing systems and is targeted at the 'power
user.' The Celebris XL line offers maximum flexibility in power, graphics
and memory. Celebris XL features an upgradeable processor architecture
that allows users to protect their computing investment by taking
advantage of successive generations of Intel or Digital Alpha
microprocessors.

Digital Prioris Servers -- Digital's full line of PC server systems meet
the computational needs of workgroups of all sizes. The Prioris MTE Server
is an entry-level server ideal for small workgroups' file, print and
peripheral sharing requirements. The Prioris XL Server can be configured
as either a midrange print/file server or an entry-level application
server. Prioris XL server's scaleable design and advanced architecture
enables the addition of higher-performance processors and peripherals over
the life of the product. The recently introduced Prioris HX family of
highly scalable application servers can support workgroups numbering in
the hundreds. The Prioris HX family is currently available in single and
dual processor configurations and offers a host of fault-tolerance and
redundancy features for maximum reliability, including ECC memory, Remote
Server Manager support, advanced disk subsystems with controller
duplexing, integrated hot-swap SCSI backplanes, and internal or external
RAID.

Digital Starion PC -- The Starion line is Digital PC's initial entry into
the rapidly growing retail sales channel in the U.S. and is targeted at
the 'ToHo' -- Tiny Office, Home Office - market. Starion PCs come equipped
with CD-ROM, sound capabilities, and other multimedia features. In
addition, a suite of small office applications, such as a telephone
answering machine, fax modem and software, ClarisWorks, CompuServe, and
tape backup drives complete the Starion package. These products are
covered by one-year, on-site warranty service and are available at CompUSA
and Sam's Club.

DISTRIBUTION

Digital PC is committed to a measured, rational approach to its
distribution strategy as a means of minimizing channel conflict and
assuring potential buyers of the widest range of purchasing choices. The
strategy is based on mutually beneficial, long-term relationships with key
channel partners in each geographical region. For example, Digital's
partners in the America's include MicroAge, Merisel, Tech Data and Gates
F/A. European partners include Simec, Computer 2000, Ideal and West Coast.
Digital's most prominent partner in the Asia/Pacific region is the Founder
Group. Today, Digital PC sells over 80 percent of its products through
channel partners, with a goal of reaching close to 100 percent by the end
of 1995.

SERVICE AND SUPPORT

One of Digital PC's greatest strengths is its ability to leverage the
traditional superiority of Digital Equipment Corporation's worldclass,
worldwide service and support organization on behalf of its desktop,
mobile and PC server customers around the world. A three-year limited
warranty is standard on all desktop and mobile personal computers, while
Prioris servers are covered by a three- year, on-site limited warranty
with standard next-day response from Digital's MultiVendor Customer
Services organization or through a Digital Channel partner. Digital's
optional Passport service program provides 48-hour express service for the
full line of HiNote notebook computers in the U.S.

MANUFACTURING AND LOGISTICS

Digital PC's strategy is to maintain high-quality, predictable
manufacturing and logistics operations that balance cost and flexibility.
In order to maintain a high level of responsiveness to customer orders,
manufacturing and logistics operations are located close to major customer
in each geographic area, with major facilities in Kanata, Canada; Irvine,
Scotland; and Tao Yuan, Taiwan. Digital PC also maintains integration
centers which perform customer-requested modifications, such as option
installation and factory-installed software loading in Brazil, Japan, Hong
Kong, Singapore, Australia, and the Peoples' Republic of China. Digital PC
strives to lead the industry in cost- effective manufacturing with systems
that ensure optimal inventory, delivery and quality control. The goal is
to maintain competitive manufacturing costs while retaining
predictability, flexibility and the ability to respond to rapid market and
technological evolution.

MARKETING AND SALES

Digital is investing heavily in its PC communications activities, using
advertising, public relations, industry events and other tools as a means
of creating awareness among industry opinion leaders and a broader base of
potential PC buyers. A crucial component of the company's strategy is to
work closely on sales and marketing programs with its distributor partners
in each geographical region. In this way, marketing programs can be
tailored to appeal to the demands of individual locales, maximizing their
attractiveness to local audiences. In general, Digital is working to
broaden the brand equity it has achieved with its traditional core
business customers as it expands into new market segments, and as the
company grows its PC market share.

Digital Equipment Corporation is the world's leader in open client/server
solutions from personal computering to integrated worldwide information
systems. Digital's scalable Alpha platforms, storage, networking, software
and services, together with industry- focused solutions from business
partners, help organizations compete and win in today's global
marketplace.

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