Intel Inside For Now

COMPAQ AND INTEL, WHICH have spent a year battling, have called a truce. Compaq Computer , the nation's No.1 PC maker, is turning to chip king Intel for motherboards, the guts of computers. Intel Senior Vice-President Paul Otellini calls this a "gradual thaw" between the twosome.

A few years ago, there was little friction between the two companies. But then Intel started branching out into motherboards and launched its own branding program, called "Intel Inside." This outraged Compaq, which makes its own boards and wanted to preserve its brand name. Rivals Gateway and Packard Bell snapped up the ready-made Intel boards and pumped out product so quickly they outflanked Compaq and enjoyed strong sales.

Industry experts call it a marriage of convenience. Says Dataquest analyst Robert Corpuz: "We'll continue to see peaks and valleys in this relationship." Compaq hasn't announced how many Intel motherboards it will use. In fact, Compaq says it will keep making its own motherboards for most lines--and will use rival chips from Advanced Micro Devices and NexGen. Compaq has no plans to rejoin the "Intel Inside" program, which it quit in early 1995.

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