Compaq goes into the postage stamp business

Compaq Computer is to help with international distribution of a new electronic postage stamp product by bundling it with its Presario PCs. Compaq and the German-based Francotyp-Postalia have signed up as strategic investors in E-Stamp, the Palo Alto company part-owned by Microsoft which made the news earlier this year when it received permission from the US Postal Service to begin public tests of its electronic postage system.

E-Stamp, which in March received permission from the US Postal Service to begin public tests of its electronic postage system, has announced new alliances aimed at making its Internet stamps available outside the US.

Partially owned by Microsoft , AT&T Ventures and venture capital firm Canaan Partners, E-Stamp will announced yesterday that it has lined up Compaq Computer and German-based Francotyp-Postalia AG, of Berlin, as additional strategic investors in the company. The two new partners will help the Palo Alto, California-based startup with the international marketing and distribution of its electronic postage system, said Sunir Kapoor, E-Stamp's president and CEO.

Starting next year, Compaq will bundle E-Stamp's systems with its Presario PCs, targeted at the small office market, he added.

More importantly, through Francotyp-Postalia, which is already licensed in 86 countries around the world to lease postage meters to businesses, E-Stamp will gain authorisation by national regulators to sell its electronic stamps in foreign markets more quickly, Kapoor said.

"We have requests from 25 nations outside the US and we need to get regulatory approval from individual countries to sell our products," Kapoor said. He added that by the end of the year or early 1999, E-Stamp expects to be able to launch beta trials for its system in several Asian and European countries. He could not name the specific countries, citing ongoing negotiations with regulators.

The $US199 E-Stamp Internet Postage 1.0, now being beta tested in Washington D.C. and soon to be trialed in San Francisco, consists of PC software and a small hardware device that attaches to a parallel printer port. The device stores the postage value customers purchase from E-Stamp's Web site and allows for the production of electronic stamps via any regular PC printer offering resolutions greater than 300 dots per inch (dpi).

E-Stamp-enabled applications include Microsoft's Word and its Outlook e-mail client, and eventually the Office applications suite among others, Kapoor said.

Compaq will include an E-Stamp icon on the desktops of its Presario PCs, Kapoor said. He declined to say what Compaq's investment in E-Stamp is, but said a just completed round of financing gave the company an additional $16 million.

Compaq was one of the first PC makers to install an America Onlineicon on its desktop, Kapoor said, and an E-Stamp icon on Compaq's desktops should go a long way towards "creating the market" for electronic stamps, he added.

Kapoor said E-Stamps save time by eliminating a trip to the post office, are easy to use and install, avoid "overposting" since the application can calculate the required postage for each individual piece of mail, and are secure through the use of 1,024-bit RSA-based digital signatures.

The USPostal Service, according to Kapoor, is interested in electronic stamps since their usage offers the potential to reduce postage fraud, which officially amounts to $190 million a year. Unofficial postage fraud figures are actually ten times higher, he said.

Transaction fees to be charged by E-Stamp once the system is commercially available will be less than 10 percent per transaction, Kapoor said.

Initially targeting the small office/home office (SOHO) PC market, E-Stamp will also bring out a Web browser-based version of E-Stamp for individuals and plans a client/server version for intranets and local area networks (LANs) targeted at workgroups and departments, Kapoor said.

E-Stamp, based in Palo Alto, California, can be reached at http://www.estamp.com/.

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