But the two companies aim to sell 150,000 Internet-capable PCs in South Korea through their new deal by year-end with the first expected on the market in early August. "We expect to raise our combined share in the Korean desktop computer market to 18 per cent by the end of this year," said Khang Sung-wook, president of Compaq Korea.

Analysts believe the Internet will expand faster in South Korea than in the rest of Asia, excluding Japan, and government figures show the number of Internet users reached 13.93 million, or 29.6 per cent of the population, by the end of March.Financial terms of the pact were unavailable but the alliance calls for co-operation on technology development and joint marketing, production and supply of PCs, which will be marketed under a Compaq-Hyundai Multicav brand. Hyundai Multicav would manufacture and distribute the PCs, which would use core components and technology support from Compaq, the two companies said.

"The alliance would result in the two technology giants gaining a sizeable bite of the Korean PC market," Alex Gruzen, vice president of Compaq Computer Asia Pacific, told a news conference.Korea's desktop market is now controlled by Samsung Electronics and Trigem Computer Inc, whose combined market share is seen at more than 60 per cent. International Data Corp has forecast South Korea's PC market will grow 20 per cent a year to 2004.

advance seen limited Analysts said the deal represented Compaq's first serious attempt to explore further into Korea's consumer PC market, but reckoned it would face stiff resistance from local competitors. "Compaq has so far focused on mid and big-sized corporate computers and servers in Korea," said Park Kang-ho, a senior analyst at LG Investment & Securities.

"Now it wants to be thought of as a personal PC giant as well."But he said Compaq would find it difficult to achieve its goal because of its insufficient sales network and marketing efforts in the local consumer PC sector. Kim Gee-soo, an analyst at Nomura Securities, agreed."Compaq's targeted figure sounds too aggressive," he said."Considering the complex distribution channels and relatively weak brand-name here, it will be hard to take many users from Samsung or Trigem." As part of its efforts to expand its presence in Korea, Compaq president and chief executive Michael Capellas said during his visit to Seoul in May the company would invest $100 million in Korea's Internet sector.

Plans included a $5 million investment in a joint venture with Dacom, LG International and other Korean Internet firms to build a business-to-business portal. Compaq also said it planned to purchase South Korean-made computer components worth nearly $4 billion in 2000, a rise of 50 per cent over last year.