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Compaq and Microsoft are taking the Internet appliance plunge together, unveiling on Tuesday a simplified but pricey all-in-one computing device designed for the Web, same-time messaging, and e-mail access.

Compaq supplies the hardware, called the Compaq IPaq Home Internet Appliance, which is part of its larger rollout of new members of the IPaq family of devices also being announced Tuesday. The IPaq Internet appliance is the first MSN Web Companion, a new class of devices that run Microsoft's Windows CE 3.0 operating system to connect directly to a simplified version of the MSN.com portal.

The Compaq appliance is available now and priced, before any MSN rebate, at $599 but gets cheaper if you make a long-term commitment to MSN as your Internet service provider. Rebates range from $400 for a three-year contract with MSN to $100 for a one-year contract. Internet access through MSN costs $22 monthly. But that's not really a choice: MSN is hard-wired into the appliance as your Internet access provider; you cannot use another ISP with this unit.

The Compaq device has no hard disk, CD-ROM drive, or floppy drive. Inside is a 266-MHz AMD K6-2 processor, 32MB of SDRAM, and 16MB of flash memory. The unit has support for a small number of Universal Serial Bus devices.

Other MSN Companions from companies such as Acer, EMachines, Philips Electronics, Thomson Multimedia SA, and Vestel USA are expected to hit retail shelves in the next year.

Compaq is also announcing expansion of its IPaq family today. The new members are consumer devices, including handhelds and the Internet appliance, as well as a home networking unit. (See "Compaq Expands IPaq Family.")

Taking a First Look

The appliance itself is small and designed to go anywhere in the house. It consists of a crisp, 10-inch flat-panel color screen mounted on a plastic base about the size of a notebook computer. It comes with a wireless infrared keyboard with shortcut keys to Web sites for retrieving e-mail, shopping, and conducting Web searches.

The keyboard also contains a pointing device that's meant to replace the mouse, but optionally you can purchase a mouse along with peripherals such as a printer and speakers.

During a preliminary review of the device, it took less than five minutes to set up. But getting connected to the Net was not so simple. An abridged sign-on procedure enrolling me as a MSN member took some tinkering.

After finding a local POP to dial into in San Francisco, the software refused to drop the area code prefixes from the dialing string, causing error messages. Unlike desktop PC dial-up networking software, the Compaq Home Internet Appliance does not easily modify the telephone number. A call to tech support ironed out that problem in about 15 minutes.