A study examined the pilot year of the Computers in Early Literacy (CIEL) program, a multi-year project aimed at developing and assessing various strategies for improving the literacy development of children in kindergarten and the first grade. Subjects, 25 kindergarten and 22 first-grade students in a midwestern primary school, received three personal computers for each of two classrooms. The kindergarten class used a graphics software program and a word processor, while the first grade class used only the word processor on their three computers. Data included ethnographic observations, children's written products, and systematic student assessments. The children quickly mastered the basics of the software but had problems with the "save,""load," and editing functions of the word processor. Kindergarten children: exhibited a variety of patterns of use and forms of writing; used writing patterns at the computer similar to those observed with paper and pencil; appeared to pronounce letter names more often at the computer than when composing hand-written text; enjoyed using the graphics program to insert ready-made pictures into their stories; and collaborated at the computer. First grade students: were uncomfortable with text "jumping" or moving on the screen; provided each other with some of the needed technical support; viewed, by the end of the year, the computer as just another tool similar to the pencil and crayon to be selected when appropriate; used the computer in widely different ways. (Numerous examples of students' writing, five tables of data, and two figures representing the classroom arrangement are included.) (RS)