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© Copyright 2002 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.

Good morning.

What you just saw is an ad that will begin running this morning.
We call this ad Anthem.

It's part of a campaign that will feature the stories of our customers and how they use our technology.

And all of these customers that we will feature have one thing in common.

Every one of them was told that what they hoped to accomplish was impossible.

FedEx was told they'd never make an overnight delivery service work.

Amazon was told they'd never make online retailing work.

BMW's Formula One team was told they'd never make a car that rivals Ferrari.

In every single case, they proved the skeptics wrong.

And in every single case, HP was there.

Why is this the face we have chosen to show the world?

Because it's about everything we can achieve, working together.

It's an affirmation of our belief that progress is not made by the cynics and the doubters, it is made by those who believe that everything is possible.

Now is not the easiest time for the IT industry, or around the world, for that matter.

But in these uncertain times, it is our capacity to look ahead, our capacity to build a better future, our capacity to develop practical solutions that make our work all the more essential.

And ultimately, we achieve what we achieve because we are optimists; because we believe challenges yield to solutions; because we have confidence we can invent the future.

At HP, it's what our collaboration with customers is all about.

It's what the work in our labs is all about.

It's what the journey of our company these past three years has been about.

At HP, we recognize that technology itself is not the end, but the means to an end of something far greater.

Every year, we come here to show off the latest and greatest in our industry.
Comdex has always been the world's best stage for the things this industry makes - for the inventions and the discoveries that brilliant minds and brilliant companies have created.

But the truth is - as Anthem shows — the real storyline of this industry is not being written on the show floor, but in the very things we can't display on the show floor: not just in what we are making as an industry, but in what we are making possible for consumers, for businesses, for governments, and for customers around the world.

Which is why, even though we come back to Las Vegas this year maybe with more on our minds than in years past - not only war and recession and terror and corporate scandal, but fear perhaps that the very wheels of innovation in our industry have slowed in response to a less certain world - I come to this conference more hopeful about our future than I have ever been.

Because while the demand for technology for its own sake may be down, the need for technology that solves real human and business problems is stronger than it has ever been.

As IT professionals, it's easy to forget the things that IT makes possible.
Frankly, you might think a lot more things would be a lot more possible if your technology worked better together, if your components talked better to one another, if the system you spent millions of dollars on five years ago worked in a new century.

While we all know that the latest and greatest are exciting and new, it's not what you need most from this conference or from this industry.

What you've told us is that while point products are cool, what you need most are solutions; what you need is a partner who can help you make all the pieces you've already got work better together; who can manage your systems seamlessly across global networks; and who comes to the table with the depth and breadth and product line to address all your needs.

Three years ago, I came to this stage and told you that we were setting out on a process to preserve what is best about HP and reinvent the rest.

That reinvention reached its most public expression with our merger last spring.
We think we return to this stage today as a more complete partner for our clients and our customers - with the capability to serve any institution, any consumer, any community.

Let me tell you a little bit about the new HP.

HP is 140,000 strong, with employees working in every time zone on earth.
It makes conference calls a challenge - but for a company that does nearly 60% of its business outside the United States, we think that having capabilities in 160 countries, doing business in 43 currencies, and 15 languages is an asset.

The merger has improved our market position, because we can offer our customers more.

We think it's an advantage for those who use our services that we are now the market leader in supercomputing, in management software, in servers --Windows and UNIX and Linux-- in storage, in workstations, in imaging and printing, in laptops - running neck and neck with Dell on PCs, and close behind IBM on IT services.

Our portfolio runs from desktop to print shop, from palmtop to Nonstop, from printers that sell for $49.99 to multi-million dollar commercial systems.
And we think the depth and breadth of our portfolio not only serves our customer’s needs and serves our customer base; we think it is reflected in our customer base.

Today, more than a billion people around the world use HP technology every day.
That means that if you made a city of all of our customers, it would be about 2,100 times larger than Las Vegas. If you made a country, it would be the third largest country on earth.

We're in a lot of places that you see every day.

The new HP powers more than 100 stock and commodity exchanges, including 14 of the world's largest. We support 95 percent of the world's securities transactions.
We help process two out of every three credit card transactions worldwide and three out of every four electronic funds transfers.We handle 80 percent of the mobile billing and customer care traffic in Europe and Asia. And, we help control 65 percent of the world's energy infrastructure.

As systems supplier for companies as diverse as Adidas, Kellogg's, Starbucks, Levis, Daimler Chrysler, Verizon, AOL, Nokia, Home Depot, and GlaxoWellcome, we're also in a lot of places that you may not realize.

Because we supply servers to Sony and power Nike's supply chain, we're there when you hit your alarm clock in the morning and when you put on your running shoes.
In similar ways, we're there in the cereal that you pour, the coffee that you drink, the jeans that you wear, the car that you drive. We're there in the back office when you call your stockbroker, when you check your email, when you order books online, or call a friend on your cell phone. We're there in the package you send overnight, the hammer you buy, the prescription you pick up at the pharmacist, and the plane ticket you purchase online. We're there in the tires that get you home - and we'll be there tonight when you go back to your room and check game scores on ESPN.com.

We feel privileged to have powered up the New York Stock Exchange after September 11th, to have supplied printers to the new government in Afghanistan after the Taliban fell, to help screen airport luggage for harmful objects - and to work with the Fire Department of New York to help train new recruits.

And we also feel good about our ability to continue to innovate for our customers.
With 35,000 pre-sales and sales representatives... and 65,000 service and support professionals... which is nearly twenty-five times the number of people in this room today — we have more feet on the street than ever before.

We feel fortunate to be able to do all this while maintaining the intellectual property portfolio that justifies our logo.

We have today 16,000 patents in all - including three new patents we generate every working day – and those patents span every part of the technology puzzle, from print technology to molecular computing. In fact, that $49.99 printer that I mentioned a moment ago has upwards of 100 patents associated with it. Proving that low-cost doesn’t always mean low-tech.

Those 16,000 patents represent $4 billion in annual R&D investment. And we believe it's vitally important that we maintain this level of R&D investment and commitment to keep the wheels of innovation and invention in motion.

Finally, being the number one partner for Microsoft, Intel, Accenture, PeopleSoft, BEA, Oracle, Siebel, CGEY, BearingPoint — help us fulfill what we believe is one of the most important roles for HP — to galvanize all those partners, and bring the full power of this industry to our customers and to your company.

Now, that's the new HP in a nutshell.

And six months after we closed our merger, we feel good about the progress we've made. But we know the ultimate arbiter of success is not what we can do for our company, but in what we can do for our customers.

We know that if consumers don't have a good experience using our technology, interacting with our people and our products, they won't buy it again.
Likewise, we know that if companies cannot see a clear linkage between return on technology investment and business priorities and business productivity, they simply won't make the investment.

I think if you look beyond the distractions of our day, you will actually see a new breed of company emerging: companies that are making the tough choices, streamlining, but not backing off their core purpose. And so I want to focus the rest of our time on what these kinds of organizations are doing.Because they are solving real, and often impossible-seeming problems. From the tiniest to the most massive in scale, let's look at some of the ways they are using technology to improve business, enhance life, and build our future.

We'll start really small ... with scientists who are studying complex interactions at the molecular level.

Say hello to the Terascale Computing System, or TCS. It’s humming in a building near Carnegie Mellon University at the Pittsburgh Supercomputing Center.

Using the world's largest public computing system, scientists are creating simulations of molecular activity. What hangs in the balance of this research are better designs for artificial organs, and cures and treatments for diseases such as diabetes and glaucoma.

To put this in perspective: the floor space of the TCS is about the size of an NBA basketball court. It requires 14 miles of cable. It has the computing power to perform six trillion calculations every second — this is roughly equivalent to having 10,000 PCs hooked-up together and working on the same problem. And the TCS runs on HP server technology.

So this is a case where technology is making something very new, possible.

Scientists all over the world can tap into this massive public resource to perform research that will inform everything from disease prevention to disease cure, from storm-forecasting to understanding the Earth's magnetic fields. Most of the research is focused on critical questions that are ten or twenty years from being answered.

Now, let's move from a place defined by long-term potential, to a place defined by speed.

A Formula One race might not top the list of critical problems technology needs to solve. But please don't tell that to the BMW Williams Formula One team. Their sport uses more advanced technology than any other sport.

Two years ago, the team was stuck in the mid-ranks of the Grand Prix racing standings. So they assembled the best combination of technology and people they could find. They mobilized a team of engineers - located in response centers from Germany to England to wherever a race was being held on any given day.

For every race, they set up a sort-of mini-data center replete with HP servers, HP storage, HP management software, HP imaging and printing technology, and HP laptops - all managed by HP services pros. During the season, the team uses the technology to simulate track conditions, revisit past race data, and to make micro-adjustments to the car to compensate for conditions in real time during the race.Off-season, the systems are used to run the latest computer-aided engineering software for race car chassis, suspension and engine design.

The systems, like the cars, cannot fail. While the car screams around that track at more than 200 miles per hour, these HP systems - and HP support engineers - ensure that the car performs to its maximum capacity, while transacting millions of bits of data every second, without requiring the driver to lose a millisecond of attention - or a millisecond of speed.

Like Formula One driver Juan Pablo Montoya says, "It's about having the ultimate technology and the ultimate machine."

Thus the marriage between man and machine is beginning to pay off. The first time we worked with BMW – which was at the 2000 British Grand Prix -- Montoya broke the course record. This year, the BMW Formula One team is moving up the ranks and edging closer to its rival, Ferrari. The team is now focusing its technology and its sites on winning in 2003.

Let's move from the racetrack, and see how technology can solve problems that have critical implications for more day-to-day business.

Simply replacing a physical process with a digital process often unlocks business opportunity in profound ways. OK, now, it may be a little strange to use the words "profound" and "beer" in the same sentence. But as it turns out, Coors Brewing Company recently figured out that they could significantly streamline the production of point-of-purchase sales materials by going digital... and they could sell a lot more beer.

It used to be that if you were a bar in San Francisco wanted to advertise a special on Coors pints during a home game, they bar owners often have to hand-letter a sign. Today, Coors has replaced that clumsy physical process with a digital one. They've worked with HP to create a secure portal that lets establishments access templates and sanctioned logos to customize promotional materials, and then either print them locally, or transmit them to a centralized printing production center.

It's bringing the commercial printing industry into the digital age. For Coors, it's technology that helps them protect the brand, and sell more beer. For Coors partners, it's a pragmatic solution that improves their marketing.

Now, let's scale up to the realm of imagination.

Almost every one of us has seen the movie SHREK. What the DreamWorks team wanted to achieve with SHREK was truly pushing the boundaries of what's possible. They had an aggressive movie release deadline.They had a proprietary animation application. They had workstations that weren't performing fast enough.
And, they had Jeffrey Katzenberg - who is passionate about reinventing the art form of animation with every movie he produces. They were also looking for new partners who could help them meet their artistic and technical challenges.

So with no time to waste, they called HP. We'd been testing a workstation that we thought might be tweaked to run their proprietary software, but we weren't sure it was quite ready for primetime.

But they pushed us - and in seven intense days, we managed to squeeze four times better performance out of the system than out of their previous system.

The DreamWorks engineers stopped avoiding Jeffrey in the hallway. They ordered more workstations, cranked out the movie, hit their deadline - and won an Academy Award for best animated feature film.

Eventually, Spirit: Stallion of the Cimarron, became the first all-Linux animated film ever created.

Now, what's so inspiring about technology's role in this example, are the business returns. DreamWorks saved costs in overtime, hardware, and energy consumption.
They now enjoy forty times the performance, in the same physical footprint, for less money, than they did with their earlier set-up.

By the way, if you go to the HP booth, and I hope you will, you can insert yourself into one of these DreamWorks movies. Stop by for a visit.

Now, let's move to the realm of entire communities, and solving problems that span the globe.

HP is a company that has never thought conventionally about its role in the world.
We've always believed that with global reach comes global responsibility. That's especially true now... we have seen how technology can be used to empower people and create opportunities that have never existed before.

More than 40 years ago, HP pioneered the idea of giving its employees paid time off each month to do community service work. We continue that practice to this day.

But when it came to the developing world, HP chose a more traditional route, committing either money or resources to help solve problems. Until we recently realized that by limiting ourselves in that way, we were withholding the very assets that make corporations most relevant - namely, our ability to set goals, to manage projects, and to invent locally appropriate technology solutions.

So today, we are committing teams of senior-level employees in communities around the world for up to 3 years, to listen and learn from local communities, to help citizens there set goals, to strike-up partnerships including Non-Governmental Organizations and local governments and businesses, and then work together to achieve those goals.

We have programs like these in places like South Africa, and in Andrha Pradesh, India, where a team for example is working to improve literacy, create jobs, and expand government services. Ideally, the learning that we obtain in these communities can then be applied in others around the world.

When you go to the HP booth, you'll see an invention inspired by a real problem in another Indian community. It's a solar-powered HP printer and digital camera, contained in a portable piece of luggage.

In India, every citizen must carry a photo ID. The problem is, in many regions people have to lose two days of work traveling to photography studios, and photos are expensive. But with this camera and printer that are powered by a small solar panel, street photographers don't have to worry about relying on precious disposable batteries, or an unreliable power grid. They purchase the pack at cost.
They charge 50 rupees - about a buck - to take someone's picture and print it on the spot. The pack quickly pays for itself, and becomes a sustainable business for that photographer.

We think this is where invention is going. When you look at who uses technology today, you realize it only encompasses 10 percent of the world’s population. And if we look beyond the next few quarters, as a company interested in generating growth for the long term, we must acknowledge the fact that many of the discoveries, talent, ideas, and innovations of the future are not going to come from that 10 percent alone - but from the other 90 percent, from developing nations and new markets around the world.

It's not hard to imagine extending this kind of technology solution to power things like home water purification systems, and TVs, and lamps that can be used after a village's electricity is powered-down for the night. And teams in our labs and teams of our partners are exploring these kinds of opportunities as we speak.

I hope that through glimpses into what these organizations are achieving with technology, you're starting to see that HP -- with a new depth, a renewed dedication to world-class engineering, and a new reach across more than one billion customers -- is a partner that brings technology to so many different facets of business and life. The companies I've talked about today are focused not on the technology itself, but on what the technology can make possible for them.

Because the real agenda in today's world is a customer agenda.

So where do we go from here? You have to ask what's important now, and who is committed to delivering it.

In the last few years, I have stood on this very stage and talked about HP's vision of a world where technology is ultimately more human, more accessible, more essential - and more reliable, more affordable, and more agile. It's a world where the success of technology is measured not in how much it invades our lives and our businesses, but in how it supports all the ways we live and work.

It's a world where technology does not discriminate between the haves and have-nots, between enterprises and consumers, between big businesses and small, between back office and desktop. Every part of the technology landscape needs to be taken into account.

I frankly think the last thing customers need today are time machines or binoculars or more breathless hype about multi-billion dollar bets on the next big tech thing. As business customers, you have made your agenda clear: What you need is straight talk, practical solutions, and partners you can trust.

You want to lower your operating costs, you want to lower your acquisition costs, you want the freedom to incorporate the best technology and services from anyone, you want infrastructure that will flex and change and adapt to your business requirements. You want a tight link between your business and your IT systems.
You want immediate information and insight so that you can take intelligent action.

And that requires evolving your existing infrastructure -- the one you've already built, and invested in -- into a far more adaptive infrastructure. Because a truly adaptive infrastructure is one where your resources satisfy your demands exactly, every second of the day. That's when you know you're getting the most out of your infrastructure-the most out of your investment.

So, while IBM is placing $10 billion bets on the "final chapter" of e-business, and saying that you're at a crossroads that will seal the future fate of your business forever...at HP, we don't see it that way.

The path to the future is about taking one step at a time ... we see these times as a continuum, not a crossroads. We are continuing down a path that we have been on for quite some time. And every step of the way, we're focused on redefining the value proposition for information technology — improving the value of information technology, the total return on your IT investments.

First, we think it's about lowering your cost of acquiring technology. Which is why you'll see HP continue to invest heavily to ensure that our product line is the most modular and most standards-based in the industry — because standards and modular systems design give you choice and flexibility - and improve your overall cost of ownership.

You'll see us adhere to an engineering paradigm that is firmly rooted in making a deeply diverse technology landscape work, and work better. We are genuinely open, not a company masquerading as being open to get you to buy more of its proprietary offering.

It's why you'll see us invest to extend our lead in Windows, and UNIX and Linux platforms, and in modular architectures like blades and cell boards. It's why we will lead advancement in dot-Net and also J2EE in the emerging web-services world, because our customers say it is what they want, and need, to create an infrastructure that adapts to business - in real time.

Second, it's about lowering technology operating costs, by making it easier for you to manage the assets you already have. Which is why you'll see us continue to invest big in virtualization-to achieve better capacity utilization — in servers, in storage, across the data center. It's why you'll see that our approach to RoIT includes PCs, handhelds, wireless devices, and printing infrastructure as well as servers and storage and data centers -- because your entire infrastructure must be adaptive, in order for you to fully capitalize on your investment.

Third, it's about skillfully managing the infrastructure from end-to-end. That's why we have put more investment into OpenView. OpenView is the console that lets you see in one view all of the resources in your IT environment — from end-to-end - inside and outside — so you know how to shift resources to best handle the demands of business. It's the foundation and the key to building an adaptive infrastructure that truly flexes with changes in business activity.

Fourth, it's about providing the services that fundamentally improve your return on investment. We're focusing all 65,000 members of our services organization on being the industry's experts on adaptive infrastructure. We're pioneering new methodologies and new services in IT consolidation...in optimizing heterogeneous environments... in mission-critical services... in enterprise Microsoft... in on-demand infrastructure solutions... and in optimizing the infrastructure all the way out to mobile solutions and handheld devices.

And ultimately, it's about freedom of choice. One of the key reasons HP merged with Compaq was to combine enough of the key elements of an enterprise infrastructure under one roof -- so that we could, quite literally, speed implementation for our customers. We now have within our scope the leadership products and technologies required to actually redefine the IT value proposition for business... to actually deliver the best return on information technology.

But we do not wish to control you. Or lock you in. Or limit your choices.

In fact, the essential difference between HP and our competition is that -- because of our engineering orientation and our DNA as a company -- we believe partnership is our lifeblood: our partnership with you, and our partnership with others in the industry who serve you.

We believe it's our job to ensure that you always have access to the best talent and innovation. In some cases, it will be our talent and innovation, specifically in the places where we believe we can make a valued contribution, in areas like management, interoperability and utilization software and services... areas like computing utility and grid technologies... imaging technologies... mobility...
secure and trusted systems... and consumer connectivity. In other cases, we'll work with valued partners and bring their talent and innovation to customers.

Now, while I've focused so far on our strategy to serve everyone from the micro-business to the Fortune 10, we are also the largest consumer technology company in the world. Our strategy in the consumer market is simple: We asked, What does 'productivity' and 'return on IT' mean for consumers? And they told us that they know they've gotten a great return when their experience using technology is simple and rewarding. Simple to buy, simple to own, simple to use. Rewarding because it’s fun, because it helps you communicate, because it helps you be more productive.

So simple and reliable are our strategy. It's helped us continue to develop technology that works for you, rather than the other way around. We're focused on delivering a consumer technology experience like the one you see here where simplicity, and interoperability, and connectivity are a given.

Where information is increasingly personalized and easily shared. Where products and technologies are a personal reflection of you ... and the varied lifestyles of consumers. And these technologies are affordable to as many people as possible.

Now this strategy is what inspires an invention like this iPAQ. There are very few things are as distinctly personal, as individual, as your fingerprint — and this device incorporates technology which requires you to touch the sensor and be recognized by your fingerprint, before it will allow you to access the data locked inside. I think this is the ultimate stocking stuffer, don't you?

A focus on simple and rewarding experiences is also inspiring inventions like our TabletPC, which extends the functionality of a notebook, with handwriting and speech technologies. Again, it's technology that makes it possible for us to do things we weren't able to do before...like write a spontaneous note whenever the mood strikes, and email it in your handwriting. Let me show you...Reggie, can you come up and help with me with this for a second, so everyone can see?

How many of you were at Bill Gates keynote last night? Good. I believe Steve Balmer is somewhere here in the audience, so let’s send him a note: “Steve: Stop playing Mech Assault during my speech. Thanks…Carly.” Now we will email that to Steve…I don’t imagine it’ll have much impact on him.

I started today by saying that I have every reason to be hopeful about the prospects for our industry, and I gave you a few examples of the ways customers are using technology today.

If we can get beyond the doom and gloom headlines that we've grown accustomed to the past few years -- we see a world where technology is more ubiquitous, more accepted, more purposeful, more promising and driving more change than it ever has before.

From the furthest reaches of space to the familiar corners of our cities, technology is making everything possible.

[run CrimeFighters ad]

That last commercial sort of brings the notion of drag and drop to a whole new level!

At HP, the idea that we can help make more things more possible for more people in more places represents our highest aspirations -- as well as our most practical goals as a company and as a partner. It is at the intersection of practice and promise that you will find today's HP.

Forty years ago, last month, in Washington, DC, the first office was opened for the project that eventually produced the ARPANET. One of the scientists of that project decorated his office with two pictures. One was a picture of the moon; the other was an empty frame. He used to tell people that soon, the solutions he was working on would fill that frame with a picture from the other side of the moon.

Today, forty years later, that frame is filled with more than he could have ever imagined. And frankly, forty years from now, it will be filled with things we can't imagine.

But one thing we know for sure: Progress is not made by the cynics or the doubters; progress is made by those who believe everything is possible.

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