News release

HP to Acquire StorageApps

PALO ALTO, Calif., and BRIDGEWATER, N.J., July 25, 2001

Hewlett-Packard Company (NYSE:HWP) and StorageApps today announced the companies have reached a definitive agreement under which HP will acquire StorageApps, a leading provider of storage virtualization solutions, in a stock-for-stock transaction.

Under the terms of the agreement, HP will acquire all of the capital stock of StorageApps for HP common stock with a value of $350 million. Completion of the transaction is subject to customary closing conditions and regulatory review. The transaction is intended to be structured as a tax-free reorganization and accounted for as a purchase. Upon completion of the transaction StorageApps will become a wholly owned subsidiary of HP.

The addition of StorageApps virtualization technology is intended to allow customers to easily implement and manage storage networks. This technology also enables customers to pool storage devices from different vendors, easily add capacity and readily move data among the devices independent of server operating systems or network infrastructure. As a result, customers can choose the best storage technology for their needs and more flexibly scale their networks to meet the unpredictable storage demands of their businesses.

This acquisition strengthens HP's storage offering by adding virtualization as a key component to HP's Federated Storage Area Management (FSAM) strategy. FSAM is designed to enable customers to meet the challenge of managing ever growing and disparate storage systems by growing their storage by a factor of ten without additional people.

"The addition of StorageApps' technology extends our leadership position as a complete networked storage solutions provider," said Nora Denzel, vice president and general manager, HP Network Storage Solutions Organization. "StorageApps virtualization accelerates our FSAM momentum and allows customers to more quickly and efficiently take advantage of new technology while protecting their legacy investments. This gives customers freedom of choice to mix and match storage technologies from many vendors, allow storage devices to be connected to the network as they are needed and move data between different vendors' storage devices."

"We were among the first companies to deliver this type of virtualization technology to customers more than a year ago and we've seen exceptional success gaining market acceptance. Essential to that success is our ability to help customers address the needs of unpredictable demands of data growth," said Daniel Gittleman, chairman and chief executive officer, StorageApps. "HP is able to rapidly roll out our virtualization software on a global level to help customers facing challenges in managing their networked storage."

About StorageApps

StorageApps -- a leader in virtualization storage software -- develops software and appliances that help give customers controlled, secure access to information. The company's customers range from Fortune 100 companies in financial services to energy and Internet-related companies.

About HP

Hewlett-Packard Company -- a leading global provider of computing and imaging solutions and services -- is focused on making technology and its benefits accessible to all. HP had total revenue from continuing operations of $48.8 billion in its 2000 fiscal year. Information about HP and its products can be found on the World Wide Web at http://www.hp.com.

This news release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of HP and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the ability of HP to retain and motivate key employees; the timely development, production and acceptance of products and services and their feature sets; the challenge of managing asset levels, including inventory; the flow of products into third-party distribution channels; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to the annual report on Form 10-K for the year ended Oct. 31, 2000, and subsequently filed reports. HP assumes no obligation and does not intend to update these forward-looking statements.