News release

HP Unveils Plans to Leverage and Extend Core Software Assets Post-Merger

PALO ALTO, Calif., July 15, 2002

HP (NYSE: HPQ) today announced its intent to increase focus and investment in its industry-leading software suites. HP, currently the 5th largest software provider in the world, will target future development on extending its industry-leading HP OpenView, HP Utility Data Center, and HP Opencall software suites.

Leveraging Key Strengths: HP OpenView, HP Utility Data Center and HP Opencall

HP will redirect its current and future development and go-to-market efforts toward three software categories where the company has considerable intellectual property and customer acceptance - HP OpenView, HP Utility Data Center and HP Opencall.

The company will extend its market-leading HP OpenView infrastructure management software to support a new generation of Web services as well as tighter integration between business and operations management. By extending HP OpenView's capabilities, the company will make it easier for business and operations managers to optimize business services, reduce operating costs, and make more informed, real-time business decisions with a consolidated "dashboard" view of their entire business infrastructure.

The company will also invest in extending HP Utility Data Center offering, a software category designed to "virtualize" global infrastructure resources such that data centers automatically anticipate problems and dynamically re-deploy infrastructure resources to avoid potential impacts on performance or availability. HP Utility Data Center enables companies to deploy a self-managing, self-optimizing programmable data center, including support for next-generation Web services. HP intends to differentiate and extend its current lead in delivering utility-like computing solutions.

"Our plan is to extend the software management capabilities in HP OpenView and HP Utility Data Center to create what we're calling a 'management fabric' that will radically reduce the complexity of enterprise and service provider operating environments," said Nora Denzel, senior vice president and general manager, HP Software Global Business Unit. "We want to provide businesses with a 'real-time dashboard' for making smarter, faster decisions enabling them to make better use of their technology and information-based assets."

Planned enhancements to HP's Opencall and IN7 telco middleware platforms will further cement its lead in the wireless and wireline service and equipment provider markets.

Strategic Partnerships

HP also announced it will continue to invest in Web services middleware solutions for its UNIX, Windows and Linux platforms by strengthening relationships with leading middleware and enterprise software providers. Specifically, the company has expanded its alliances with Microsoft and BEA Systems, Inc., to provide middleware solutions to support .NET and J2EE environments.

Microsoft and HP will work together to accelerate the adoption of .Net and the implementation of Web services in Windows-based environments. BEA will treat HP OpenView as a preferred strategic solution for application, network and systems management. By working with market leaders and continuously developing new strategic alliances, HP will ensure its customers have access to the industry's leading software solutions and technologies across a wide variety of computing and communications environments.

Netaction Software Suite

Due to this post-merger shift in the company's software strategy, HP has re-assessed its middleware investments that focused on delivering application infrastructure solutions and has decided to discontinue the HP Netaction Application Server, HP Netaction Web Services Platform and HP Web Services Registry products in its middleware portfolio. HP will leverage the technologies associated with these products and continue development of technologies and products in selected strategic areas, specifically in the space of Web services management and business activity management. This will enable HP to extend the power of HP OpenView across infrastructure, Web services and business processes.

Transition program details for the discontinued Netaction products will be made public by September 15, 2002. As always, customers can expect HP to focus heavily on their long-term welfare and satisfaction.

"This strategy will strengthen HP's overall software and solutions delivery capability. It enables us to differentiate and add value in the areas where we have assets, experience, and leadership, specifically telco middleware, and end-to-end voice and data service management, including next-generation services designed around the .NET and J2EE architectures," Denzel said. "We will extend the capabilities of these industry-leading software suites by selectively partnering with complementary software vendors, providing our customers what they want most: choice, flexibility, and superior overall functionality."

About HP

HP is a leading global provider of products, technologies, solutions and services to consumers and businesses. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. HP completed its merger transaction involving Compaq Computer Corp. on May 3, 2002. The company would have had combined revenue on a pro forma basis giving effect to the Compaq transaction of approximately $81.1 billion in fiscal 2001 and operations in more than 160 countries. More information about HP is available at http://www.hp.com.

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development of these products and services may not proceed as planned; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to HP's annual report on Form 10-K, as amended on January 30, 2002, for the fiscal year ended October 31, 2001, HP's quarterly report on Form 10-Q for the quarter ended January 31, 2002 (as filed with the SEC on March 12, 2002) and subsequently filed reports. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, HP's results could differ materially from HP's expectations in these statements. HP assumes no obligation and does not intend to update these forward-looking statements.