News release

HP Outlines Strategy to Deliver Best Return on IT for Business, Rewarding Consumer Technology Experiences

Focused Cross-company R&D Investments in Software, Mobility, Security, Rich Media

HP (NYSE:HPQ) today outlined core elements of its strategy and research and development investment focus for 2003 at its annual industry analyst conference in Santa Barbara, Calif. The company said it plans to focus its technology investments in areas that reduce the cost and complexity of information technology (IT) systems for business and improve the overall experience consumers have with technology.

Specifically, the company said it will center its cross-company R&D investments in IT management and utility computing software, mobile infrastructure and devices, security technologies, and the creation, distribution and management of new kinds of rich media, including images, audio and video, across networks.

"Our customers can count on us to improve the value they derive from their technology investments," said Carly Fiorina, HP chairman and chief executive officer. "For business customers, that means helping them to standardize, optimize and manage all the systems in place today, while paving the way for new technologies like Web services and utility computing.

"The days of standalone boxes and vendor-focused lock-in strategies are over. By leading the industry to standards-based and modular systems, focusing on improving the manageability and utilization of IT and delivering services that focus on improving business agility and lowering the total cost of ownership, we will redefine the IT value proposition for business and offer the best return on information technology.

"For consumers, we're focused on improving people's overall experience with technology," said Fiorina. "Whether it's listening to music on a digital entertainment system, downloading and printing images or staying connected while you run errands, we will focus on making that experience simple and rewarding."

HP invests an estimated $4 billion annually in R&D, including HP Labs' exploration of high-impact future technologies plus ongoing product innovation in imaging and printing, personal systems, enterprise systems and HP Services. This investment has made HP one of the world's top innovators, resulting in more than 1,345 U.S. patents granted and 5,000 worldwide patent applications in 2001. The company currently holds more than 16,000 patents in its intellectual property portfolio.

"In challenging economic times, customers need help managing their costs and improving their returns -- fast. It's more important than ever that their technology strategy supports and fuels their business strategy," said Shane Robison, HP senior vice president and chief technology officer. "For HP, that means delivering technologies that provide a focused and valued contribution to our customers' biggest challenges and their most promising opportunities.

"For consumers, technology must become more transparent and personalized as it becomes more powerful," said Robison. "Speeds and feeds are valuable, but the real difference comes when you can provide a much better experience with information technology. And, as these technologies become more standardized, we will focus our innovations on adding value on top of these industry-standard building blocks. We're asking our technologists to answer the tough questions like, 'How do you integrate PCs with digital entertainment systems? How do you stay connected and get the information you need while you're on the move? How do you overcome security challenges that impede growth in the mobility market?'"

In addition to continued product innovation, HP and Robison provided more detail on the four key cross-company technology priorities for 2003:

• Software: Building on the synergies between HP OpenView software and leading virtualization capabilities like HP's Utility Data Center to create "management fabrics" that enable customers' infrastructures to be more adaptive to their business process needs, while offering new levels of manageability and asset utilization capabilities across a world of multiple devices, networks, applications, databases, storage, Web services and business processes.

• Mobility: Leveraging HP's complete portfolio of assets and capabilities in infrastructure (servers, storage, software and services) and devices (notebooks, handhelds, tablets) to facilitate enterprise and consumer mobility and security -- including device protection, data protection, network monitoring, network access, and mobile network design.

• Security: Tapping into HP's end-to-end systems experience and software management capability to offer trust and security solutions across the entire IT value chain.

• Rich Media: Leveraging HP's enterprise and personal systems, imaging and printing assets, and intellectual property to help increase the adoption of digital media and processes that improve the user experience and to address new challenges posed across infrastructure, such as content creation and device delivery.

"These are the emerging areas where customers are asking HP to play a leadership role," said Robison. "Software management and security are emerging as focal points for enterprise customers to gain better control of their IT environments. Mobility and new rich media solutions will have an important impact as every business process becomes digitized."

During its industry analyst meeting, HP reinforced that the company's innovation will be delivered on top of world-class cost structures. Over several years, HP has shifted its R&D investment to leverage the volume and adoption base of industry-standard platforms, including Intel microprocessors; Windows, Unix and Linux operating systems; and .Net and J2EE software environments. HP's broader standards development and adoption efforts have earned it a key role across open source, storage networking, Web services, digital media, management and security communities.

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. More information about HP is available at http://www.hp.com.