News release

HP Aims to Drive Growing PC Replacement Market with Comprehensive Upgrade Program

Targets Businesses Facing Increased Security Threats, Rising IT Costs from Aging Y2K Computers

To make transitioning to new technology easier and more cost-effective for customers who want to get more out of their IT investment, HP (NYSE: HPQ) today introduced a solutions suite of services and secure new products as part of its PC Upgrade Program for businesses.

"CIOs who understand the hidden liabilities they are exposing their companies to by keeping old PCs -- such as loss of competitive advantage in the marketplace, increased IT support and employee downtime -- are realizing now is the time to replace," said John Thompson vice president and general manager, commercial products Americas, HP Personal Systems Group. "We know customers are concerned with the capital expenditure for new PCs, but inherently insecure and poorly performing old technology is leaving them vulnerable to stolen or lost data and productivity."

The new program helps customers stay ahead of security risks and reduces IT support costs of old PCs by helping companies with the deployment, management and equipment disposal issues associated with upgrading to new technology.

While many companies have been delicately balancing tightened IT budgets, the scales are rapidly tipping as businesses realize the risks associated with aged equipment far outweigh the reduced purchase and maintenance costs of today's PCs, said Thompson.

"At America West Airlines, we're refreshing PCs in reservation systems in Reno and Phoenix. Having secure and reliable HP PCs helps our staff maintain a high level of productivity. Keeping older equipment requires higher support expenses and is too costly for us in time, money, employee and customer satisfaction," said Joe Beery, chief information officer, America West Airlines.

"It's hard for companies to assess just how much time, money and productivity is lost while users of vintage PCs sit and watch the hourglass spin; however, up-to-date PCs clearly increase productivity, save on service costs, and give an overall better end-user experience," said Roger Kay, Vice President of Client Computing at IDC. "And there is substantial evidence that the costs of supporting and migration from older, soon-to-be-unsupported environments increase the longer an upgrade is delayed."

PC Upgrade Program

Based on a recent report from CERT (the Computer Emergency Response Team), the FBI and the Computing Security Institute, businesses face increasing risk from cyber attacks, the incidence of which have grown exponentially over the past five years to 85 percent of companies in 2002. .(1) The new HP PC Upgrade Program (http://www.hp.com/go/pcupgrade) comprises several offerings to help customers assess the security risks and cost associated with older technology. It also makes it easier to purchase, migrate and manage new, more secure technology solutions.

First, HP provides businesses an assessment of current IT costs with the Web-based TCO (Total Cost of Ownership) Snapshot (http://www.hp.com/go/tco/) tool, providing quick identification of cost reduction opportunities, evaluation of current technology deployment and user requirements - at no charge to customers. For an additional charge, HP also offers TCO Assessment services, an in-house assessment with a company's IT staff that simulates the direct and indirect costs associated with the computing environment.

HP makes it easy and affordable for companies ready to replace their hardware with the HP PC Migration Service Bundle. For $909.(2) (or $39 per month) - or as low as $689.(2) for customers who participate in the HP Trade-Up program - customers receive:

• A new HP Compaq Business Desktop d530 with 2.6-gigahertz Intel® Pentium® 4 processor, 256-megabytes of RAM, 40-gigabyte hard drive, 48x CD-RW and Microsoft Windows® XP Pro
• Several valuable migration and deployment services including, program management, installation, set-up, trade-in and disposal of the old PC (a $110 value) .(2)
• A rebate of as much as $220 on desktops or $500 on notebooks through the HP Trade-Up program.(3) The HP Trade-Up program allows customers to trade in any major PC manufacturer's Intel Pentium II, III, 4 or Celeron® model desktop or notebook for a cash rebate on the residual value -- and through July 31st, HP will even pay the shipping on the trade-in units.

Additional packages featuring the HP Compaq Business Desktop d330 start as low as $389.(2) Optional upgrades to the program for purchase include additional services such as process automation, data migration, data wiping and training.

HP also offers customers a Proof of Concept Service, which provides a five-day onsite demonstration and evaluation of HP migration tools. The service includes an assessment of cloning, configuration, software deployment, and PC personality migration functionalities as provided by the HP Client Management solution, under laboratory conditions, before deploying them in an organization.

Using a server, five PCs, HP Client Management Solution, and three hardware images, a HP technical consultant will work with the customer to create an optimized, tailored solution that will integrate smoothly into the organization upon deployment. This consulting service is priced at $8,000. .(2)

HP Security Healthcheck services, priced at $8,000 to $12,000 (depending on complexity),(4) provides customers with onsite consulting and assessment of security vulnerabilities and risks within a network. With HP Wireless Access assessment, priced between $10,000 and $25,000 (also depending on complexity), (4) HP provides customers with onsite consulting and assessment of their wireless LAN, uncovering security vulnerabilities and risks within the wireless network.

As part of both of these services, HP prepares a detailed report outlining the results of the assessment, including recommendations on how to address high-risk security vulnerabilities. Once recommendations have been made, HP also works with customers to lay out a course of action.

New HP Products and Services Offer Added Security

As 40 percent of PCs in America's businesses are more than three years old,(5) a significant number of companies are at risk for security breaches and rising IT support costs since retired operating systems receive fewer and fewer security updates and aging PCs require costly upgrades and experience more frequent downtime trying to keep up in today's IT environments.

The new HP Compaq business desktops d330, d530 and thin client t5700 offer improved security features and industry-leading client services to ease the technology upgrade process and reduce maintenance, repair and support costs throughout the product's lifecycle.

An option available on all d530 models, the new HP ProtectTools Embedded Security chip, a standards-based security option developed in conjunction with Infineon Technologies, allows customers to better protect their data and control access to their network as well as enhance communications security.

The HP Compaq thin client t5700 is the first HP-engineered thin client, a small solid-state device that connects to current or legacy networks and drives local displays. With data stored on the server and containing no local drives or moving parts, thin clients are an inherently secure computing option.

For more information on new HP business desktop products, see today's related release titled "New HP Desktop Products Help Business Customers Increase Data Security and Return on IT Investment."

HP also announced today HP Business PC Solutions designed to secure data, devices and networks while increasing productivity and reducing cost with more efficient management of both wired and wireless IT environments. For more information, see today's related release titled "HP Business PC Solutions Solve Customer IT Maintenance, Security and Wireless Issues."

About HP

HP delivers vital technology for business and life. The company's solutions span IT infrastructure, personal computing and access devices, global services and imaging and printing for consumers, enterprises and small and medium business. For the last four quarters, HP revenue totaled $70.4 billion. More information about HP is available at http://www.hp.com.

(1)Computer Security Issues & Trends -- 2002 CSI/FBI Computer Crime and Security Survey.
(2) Actual prices may vary.
(3) Trade-in refund prices vary. Available U.S. only. Terms and conditions may apply. Visit http://www.hp.com/united-states/tradein/promo/desktop/eligibility.html for details.
(4) Pricing based on services chosen by customer, and may vary.
(5)META Group, "The Final Push to Windows 2000", Jan 2003

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 and performance 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 quarterly report on Form 10-Q for the quarter ended January 31, 2003, 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 to update these forward-looking statements.