Press Release:

School District in Katy, Texas, Awards IT Outsourcing to HP; Purchases Compaq Desktop PCs

Deal Underscores Trend in Schools to Outsource IT Services, Focus on Teaching

HP (NYSE:HPQ) today announced an agreement to manage the IT infrastructure and help desk services for Katy Independent School District (ISD) in Texas. Mirroring a trend taking hold in the business world, the outsourcing deal frees teachers and administrators to concentrate on their most important task: education. (See related news release, "HP Goes to Head of the Class with More Than $100 Million in New Education Sales.")

HP estimates the first year of the outsourcing contract is worth $1.5 million, noting it has four annual renewal options.

In addition, Katy ISD -- which previously had used Dell PCs -- named HP the district standard and purchased more than $3 million in new equipment from HP.

"We found we were spending a lot of time and money keeping up with technology, and that's not our prime area of expertise," said Dr. Leonard Merrell, superintendent of schools, Katy ISD. "We realized that it made more sense for us to focus on how we use the technology and let HP focus on providing the hardware and support at our many locations."

As part of the outsourcing agreement, HP will provide technical support for the district's existing equipment, as well as consulting and system integration, customer support and overall outsourcing services to help Katy ISD design, deploy and manage its IT environments.

"In many ways, Texas schools are ahead of the curve on technology outsourcing," said Jim Weynand, vice president and general manager, HP Public Sector Organization. "This agreement with Katy, coupled with HP's earlier outsourcing agreement with Richardson ISD and recent outsourcing RFPs issued by Dallas and Houston ISDs, demonstrates that school districts are starting to realize that they are the experts at teaching students and that's where their focus should be -- not on managing an IT infrastructure. That's an area where we excel."

"The move to outsourcing in education mirrors a trend that began earlier with commercial businesses," said Ralph Lipizzi, services vice president, HP Public Sector Organization. "The agreement with Katy ISD is just the latest example of how HP is providing superior value to customers as we leverage HP Services' expanded offerings in the marketplace."

Recently, HP announced a series of new contracts -- valued at nearly $200 million -- with commercial customers for its HP Services business unit, including a number of major outsourcing agreements.

For example, Agere Systems, the world leader in communications components, awarded HP a three-year, managed services contract to implement a flexible and cost-effective plan to manage its data centers and improve its operational efficiencies.

Also, HP won a multi-year, multi-million dollar global services contract with Microsoft. HP Services will provide centralized end-user technical support for 61,000 Microsoft employees, vendors and contractors in up to 68 countries. The new agreement made Microsoft one of the largest clients for HP.

HP is winning significant new contracts in competitive bids while retaining current customers with contract renewals. HP is ranked No. 3 in the global IT services industry, which is expected to exceed $626 billion by 2006, increasing from $349 billion in 2001, according to IDC.(1)

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 revenue on a combined company basis with Compaq of approximately $81.1 billion in fiscal 2001 and has operations in more than 160 countries. More information about HP is available at

(1) IDC, "Worldwide IT Services Industry Forecast and Analysis, 2001-2006," published May 2002.

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About HP

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