Company declares 2004 "the year digital color goes mainstream"

PALO ALTO, Calif., June 2, 2004

HP today announced a broad initiative to expand digital color imaging and printing to all of its customers in the home and office. Bringing 20 years of innovation and more than $1 billion in overall research and development, HP is helping customers add color to all aspects of their lives.

In order to reach customers in various stages of digital color adoption, HP plans to:

• Work with industry leaders such as Adobe, Apple, Microsoft and Quark to deliver the best color experience - one that is both richer and easier - for businesses and consumers.

• Deliver robust, affordable color printing products. For example, HP is launching the first color laser printer in North America introduced at a price below $500. At an estimated U.S. street price of $499, (1) the HP Color LaserJet 2550 printer is priced to fit the budgets of microbusinesses and small- to medium-size business (SMB) customers.

• Continue to elevate and improve print quality. HP is introducing new papers - including laser specialty media, matte postcards and labels - to complement the complete color printing system, bringing customers professional print quality and reliability whether they are printing everyday general office documents or professional-looking marketing materials.

"Three vectors have come together allowing HP to bring a more holistic color experience to nearly every customer: digital photography is widespread, imaging devices are affordable, and technology now can provide rich, powerful color at prices customers can afford," said Vyomesh Joshi, executive vice president, Imaging and Printing Group, HP. "HP is harnessing these factors to make 2004 the year digital color goes mainstream."

Already a $7.1 billion market, HP estimates office color printing will grow annually by 20 percent to $10.2 billion by 2006. Realizing the power of digital color, customers are turning to customized in-house marketing to increase marketing capabilities and reduce costs.

According to HP, companies can save up to 50 percent of their current outsourced printing budget by going in-house. For example, largely due to an HP in-house publishing solution, the Toronto Blue Jays has enjoyed a 54 percent reduction in season ticket production and fulfillment costs, and faster ticket processing for improved customer satisfaction.

Upon identifying this trend, HP aligned with other industry leaders to meet the needs of customers:

• Adobe - For business customers, HP and Adobe are working together to maximize the color experience across Adobe's PDF-based document solutions as well as enabling marketing professionals to deliver outstanding color results, based on ICC standards, when printing from Adobe's creative products. For consumers, a priority for both companies is to ensure stunning color images can be printed at home through the Adobe Photoshop® family of products.

• Apple - HP and Apple have a long history of working closely together and are strengthening support for the Mac platform and open standards around color printing and imaging. HP offers world-class Mac OS X and ColorSync solutions and support for the complete HP lineup for professionals and consumers in any market.

• Microsoft - HP and Microsoft have combined their significant expertise in color to deliver to SMBs a comprehensive "marketing in a box" in-house publishing solution. HP customers will receive a trial edition of Microsoft® Office Publisher 2003 and a free Business Marketing Toolkit CD, complete with templates and rebates, bundled with select HP printers to create and develop professional-looking marketing communications materials simply, easily and affordably.

• Quark - HP and Quark are collaborating on new initiatives in the areas of color management and custom solutions, including joint testing of Quark applications with HP printers and joint technical support. The companies also are working to simplify the creation of highly customized marketing communications. Quark is implementing full support for HP Professional Color Technologies, including CMYK Plus, and certifying HP graphic arts printers and presses - on an exclusive basis - for enhanced print performance.

Additionally, HP is expanding the industry's most extensive color imaging and printing portfolio to provide the best solutions to meet customers' diverse needs whether for the home or the office. New and recent additions include:

• HP Color LaserJet 2550 - An affordable, high-quality color laser printer, with upgradeable memory, paper capacity and network capabilities for the home or office - $499.

• HP Color LaserJet 4650 - An in-line printer targeting the SMB market with speeds of up to 22 pages per minute and featuring Instant-on Technology, which allows customers to print professional color documents quickly and easily - $1,799.

• HP Scanjet 5590 - A versatile, digital flatbed scanner featuring a 50-page automatic document feeder with duplexing capabilities often needed in SMB offices - $399.

• HP Officejet 4215 - A compact, consumer-priced all-in-one device with print, fax, scan and copy capabilities - $149.

• HP PSC 1315 all-in-one - A highly affordable printer, copier, scanner that offers photo-quality color with fast and easy, consumer-friendly set-up - $99.

• HP Photosmart R707 - HP's first digital camera to feature HP Real Life technologies, a series of technical advancements, including in-camera red-eye removal, that makes it easier to take higher quality pictures - $349.

• HP Laser Specialty Media - New media designed specifically for HP Color LaserJet printing systems, allowing customers to reliably and affordably print in-house graphics and marketing materials, including high-quality photos and graphics or image-rich documents, with professional-looking results.

• HP Matte Postcards and Labels - Customers can create promotional and marketing collateral, personal announcements or invitations and a wide range of address labels in an easy, convenient and affordable process.

• Key HP color technology innovations - HP's CMYK Plus and Closed-Loop Color Calibration technologies provide graphics professionals with expanded control and accuracy when printing professional color documents. HP also supports black point compensation, a technology that automatically adjusts for differences in black levels between the image files and the printer, allowing for richer, accurate colors and image detail.

HP delivers resources for customers beyond the box, making it easier for everyone to adopt and benefit from the increasing use of digital color.

• Starting in June, HP will launch online workshops to help SMBs learn about advanced color topics, including methods to develop professional color documents. For graphic designers, HP classes teach successful color application within a workflow, and color consistency across the imaging process - http://education.itresourcecenter.hp.com .

• The HP Learning Center offers free online classes to explore anything from general printing to industry-specific applications, such as real estate or accounting. HP also plans to create a special "In-House Campus" within the site containing a series of classes related to in-house marketing topics. These include publishing, direct marketing and specialized Microsoft topics, such as Microsoft® Word and PowerPoint - http://www.hplearningcenter.com .

• HP Expertise Centers help SMBs determine the best solution and products for their individual businesses. Leveraging a global network of partners and advisors, HP offers online, phone or in-person answers and ideas - http://www.hp.com/go/expertisecenter .

• The HP Imaging and Printing Assessment Center helps customers determine their imaging and printing investment and can help find options to improve cost savings on a national or global scale - http://www.hp.com/go/assessment .

• The HP Color Office Printing Center offers free, online tools to effectively and easily introduce color printing into the office. Newly enhanced resources include color printing tips from basic office printing to cost-saving in-house production, document templates, a print cost calculator and solution selection help for any type of budget - http://www.hp.com/go/color .

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. For the four fiscal quarters ended April 30, 2004, HP revenue totaled $76.8 billion. More information about HP (NYSE, Nasdaq: HPQ) is available at http://www.hp.com .

(1) All prices are estimated street prices, actual prices may vary.

Adobe and Photoshop are trademarks of Adobe Systems Incorporated. Microsoft is a U.S. registered trademark of Microsoft Corp.

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 the Quarterly Report on Form 10-Q for the fiscal quarter ended Jan. 31, 2004, and other Securities and Exchange Commission reports, filed after the Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2003. HP assumes no obligation and does not intend to update these forward-looking statements.