press release

HP CEO Carly Fiorina Says Linux Ready for Breakout Year

LinuxWorld Keynote Address Showcases Open Source Progress, Enterprise Success, Benefits of Compaq Merger

NEW YORK, LinuxWorld, Jan. 30, 2002

In her keynote address here, Hewlett-Packard Company (NYSE:HWP) Chairman and Chief Executive Officer Carly Fiorina declared this the breakout year for Linux, the open source technology that is finding favor with big businesses for its flexibility and cost-effectiveness.

Fiorina highlighted a number of innovative Linux solutions already deployed by customers in the entertainment, banking, service provider, Internet infrastructure and technical computing arenas. Adoption in these markets, along with retail, financial services and public sector, is helping fuel growth in Linux, which consultancy Gartner expects to achieve 50 percent revenue increase in 2002⁽¹⁾, despite uncertain economic conditions.

"These representatives from the business community aren't supporting Linux because it's popular. They're doing it because it meets their needs and those of their customers, and they're putting their money where their mouths are," she said.

Fiorina announced that one such company, DreamWorks SKG, is expanding its Linux relationship with HP into a three-year strategic alliance. (See the HP release, "HP, DreamWorks Announce Strategic Alliance Aimed at Revolutionizing Animation Production.")

She also commented on the growing influence of Linux in consumer applications, a milestone that "further demonstrates the mainstream nature of Linux today."

In her opening remarks, Fiorina recognized the audience for being part of a vanguard of pioneers and innovators who accelerated the idea of Linux and turned it into an undeniable force.

"A decade ago, this conference couldn't have happened because this movement literally didn't exist. But here we all are -- challenging conventional wisdom and changing the world all at the same time."

Fiorina praised the open source community for enabling Linux to stay true to the spirit of its revolutionary roots while developing into a solution that can meet the needs of big business.

She encouraged attendees not to become distracted by the industry discussions surrounding the deployment of Microsoft® and Linux solutions.

"The reality is that Microsoft solutions on industry-standard hardware are a mainstay of many corporations, especially on the desktop, and will continue to be so," Fiorina said. "Likewise, Linux solutions have found their way into a number of mainstream enterprise applications, are already on the desktop in niche applications, and will continue to make inroads.

"HP offers both solutions, as well as HP-UX, because we see opportunity in offering our customers a choice of building blocks for their heterogeneous environments. That's what we're about. We're the company that others come to when they want to run a multi-platform environment for mission-critical services. Right now we're taking a pragmatic approach. The question for us isn't 'Will Linux dominate the world?' but 'What part of the world will Linux dominate?'"

Fiorina outlined several initiatives where the open source community should continue to apply its energy to keep moving Linux forward for customers. These included ease of use, support of the Linux Standard base to reduce the complexity of Linux development and the resolution of the royalty-free standards issue currently being debated in standards circles.

"In HP's view, even the so-called 'Reasonable and Non-Discriminatory' patent licensing would distort the standards selection process to an unacceptable level for Web infrastructure software standards," she said. "We continue to work to draft a policy that requires the W3C to endorse only those recommendations which can be used free of royalties."

HP's CEO also described her company's initiatives to contribute to the advance of Linux. This includes taking a comprehensive approach to help build customer confidence in Linux platforms by offering a full range of sales, consulting, support and education; seeking out the open source community and software, hardware and channel partners to accelerate the delivery of innovative solutions for customers; and delivering a line of security-enhanced servers, blade servers, appliances, workstations, storage media, printers, business PCs and telecommunications racks.

"We see HP's role as helping to increase Linux' credibility in the business world," she said. "One of the primary motivations of HP's merger with Compaq is our deeply shared belief in standards-based platforms and technologies, and the contributions of the open source movement in helping customers take full advantage of these platforms.

"Market-unifying standards such as Itanium and Linux, and the inexorable march toward open source and open connectivity standards, will shift the underlying economics and the basis of competition in this industry, leading to more competition, greater choice and flexibility for businesses and better ease of use for consumers.

"One of the aspects of merging with Compaq that our customers find most appealing is that we are both committed to driving adoption of Linux on the Intel and Itanium platforms. Together, we have an unbeatable R&D team with a focus on both the enterprise and consumer. Together, we'll be in a position to help facilitate progress in standards through our relationships with both the enterprise developers and the open source community, and with customer relationships and support, to help Linux continue to mature as a platform for the enterprise."

About HP

Hewlett-Packard Company -- a leading global provider of computing and imaging solutions and services -- is focused on making technology and its benefits accessible to all. HP had total revenue of $45.2 billion in its 2001 fiscal year. Information about HP and its products can be found on the World Wide Web at http://www.hp.com.

⁽¹⁾ Gartner report, "Server Market Predictions for 2002", Dec. 11, 2001.

Microsoft is a U.S. registered trademark of Microsoft Corp. HP-UX Release 10.20 and later and HP-UX Release 11.00 and later (in both 32- and 64-bit configurations) on all HP 9000 computers are Open Group UNIX 95 branded products.

UNIX is a registered trademark of the Open Group. Intel is a U.S. registered trademark of Intel Corp. Itanium is a trademark of Intel Corp. in the U.S. and other countries and is used under license.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that involve risks, uncertainties and assumptions. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, the results of HP and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenues, synergies, accretion or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including the execution of integration and restructuring plans and the anticipated timing of filings, approvals and closings relating to the Merger or other planned acquisitions; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief and any statements of assumptions underlying any of the foregoing.

The risks, uncertainties and assumptions referred to above include the ability of HP to retain and motivate key employees; the timely development, production and acceptance of products and services and their feature sets; the challenge of managing asset levels, including inventory; the flow of products into third-party distribution channels; the difficulty of keeping expense growth at modest levels while increasing revenues; the challenges of integration and restructuring associated with the Merger or other planned acquisitions and the challenges of achieving anticipated synergies; the possibility that the Merger or other planned acquisitions may not close or that HP, Compaq or other parties to planned acquisitions may be required to modify some aspects of the acquisition transactions in order to obtain regulatory approvals; the assumption of maintaining revenues on a combined company basis following the close of the Merger or other planned acquisitions; 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 and HP's registration statement on Form S-4 filed on February 5, 2002.

HP assumes no obligation and does not intend to update these forward-looking statements.

ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT

On February 5, 2002, HP filed a registration statement with the SEC containing a definitive joint proxy statement/prospectus regarding the Merger. Investors and security holders of HP and Compaq are urged to read the definitive joint proxy statement/prospectus filed with the SEC on February 5, 2002 and any other relevant materials filed by HP or Compaq with the SEC because they contain, or will contain, important information about HP, Compaq and the Merger. The definitive joint proxy statement/prospectus and other relevant materials (when they become available), and any other documents filed by HP or Compaq with the SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by HP by contacting HP Investor Relations, 3000 Hanover Street, Palo Alto, California 94304, 650-857-1501. Investors and security holders may obtain free copies of the documents filed with the SEC by Compaq by contacting Compaq Investor Relations, P.O. Box 692000, Houston, Texas 77269-2000, 800-433-2391. Investors and security holders are urged to read the definitive joint proxy statement/prospectus and the other relevant materials (when they become available) before making any voting or investment decision with respect to the Merger.