HP Heritage 6/17/2003. Digital Equipment Corp Ken Olsen Harlan Anderson. Hewlett-Packard Bill Hewlett Dave Packard

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1 page 1 HP Heritage Hewlett-Packard Bill Hewlett Dave Packard 1982 Compaq Rod Canion Jim Harris Bill Murto Tandem Jim Treybig Digital Equipment Corp Ken Olsen Harlan Anderson 1979 Apollo Bill Poduska hp page 2 1

2 HP Today Portfolio leadership Palmtop to NonStop Segment leadership Consumer to SMB to enterprise 137,000 employees Customer focused 15,000 pre-sales and sales representatives 65,000 service professionals 100,000+ partners of choice worldwide page 3 HP Today ecommerce leadership $12 billion/quarter in e-commerce transactions (includes internet, EDI, web-enabled revenue) B2B capabilities in 185 countries, 43 currencies, 15 languages R&D leadership >17,000 patents spanning print technology to molecular added 1300 patents in fy2002 $4 billion annual R&D investment Financial strength $13 billion in cash page 4 2

3 Did you know HP today Powers more than 100 stock and commodity exchanges, including 14 of the world s largest Supports 95% of the world s securities transactions Handles two of every three credit card transactions worldwide Handles three of every four electronic funds transfers Handles 80% of all telecom billing and customer care traffic in Europe and Asia Controls 65% of the world s energy infrastructure Leads the world in high performance technical page 5 Our strategic principles Return on information technology (RoIT) Adaptive infrastructure + collaboration Simple and rewarding experiences Easy to use + better together World-class cost structures Consolidation + supply chain + IT integration Focused innovation Focus where we can make unique contributions and lead + partner for the rest page 6 3

4 The challenge of the CIO Today s reality: business turbulence tight spending more risk adverse every business decision triggers a series of IT events underscoring the linkage of IT with business; now IT must: keep pace with the business integrate business processes and information ensure continuity and security lower operating costs deliver better service levels automate the management and control of IT show demonstrable return on IT page 7 HP s approach if you get the infrastructure right everything else becomes possible The IT infrastructure should be: a platform for managing the impact of change deployed across the business, applications and processes managed like a business: disciplined, predictable, reliable The HP Adaptive Infrastructure an IT foundation that dynamically adapts to rapidly changing business conditions. The HP Adaptive Infrastructure includes a Reference Architecture and a set of solutions, services and products. page 8 4

5 HP s strategy Enable business agility through an adaptive infrastructure that: Is an IT foundation that dynamically adapts to rapidly changing business conditions Takes advantage of new technologies Rapidly accommodates unanticipated changes Demonstrates the value of IT through a measurementdriven approach adjust supply of resources time business strategy range business process ease HP adaptive infrastructure simplification integration integration standardization modularity modularity anticipate and respond to change create business opportunities demand for services / resources page 9 Increasing adaptability for business agility use change to compete Business Agility dynamic resources linked to business business agility pro-actively change anticipate changes stable, secure, extensible foundation optimized, integrated resources, managed as a service react to change infrastructure adaptability page 10 5

6 Maximizing RoIT through hp s collaborative approach collaborative approach: #1 partner for Microsoft Exchange and SQL server preferred partner to BEA in the J2EE space 40% platform share of Oracle 40% platform share of PeopleSoft 51% share of SAP s installed base 50% platform share of Siebel 40 + outsourcing contracts, plus hundreds more with partners page 11 Simple and Rewarding/Better Together HP delivers simple and rewarding IT user and consumer experiences by making technologies work better together HP focuses on delivering a consumer technology experience in which: simplicity of use, interoperability and connectivity are a given information is increasingly personalized and easily shared products and technologies reflect varied lifestyles of consumer market new technologies are readily affordable to the broad market page 12 6

7 World-Class Cost Structures $3B in annual savings in 2004 Merger related cost savings in second half FY02 were $651 million, 30% above plan Consolidation savings FY02 headcount reductions = $460M in annualized savings 19% reduction in administrative facilities = $200M annually 35% reduction in manufacturing facilities = $250M annually Supply chain savings $550M direct procurement savings in fy03; $458M to date $250M indirect procurement savings in fy03; $52M to date IT infrastructure savings targeting $400 million savings in IT operations spend in fy04; $45M to date page 13 Focused Innovation hp will invest in innovation (technology and business models) where it can make a valued contribution; and partner for the rest adaptive infrastructures moving toward utility infrastructures utility data center link to grid using Globus protocols consumer connectivity imaging technologies rich media solutions mobility Linux partnering with Intel, Microsoft, BEA (among many others) page 14 7

8 external storage FY2002 segment revenue percentage Total Revenue = $72.3 Billion *Includes merger-related eliminations IPG record performance 18% growth industry leader PSG Imaging & Printing 30% Personal Systems 28% execution and innovation 6% growth grew faster than US market (IDC) Enterprise Systems 22% HP Services 17% HPFS 3% ESG every business, every region 8% growth #1 in servers #1 in storage HPS on demand capabilities 4% growth #3 worldwide IT service provider page 15 Competitive Position By Business Group Pro Forma Combined Company Revenue (Based On Last 4 Reported Quarters) servers Enterprise Services Group (ESG) $12b $10 $4b $3 $3 $5 $3 $2 hp IBM Sun Dell hp EMC IBM Sun Imaging & Printing Group (IPG) $20b hp Services (HPS) $35b $22 Personal Systems Group (PSG) $22b $21 $13 $11 $4b $4 hp Lexmark IBM EDS hp hp Dell IBM GTW Source: hp reflects unaudited combined results rounded to the nearest billion; competitors - servers and external storage = idc; printing, services and pcs = wall street estimates or company segment results when available. page 16 8

9 Organization Chairman & CEO Carly Fiorina Imaging & Printing Group Vyomesh Joshi Consumer Personal Systems Group Duane Zitzner SMB/Direct HP Services Ann Livermore Public Sector Enterprise Systems Group Peter Blackmore Corporate & Enterprise 26% Merger Integration & Organizational Effectiveness Webb McKinney 12/02 & Chief Informatio n Officer Bob Napier HR & Workforce Developmen t Susan Bowick Supply Chain & Customer Operations Jeff Clarke & Chief Technology & Strategy Officer Shane Robison & Chief Financial Officer Bob Wayman & Chief Marketing Officer Mike Winkler page 17 technology vision page 18 9

10 Toward pervasive information systems penetration batch and timesharing minis networked personal distributed micros internet adaptive infrastructure open systems of clients and servers information utility/appliances utility mainframes page 19 HP Vision enabling intelligent, connected devices and environments enabling digital content and services enabling transformation enabling adaptive, pervasive IT infrastructures hp delivers vital technology for business and life. By helping build and connect these strategic elements, we can transform the experiences people have with technology and the role it plays in their enterprise and their personal lives. page 20 10