HP and Microsoft Announce Retail Partners for HP Media Center PC with Windows XP Media Center Edition

PALO ALTO, Calif. and REDMOND, Wash., Oct. 10, 2002 — HP (NYSE:HPQ) and Microsoft Corp. (Nasdaq:MSFT) today announced the HP Media Center PC with Microsoft® Windows®
XP Media Center Edition is expected to be available at Best Buy, Circuit City and CompUSA in the United States, at Future Shop and Best Buy in Canada and direct from HP online at hpshopping.com by the end of October.

The HP Media Center PC is powered by Microsoft Windows XP Media Center Edition, which turns a PC into a media center that integrates digital entertainment experiences — including live television, personal video recording with free electronic program guide,1 digital music, digital video, DVDs and digital photos — with the freedom of remote control access.

“With its combination of PC power and entertainment features, the HP Media Center PC is an ideal choice for consumers looking to purchase a PC as a holiday gift,”
said Sam Szteinbaum, North America vice president of consumer products, HP Personal Systems Group.
“It’s like giving a PC and all your home entertainment center components in one.”

The HP Media Center PC is ideal for digital media enthusiasts and consumers, such as teenagers, college students, young adults and families, who want to use their PC for entertainment and digital media in small, space-constrained environments. Featuring a sleek black and chrome design, the new HP Media Center PC will have a six-in-one media card reader on its front panel for quick and easy transfer of digital data, outstanding sound quality, and photo and home movie creation and editing software.

Powered by Intel® Pentium®
4 processors, the HP Media Center PC allows users to enjoy the digital entertainment capabilities of the newest member of the Windows XP family. Building on the stability of Windows XP and its easy-to-use digital media tools, Windows XP Media Center Edition introduces the new Media Center user experience. Media Center will serve as a unified destination for entertainment on the HP Media Center PC and is designed to be viewed from anywhere in the room.

“Windows XP Media Center Edition represents the arrival of a new type of home computing experience, and Microsoft is excited to be working with such broad-reaching retailers to bring consumers media center PCs that will offer them more freedom, more fun and deliver even more value in their everyday lives,”
said Mike Toutonghi, vice president of the Windows eHome Division, Microsoft.

Retailers have shown strong support for the new Media Center PC category:

“CompUSA customers understand technology. We know they’ll find the idea of controlling their PC entertainment experiences from across the room to be very compelling. The remote control could well become the next standard PC peripheral; we see the HP Media Center PC with Windows XP Media Center Edition as an important first step toward the connected home.”
said Tony Weiss, executive vice president, CompUSA

“The HP Media Center PC with Windows XP Media Center Edition is what the future has in store this holiday season. We’re very excited about showcasing this product and demonstrating how much more our customers can get from their PC. The Media Center interface is simple, elegant and highly functional. What a great idea to be able to kick back after the e-mails and spreadsheets and simply enjoy a wide variety of entertainment choices.”
said Rick Lotman, senior vice president, Merchandising and Marketing, Future Shop.

Expected to be available by the end of October, the HP Media Center PC will have an estimated U.S. street price starting at $1,399. 2

Additional information on the HP Media Center PC is available at http://www.hp.com/go/mediacenterpc/ , and more information about Microsoft Windows XP Media Center Edition is available at http://www.microsoft.com/presspass/presskits/2002/winxpmediacenter/ . Detailed product specifications and exact pricing will be released from HP later this month.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

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. More information about HP is available at http://www.hp.com .

1 Internet access required to download program guide.

2 Actual prices may vary.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Intel and Pentium are U.S. registered trademarks of Intel 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 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 April 30, 2002 and reports filed subsequent to HP’s annual report on Form 10-K, as amended on January 30, 2002, for the fiscal year ended October 31, 2001. 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 and does not intend to update these forward-looking statements.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass/ on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.asp .

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