HP Server Revenue Growth Outpaces Worldwide Server Market and Next Two Largest Competitors; HP No. 1 in Worldwide Server Shipments for 13th Consecutive Quarter

Business Wire, August 26, 2005

PALO ALTO, Calif. -- HP (NYSE:HPQ) (Nasdaq:HPQ) demonstrated strong server revenue(1) growth and was the No. 1 vendor in worldwide server shipments for the 13th consecutive quarter, according to second quarter 2005 figures released today by IDC.(2)

In total server revenue, HP grew twice as fast as the market and took market share from IBM and Sun. HP was No. 1 in total worldwide revenue for the three major operating environments of Windows(R), Linux and UNIX(R) combined, which comprise more than 95 percent of all servers shipped worldwide. Additionally, HP had strong year-over-year revenue growth compared to the market for x86 servers (17.6 percent), x86 blade servers (120.6 percent) and Intel(R) Itanium(R) 2 (EPIC)-based servers (85.6 percent).

"We are clearly pleased with the strength of execution in the second quarter, as evidenced by the solid growth in revenue across our server lines, especially our HP ProLiant and Integrity server businesses," said Mark Hudson, vice president, marketing, Enterprise Storage and Servers, HP. "The strength of our portfolio and strategy of delivering innovation on standards -- through capabilities such as dual-core technology, virtualization and management simplicity -- continue to resonate with customers, making HP their platform of choice."

Other highlights of the analyst firm's report include:

--HP was No. 1 in total Linux revenue and held the top spot in x86 Linux server revenue;

--In Windows x86 servers, HP maintained its No. 1 position in units and revenue and outpaced the market year-over-year in revenue;

--HP was No. 1 in total worldwide revenue and maintained its No. 1 server unit position for UNIX mid-range servers between $25,000 and $500,000, which is the largest segment of the UNIX marketplace. HP gained market share year-over-year in total revenue worldwide for the lucrative high-end UNIX server market over $500,000;

--HP was again No. 1 in x86 server units and revenue, while outpacing

the market in revenue growth year-over-year. Of note, HP regained the No. 1 position in revenue in the United States;

--In x86-64 servers, HP's investments in new technologies -- AMD Opteron(TM) and Intel Xeon(TM) EMT64T -- delivered the leadership position in this market in both units and revenue. HP holds nearly double the unit and revenue share of the next largest vendor of Opteron-based servers;

--In x86 blade servers, HP outpaced the market in units and revenue both year-over-year and quarter-over-quarter, taking revenue market share from IBM. HP more than doubled its x86 blade server revenue year-over-year worldwide, and regained the No. 1 position in the United States in revenue;

--Itanium 2-based HP Integrity servers were No. 1 in worldwide units and revenue and grew in revenue with the worldwide EPIC server market at 86 percent year-over-year.

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended July 31, 2005, HP revenue totaled $85.2 billion. More information about HP is available at www.hp.com.

(1) Factory revenue according to IDC's Worldwide Quarterly Server Tracker, August 2005.

(2) Source: IDC's Worldwide Quarterly Server Tracker, August 2005.

Intel, Itanium and Xeon are trademarks or registered trademarks of Intel Corp. or its subsidiaries in the United States and other countries. Windows is a U.S. registered trademark of Microsoft Corp. UNIX is a registered trademark of The Open Group. Linux is a U.S. registered trademark of Linus Torvalds. AMD Opteron is a trademark of Advanced Micro Devices, Inc.

This news release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they ever materialize or prove incorrect, could cause the results of HP and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected development, performance or rankings of products or services; statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the development, performance and market acceptance of products and services 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 fiscal quarter ended April 30, 2005, and other reports filed after HP's Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2004. HP assumes no obligation and does not intend to update these forward-looking statements.

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