HP Disrupts Retail Photo-Printing Market; Breakthrough Photo Kiosk and In-Store Studio Deployed in Chains Nationwide.

PALO ALTO, Calif. -- HP (NYSE:HPQ) (Nasdaq:HPQ) today marked its entrance into the retail photo-printing market with the introduction of a self-service photo kiosk and an in-store photo studio that will be rolled out in top-tier retail chains nationwide.

Albertsons, Longs Drugs Stores, Bashas' Supermarkets and specialty photo stores Dan's Camera City in Allentown, Pa., and Rush Hour Photo and Wireless in Corvallis, Ore., will be among the first to feature the photo-printing solutions at select stores.

The HP Photosmart Express station is the most advanced standalone, self-service photo kiosk dedicated to producing 4 x 6-inch prints quickly -- in as fast as five seconds. The HP Photosmart Studio is the first and only in-store solution where consumers can design creative products in about five minutes -- without having to crop or place photos into individual templates -- and pick them up in one hour or less.

Both products, announced in anticipation of the Photo Marketing Association (PMA) show to be held in Orlando, Fla., from Feb. 26 - 29, open the doors to a significantly more profitable photofinishing business for retailers(1) while offering their customers improved flexibility and speed in printing photos.

"We're leveraging our photo-printing leadership in the home to drive down the cost for retailers and to bring consumers more choice than they've ever had in stores," said Vyomesh Joshi, executive vice president, Imaging and Printing Group, HP. "The breadth and innovation required here is what HP does best."

Targeting the $35 billion-plus retail photo-printing market, HP will work with retail partners to roll out thousands of HP photo solutions in a wide variety of locations, such as mass-merchandisers, club stores, supermarkets, drug stores, photo specialty stores, electronics stores, office product stores and less traditional photo service locations.

Unique retail printing experience

HP's retail photo solutions offer consumers the best way to get high-quality prints and creative projects from their digital cameras at retail locations where they already shop.

Marking the next milestone in HP's $1.4 billion investment in its "scalable printing technology," the HP Photosmart Express station features the premier inkjet photo-printing system in the industry and delivers 4 x 6-inch photos in as fast as five seconds. Consumers simply select, print and pay in a few easy steps. According to permanence testing, these prints will resist fading for well over 50 years -- two to 10 times as long as typical dye-sublimation-based retail systems.(2)

The HP Photosmart Express station works seamlessly with HP's Snapfish so consumers can upload their photos at home, place an order online and, at their convenience, use the HP retail photo solution for fast and easy processing.

The HP Photosmart Studio is the first in-store solution on the market developed to help consumers transform anywhere from one to 200 images into ready-to-share albums, calendars, CDs, greeting cards and posters in less than an hour. Simple and quick to use, the process does not require people to select, crop or place photos into templates on each individual page. Instead, hundreds of photos are laid out in minutes using proprietary image management algorithms developed by HP Labs.

Improved profitability and efficiency for retailers

Compared with competing photo systems currently on the market, HP estimates that the HP Photosmart Express station is up to 40 percent more profitable per square foot, has up to 10 times the supplies capacity and is up to six times more space efficient.(1)

Additionally, the HP Photosmart Express station is a completely networked, offering 24x7 monitoring and troubleshooting to ensure high uptime. Retailers can easily handle software upgrades, maintain the kiosk's operability, access performance reports and tailor store promotions all from a remote location.

The HP Photosmart Studio offers retailers an effective way to drive incremental sales and margins in existing photo departments, while delighting customers with new digital photo experiences. HP estimates that a typical photo center can boost a store's returns from photo-finishing by up to 50 percent on a sustained basis.(1) Unlike many "one-size-fits-all" photo labs, the HP Photosmart Studio is completely configurable and scalable to meet the unique needs of retailers.

In addition to providing a customizable, in-store solution, HP is also offering retailers a robust online photo service experience via the HP Snapfish infrastructure.

Greater choice for professional photographers

HP also has expanded its portfolio of products for professional and advanced amateur photographers with a new professional photo printer and an exclusively formulated line of HP Vivera pigment inks.

The HP Photosmart Pro B9180 Professional Photo Printer brings superior image quality and flexibility to the professional photography market. Based on HP's scalable printing technology, the printer delivers increased speeds -- producing a 4 x 6-inch print in as fast as 10 seconds and a 13 x 19-inch photo in as fast as 1.5 minutes -- as well as photo permanence of more than 200 years.(3)

HP Vivera pigment-based inks offer professional photographers more choice when using a broad array of media beyond traditional photo paper.

HP also introduced a variety of new media, including: four digital fine art papers that are ideal for reproductions and photographs; HP Advanced Photo Paper that is thicker, dries instantly and exhibits excellent water-resistance; the world's glossiest CD/DVD labels; and a self-adhesive photo paper that makes it easy for consumers to place photos in albums and creative projects.

More information regarding HP's announcements at PMA as well as the company's spring line of ultra-compact, feature-packed digital cameras introduced at the recent Consumer Electronics Show is available in an online press kit at www.hp.com/go/PMA2006.

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 Jan. 31, 2006, HP revenue totaled $87.9 billion. More information about HP is available at www.hp.com.

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(1) Estimate is based on early trial data from HP, not on the performance of actual production units.

(2) Based on light fade under glass testing at HP Image Permanence Lab (IPL) using HP inks and paper that come standard with the system. Storage permanence (thermal degradation resistance) over 200 years based on HP IPL tests. Confirmation tests of both in progress at Wilhelm Imaging Research, Inc. For details visit www.hp.com/go/printpermanence.

(3) Based on preliminary display permanence testing under glass by Wilhelm Imaging Research using HP Advanced Photo Paper and HP Matte Photo Paper; similar display permanence with additional HP recommended papers. For details see www.hp.com/go/printpermanence.

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 Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2005 and other reports filed after such report. HP assumes no obligation and does not intend to update these forward-looking statements.

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