HP and Apple Partner to Deliver Digital Music Player and iTunes to HP Customers.

Business Editors/High-Tech Writers

2004 International CES

LAS VEGAS--(BUSINESS WIRE)--Jan. 8, 2004

Working to provide consumers with the most compelling digital content whenever and wherever they desire, HP (NYSE:HPQ) and Apple (Nasdaq:AAPL) today announced a strategic alliance to deliver an HP-branded digital music player based on Apple's iPod, the No. 1 digital music player in the world, and Apple's award-winning iTunes digital music jukebox and pioneering online music store to HP's customers.

As part of the alliance, HP consumer PCs and notebooks will come preinstalled with Apple's iTunes jukebox software and an easy-reference desktop icon to point consumers directly to the iTunes Music Store, ensuring a simple, seamless music experience. This offering is yet another way that HP is helping consumers enjoy more from their personal digital entertainment content.

"HP's goal is to bring the most compelling entertainment content and experiences to our customers," said Carly Fiorina, chairman and chief executive officer, HP. "We explored a range of alternatives to deliver a great digital music experience and concluded Apple's iPod music player and iTunes music service were the best by far. By partnering with Apple, we have the opportunity to add value by integrating the world's best digital music offering into HP's larger digital entertainment system strategy."

"Apple's goal is to get iPods and iTunes into the hands of every music lover around the world, and partnering with HP, an innovative consumer company, is going to help us do just that," said Steve Jobs, chief executive officer, Apple. "As the industry balkanizes by offering digital music wrapped in a multitude of incompatible proprietary technologies, consumers will be reassured in getting the same unparalleled digital music solutions from both HP and Apple, two leaders in the digital music era."

According to internal HP research, more than 54 percent of current HP consumers download music to their PCs.

More than 2 million iPods have been sold since its introduction, solidifying its position as the No. 1 digital music player in the world. All iPods work seamlessly with the award-winning iTunes digital music jukebox software and the iTunes Music Store, which has sold more than 30 million songs, providing music fans with the best digital music experience on either a Mac or Windows(R) PC.

The iTunes Music Store offers Windows and Mac users a music catalog of more than 500,000 songs, the same "gold standard" personal use rights and the same 99 cents-per-song pricing. The iTunes Music Store features online gift certificates for family and friends; Apple's innovative and patent-pending online "Allowance" feature, which allows parents to automatically deposit funds into their kids' iTunes Music Store account every month; more than 5,000 audiobooks, which can be purchased with one click and listened to on a Mac or Windows computer as well as on iPods; Celebrity Playlists; and new exclusive tracks from more than 60 artists. The iTunes Music Store offers music from all five major music companies and over 200 independent music labels.

Pricing and availability

HP's digital music player is expected to become available this summer and be priced competitively to other digital music players currently available.

Beginning this summer, the iTunes software and a desktop icon guiding users to the music site will be preloaded on HP Pavilion, Media Center and Compaq Presario desktop and notebook consumer PCs.

About Apple

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. For the fiscal year ending on Oct. 31, 2003, HP revenue totaled $73.1 billion. More information about HP is available at www.hp.com.

Microsoft and Windows are U.S. registered trademarks of Microsoft Corp.

This news release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never 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. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include employee management issues; the timely development, production and acceptance of services and their feature sets; the challenge of managing asset levels, including inventory; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks that are described from time to time in HP's Quarterly Report on Form 10-Q for the period ended July 31, 2003 and HP's other Securities and Exchange Commission reports filed after HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2002. HP assumes no obligation and does not intend to update these forward-looking statements.

The information contained herein is subject to change without notice. HP shall not be liable for technical or editorial errors or omissions contained herein.