HP 2002 annual re p o rt I t ’s working. It may be what people are saying about H P ’s integration eff o rt s , but more import a n t l y, it’s what p e o p l e s a y when technology s o l v e s a s e e m i n g l y impossible pro b l e m for the first time, or reliably p e rf o rms a transaction for the millionth. I t ’s working. When technology propels a company into new markets. Cuts millions in cost out of a business. Tracks a customer ord e r. Powers the stock market. When it models aberrant weather p a t t e rns, or serious diseases, or economic turbulence — and in the process, makes possible new policies, treatments, cures. When technology opens up new opportunities in underserv e d communities. Helps car engineers cheat the wind. Or makes a parent smile. It is for these moments that we are building HP into the world’s most capable technology company. A company dedicated to harnessing technology — in all its complexity, power and hope — not just to make a p rofit, but to make a diff e re n c e . Our re l a t i o n s h i p s Rightfully so, customers are demanding more than ever from their technology part n e r s . financial markets + HP: HP people and technology power14 of the world’s largest stock exchanges. Hong Kong + HP: HP technology enables citizens in Hong Kong to access government services from public kiosks. Disney + HP: Mission: Space in Epcot at the Walt Disney World Resort is a collaboration between Disney and H P. HP technology will help bring the experience of space flight to life. retail + HP: When you use your charge card, chances are HP technology helps manage the transaction. Our re l a t i o n s h i p s HP is a very diff e rent kind of part n e r. Starbucks + HP: In 2,000-plus Starbucks stores, people use WiFi cards and HP’s wireless connection manager to check e-mail and scan the Net. e v e ry w h e re + HP: HP and Nokia are redefining where everyone works, learns, and plays. Sundance Institute + HP: HP is the official IT provider to the Sundance Film Festival, to the Sundance Institute and to independent spirits who are pioneering new frontiers in film. e-government + HP: HP is helping governments every w h e re harness technology to better serve their constituents. innovation + HP: E n t re p reneurial photographers in India are using small solar panels to power HP cameras and printers to print photo IDs for citizens in remote parts of India. 100% of the top 50 telecoms 95% of all securities transactions 67% of all credit card transactions 6 5 % o f t h e w o r l d ’s e n e rg y i n f r a s t ru c t u re And millions of people just like you HP is a company that not only values partnership, but aspires to its highest ideal. Customers want straight talk, practical solutions and a partner they can trust. A partner dedicated to helping them get far more value out of their technology investments. In 2002, with a portfolio that spans fro m desktop to print shop, from laptop to NonStop computing systems, HP people and technology p o w e red much of the world’s vital infrastru c t u re. To d a y, more than 100 stock and commodity exchanges, including 14 of the world’s largest, rely on HP. We support 95 p e rcent of the world’s securities transactions. We help manage two out of every three credit card transactions, and thre e out of every four electronic fund transfers globally. We handle 80 percent of all telecom billing and customer care traffic in Europe and Asia. We ’ re now a leading partner to Microsoft, Intel, Oracle, BEA, Siebel, PeopleSoft, Accenture, Cap Gemini Ernst & Young (CGE&Y) and BearingPoint. As a result, we are in a better position than ever to galvanize the industry on behalf of our customers. Our inventiveness Since 1999, the number of worldwide patent applications we’ve filed has increased 260 p e rc e n t . tiny + HP: HP is leading the march toward nanotechnologies to push beyond the limits of silicon. $49.99 + HP: Sometimes, it’s our most aff o rdable products that are packed with patents — our $49.99 printer is covered by 100 patents worldwide. solar power + HP: In developing countries, HP is using unexpected technologies to create sustainable businesses. your life + HP: HP digital imaging technology captures and prints more smiles, more moments and more joy. Our inventiveness One of the great benefits of the Compaq acquisition is that it increases our capacity to invent. standards + HP: Nearly 700 HP people work with 300 diff e rent standards organizations around the world. understanding + HP: HP server technology helps scientists and re s e a rchers simulate phenomena that once took an e n t i re lifetime to understand. fast + HP: As the principal sponsor of the BMW WilliamsF1 Team, HP's participation goes beyond painting a logo on the wings. An HP superc o m p u t e r, which designed the car, conducts thousands of race simulations. And HP servers and notebooks analyze real-time data, letting the team make critical changes to the car. simplicity + HP: The new HP PhotoSmart 230 printer can output directly from a digital camera memory card, no PCs attached. 17, 000 worldwide patents 2 2,000 R&D professionals 7, 000 new patent applications in 2002 100 new products in six months 25 patent applications worldwide every work day S t a rting with Bill Hewlett’s first patent in 1938 through each of the more than 17,000 worldwide patents we hold today, innovation has been a hallmark of HP scientists, re s e a rchers and engineers. In 2002, the combined company invested approximately $4 billion toward advances in consumer device connectivity; infrastru c t u re management, interoperability and utilization s o f t w a re and services; new imaging technologies; next generation computing utility and grid technologies; mobility; and security and trusted systems. And while some in our industry choose to forgo primary invention in pursuit of lower costs, we have demonstrated in products such as our $49.99 printer with 100 worldwide patents, that for HP, low cost doesn’t equate to low-tech. As just one measure of our inventiveness, we greatly accelerated our rate of innovation in 2002. In the last six months of 2002, we introduced more than 100 new products and added 1,400 patents worldwide. This happens to be the fastest rate of innovation as measured by pro d u c t i n t roduction and patent generation in HP’s history. And it shows: In 2001, we ranked 15th in the United States in patents. In 2002, we moved up to ninth. Our commitment to innovation is as s t rong as ever — and we are focusing in areas where we can make a unique contribution to our customers, and truly diff e rentiate ourselves from our competitors. The future These tough times are separating the good companies from the great companies. blade servers + HP: HP is the first vendor to ship 1,800 blade servers, next generation server technology, per month. aspiration + HP: HP technology touches more than a billion people every day. $4 billion + HP: We spend our R&D budget on innovation that will make the biggest diff e rence for our customers. solutions + HP: When a 64-bit memory can fit inside a red blood cell or act as an electronic switch; when whole c i rcuits get so small they can hide in the weave of a T- s h i rt — that is molecular computing. It’s H P ’s U.S. patent 6.459.059. know-how + HP: HP Services’ professionals bring innovative services, practices and methodologies to companies worldwide every day. The future We applaud the individuals and teams who are proving that everything is possible. media + HP: Connect the HP Media Center PC to a TV or flat-panel monitor, then use it to capture and play back TV shows and music, view digital photos, or watch DVDs and home movies. the reinvented PC + HP: H P ’s new tablet PC is a small graphics-oriented notepad with a special version of Windows that lets you draw, take notes and fill out forms with a digital pen. surplus inventory + HP: HPSupplyLink helps charitable organizations acquire needed goods from companies with surplus i n v e n t o ry that can contribute to the basic needs of communities. global reach + HP: 1 7 8 countries. 141,000 HP employees. We ’ re every w h e re our clients need us to be. 178 countries 141,000 HP employees 1 vision 1 mission One HP These are not easy times for the IT industry, or many other industries for that matter. But in u n c e rtain times, it is our capacity to look ahead, our capacity to build a better future and our capacity to develop practical solutions to real problems that make our work all the more essential. This past year, by combining the ingenuity of scientists at the Pittsburgh Supercomputing Center with HP servers that can perf o rm 6 trillion calculations per second, we’re closer to curing diabetes and glaucoma.