Personal Systems Group

Personal Systems Group Todd Bradley Executive Vice President December 13, 2005 © 2005 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Operating strategy Provide customers with Drive world-class cost superior products and structures and overall experience processes PSG 4-point strategy Leverage breadth of Drive the broadest HP portfolio customer reach Progress report WW Total PC client market share(1) Operating profit (2) (2) FY01 FY02 FY03 FY04 FY05 20% $800 8.0% 18% $1B operating $600 profit turnaround 6.0% 16% since FY02 $400 4.0% 14% 12% $200 2.0% 10% $0 0.0% 8% OP % of Revenue % of OP Dollars inmillions ($200) (2.0%) 6% 4% ($400) (4.0%) 2% ($600) (6.0%) 0% 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 ($800) (8.0%) Dell HP Lenovo/IBM Acer 1. IDC Worldwide Quarterly PC Tracker, Q3 2005 2. Based on Combined Company data. See supplemental slides at http://www.hp.com/hpinfo/investor/sam/index.html for a description of periods used for combined company information. PSG product portfolio HP iPAQ HP Workstation HP Pavilion Notebook Mobile Messenger with dual Opteron processors with QuickPlay HP Compaq Notebook HP Thin Client in HP Media Center PC with adjustable stand Consolidated Client with LightScribe Infrastructure Building on positions of strength Desktops Notebooks Workstations Handhelds FY05 •54% of revenue •37% of revenue •5% of revenue •3% of revenue profile •2% growth Y/Y •16% growth Y/Y •26% growth Y/Y •6% decline Y/Y Addressable •136M units •65M units •2M units •65M units market1 • 5% CAGR to ‘07 • 19% CAGR to ‘07 • 7% CAGR to ‘07 • 33% CAGR to ‘07 PSG •Media Center •Breadth of lineup •Collaborative •Data-centric strengths PC •Customer choice engineering devices •Blade PCs/thin •Product •Technology time •Enterprise client innovation to market relationships FY06 •Expand blade •Exploit market •Add new verticals •Leverage priorities PC reach •Blade workstation partnerships •Extend digital •Wireless WAN solution •Strengthen entertainment roadmap 1. IDC Q3 2005 PC Tracker, IDC Q2 2005 Worldwide Quarterly Workstation Forecast, IDC Worldwide Smart Handheld Device Forecast & Analysis, 2004-2009 Improving business fundamentals • Grow units at/or above market Revenue • Lead shift to mobility 4 – 6% growth • Expand emerging country reach • Exploit retail advantage • Improve product mix and attach Operating • Reduce product and service costs 3 – 4% margin • Targeted SG&A investments • Drive efficient overhead structure • Supply chain improvements Return on >50% • Inventory turns assets improvement • Asset utilization Always ready, always on mobile computing Easy Capacity Mobile access to for rich digital security Mobile services media content services & New solutions Voice & data Mobile personalized convergence applications services SW & Infrastructure Devices Services Mobile Security technology Management software Service development and delivery platforms Network service provider partners Go-to-market Leading the shift to mobility (1) • Award-winning, broad WW Notebook market share 20% product portfolio 18% • Innovation to improve the 16% customer experience 14% • Enabling customers to buy 12% the way they choose 10% 8% 6% 4% 2% 0% 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 Dell HP Lenovo/IBM Acer 1. IDC’s Q3 2005 Final Top 10 Vendor Rankings by Form Factor Capitalizing on emerging markets China market share • Expanding to second and third 40% tier cities 35% 30% • Leveraging local retail and 25% commercial channels 20% • Applying proven business 15% models and processes 10% 5% Dell HP Lenovo/IBM Acer 0% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 Central and Eastern Europe market share India market share 8% 20% 7% 18% 16% 6% 14% 5% 12% 4% 10% 3% 8% 6% 2% 4% 1% 2% 0% 0% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 Source: IDC’s Q3 2005 Final PC Tracker Delivering best customer experience creates preference and loyalty • First to market with differentiated solutions • Industry-leading customer support • Flexibility to choose product technology Key success factors for PSG • Capitalize on mobility and emerging markets • Optimize direct and indirect • Deliver innovation that matters • Continue to improve customer satisfaction • Maintain balance of profit and share .

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