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HP and Phogenix Announce First Market Trial of Digital Inkjet Minilab for Consumer Electronics Industry

Future Shop, Canada's Largest Consumer Electronics Retailer, Now Testing New Digital Photofinishing Solution
PALO ALTO and SAN DIEGO, Calif., March 3, 2003

HP (NYSE:HPQ) and Phogenix Imaging LLC, the leading developer of retail digital inkjet photofinishing solutions, today announced that the Phogenix DFX Digital Photofinishing System is now being test-marketed by Future Shop, Canada's largest and fastest growing consumer electronics retailer and e-tailer. Future Shop is a division of Best Buy Canada, a wholly owned subsidiary of Best Buy Co. Inc.

Future Shop, which is HP and Phogenix's first consumer electronics market trial, is evaluating both the business and operational benefits of using HP's state-of-the-art digital imaging solutions and Phogenix's digital inkjet minilab to economically and easily expand its digital photofinishing capabilities.

Future Shop's decision to work with HP to test the DFX minilab was driven by the company's goal to explore new digital technologies and more cost-effective alternatives to traditional silver halide photofinishing services, allowing Future Shop to more efficiently deliver expanded services to consumers.

"Future Shop is committed to offering its customers a complete digital imaging solution, including flexible choices for producing high-quality digital prints in different sizes and formats. As such, we are excited about the potential of the Phogenix DFX digital minilab to accelerate our delivery of digital photofinishing services," said Rick Lotman, senior vice president of merchandising and marketing, Future Shop. "Future Shop is extremely pleased to leverage HP's significant technology expertise and industry leadership to help assess new ways to grow our digital imaging business."

As part of the market trial, HP has integrated the Phogenix DFX digital minilab with Future Shop's photofinishing management system and existing retail store infrastructure. In addition, HP consumer kiosks have been networked with the DFX to facilitate ease of use and convenience for Future Shop customers. HP also has provided all training and support for the solution, which includes the system data manager (PC, LAN connection, monitor, CD burner, media input terminal), the print/finish station, Kodak DLS system management software and the HP local area network.

"HP is thrilled to work with Future Shop to assess the capabilities of our solution and assist in determining the best return on their digital imaging investments," said Gary Cutler, vice president, HP Digital Imaging Organization. "This market trial brings to life our vision of offering consumers a complete digital imaging solution centered around greater choice, control and convenience."

The Phogenix DFX system is an affordable, full-featured digital minilab that replaces chemical paper processing with commercial thermal inkjet technology from HP to produce high-quality, durable prints. By replacing traditional chemical paper processing with an inkjet system, the DFX greatly reduces chemical usage (up to 79 percent less chemistry than conventional labs with the 1-Touch film processor/scanner), which significantly decreases the typical infrastructure and costs associated with traditional retail photofinishing labs.

The DFX, starting at a suggested U.S. retail priced of $39,900,(1) lowers the cost of entry for retailers and the easy-to-use "dry" system requires minimal operator intervention. The modular DFX also can be configured to optimize floor space and is easily networked to consumer kiosks, the Internet or other retail systems.

In addition to standard order fulfillment, the DFX is being used to produce mixed and digital orders for one-hour fulfillment and custom print packages, specialty sizes up to 12 by 18 inches, posters, calendars, greeting cards and CD-ROMs.

"The Phogenix DFX, which consistently gets high marks for excellent print quality and ease of use, is the most efficient way to produce high-margin, mixed orders on-site," said Fred Heigold, chief executive officer, Phogenix Imaging.

"We are dedicated to providing the best digital fulfillment system to Future Shop and are pleased to demonstrate how the DFX can give electronics retailers an opportunity to retain their digital camera customers -- bringing them back to the stores to take advantage of flexible digital output options."

About Phogenix Imaging

Phogenix Imaging develops retail digital inkjet photofinishing equipment and supplies for the next generation of digital photofinishing solutions. Phogenix Imaging is a joint venture of Eastman Kodak Company and HP. Headquartered in San Diego, the company launched the DFX digital inkjet photofinishing system in February of 2002. The DFX, sold through Kodak and HP, is the first in a series of planned Phogenix Imaging products that provide retailers a flexible, easy gateway to the digital arena.

About HP

HP is a leading global provider of products, technologies, solutions and services to consumers and businesses. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. HP completed its acquisition of Compaq Computer Corporation on May 3, 2002. More information about HP is available at http://www.hp.com.

(1) Actual prices may vary.


This news release contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks, uncertainties and assumptions include the possibility that the market for the sale of certain products and services may not develop as expected; that development and performance of these products and services may not proceed as planned; 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 year ended October 31, 2002, as filed with the Securities and Exchange Commission on January 21, 2003, and subsequently filed reports. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, HP's results could differ materially from HP's expectations in these statements. HP assumes no obligation to update these forward-looking statements.


About HP

HP Inc. creates technology that makes life better for everyone, everywhere. Through our portfolio of printers, PCs, mobile devices, solutions, and services, we engineer experiences that amaze. More information about HP Inc. is available at http://www.hp.com.