HP Breaks New Ground with Video Merchant Services, Wal-Mart First Customer

PALO ALTO, Calif., Feb. 6, 2007 - HP today launched a new business that enables retailers to offer a fun, engaging video shopping experience for packaged video products and online downloads that is unlike anything available on the market.

Called HP Video Merchant Services, the business powers online video web stores and provides content fulfillment services for retailers, just as HP’s Snapfish business powers online photo services for major retailers around the globe.

Wal-Mart, the first customer of the service, today unveiled a beta version of its video download store powered by HP. The new Wal-Mart site allows customers to easily discover, shop for and purchase the movie and television titles they want with the option of downloading the digital versions to a PC or portable video player in addition to purchasing the DVD for mail delivery.

Aiming to capture a share of the approximately $30 billion home video market – a market just beginning the transition from physical to multi-format, multi-channel distribution – HP will allow retailers to fulfill the requests of consumers wanting video content in a variety of ways, including digital downloads, DVDs manufactured on demand, traditional packaged DVDs and emerging video formats such as HD-DVDs and Blu-Ray discs.

Additionally, HP Video Merchant Services enables retailers to seamlessly merchandise broad and deep video catalogs across a variety of digital and physical formats.

“Today’s launch marks a significant milestone for HP as we work toward driving the entertainment industry’s transformation from analog to digital, just as we did for photography,” said Vyomesh Joshi, executive vice president, Imaging and Printing Group, HP. “Together with Wal-Mart and their new online video store, we’re ultimately changing the way consumers shop for and purchase video content.”

With economics shifting for video merchants and Hollywood studios, established home video retailers are looking to grow their current business while meeting competitive demands to support new ways for their customers to buy and enjoy movie and TV content.

Few retailers today offer a full assortment of available video titles in multiple formats with easy and fun online search and discovery options, and consumers are often forced to wait weeks or even months for delivery because many retailers don’t merchandise titles of questionable demand.

HP Video Merchant Services enables on-demand video downloads and a file-based sell-through model that is becoming essential for merchants targeting consumers who are increasingly buying and watching videos via their PCs, networked TVs, portable media players and wireless phones.

Easy and enjoyable discovery experience for consumers

Retailers employing the services of HP’s new business can select from a variety of customizable features to create a compelling online video web store experience for consumers. In addition to searching for movies via traditional categories such as new releases, genre, actor and title, HP offers intelligent search capabilities that allow consumers to search multiple ways for favorite titles. These fun and off-beat discovery tools include:

* A “six degrees of separation” search function that asks consumers to plug in the name of a favorite actor, director or movie to discover related movie titles or projects. Consumers can then click on any related items to branch out their search through these relationships.
* Consumers who aren’t sure what they’re looking for can select movie attributes that fit their “mood” – funny, romantic, action/adventure, etc. – to generate a list of matching movie titles available for purchase.

Both the system software and architecture, which were jointly developed with Capgemini, along with the service are compatible with current versions of Microsoft Windows®, including Microsoft Windows Vista™ and with Windows Media “PlaysForSure” portable devices.

Increased profitability and efficiency for video merchants and studios

HP Video Merchant Services allows companies selling rich digital media to uncover new opportunities for profit by providing customers with content that they otherwise wouldn’t have the ability to sell or actively merchandise. Merchants also will be able to:

* Attract and retain customers by bundling in-store packaged media sales with a compelling online category experience;
* Merchandise a large catalog of movie and TV titles, enabling consumers to easily browse and discover compelling videos through advanced discovery tools;
* Offer deep catalog and specialty niche titles for download and as DVDs manufactured on demand;
* Dramatically lower the unit sales volume required on a title to achieve an attractive return on investment;
* Provide complete flexibility in the online merchandising and distribution of home video content; and
* Obtain timely, accurate data on consumer buying behaviors.

Additionally, HP Video Merchant Services benefits studios and video merchants by eliminating the challenges of supply-demand matching on catalog and specialty titles and reducing inventory holding, packaging and returns costs.

By using the digital video supply chain of HP Video Merchant Services, studios and other rights holders will have the freedom to market greater numbers of movie and television titles, not only popular mainstream content. Specialty, back catalog, niche and independent content can be made available to more consumers across a variety of format and sell-through models.

HP’s offering also will include active support of merchant licensing efforts, as well as direct access to a robust selection of aggregated rights from specialty and back-catalog content owners.

More information about HP Video Merchant Services is available at www.hp.com/large/dmp/index.html.

About HP

HP focuses on simplifying technology experiences for all of its customers – from individual consumers to the largest businesses. With a portfolio that spans printing, personal computing, software, services and IT infrastructure, HP is among the world’s largest IT companies, with revenue totaling $91.7 billion for the four fiscal quarters ended Oct. 31, 2006. More information about HP (NYSE: HPQ) is available at http://www.hp.com.

Microsoft Windows and Windows Vista are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of HP and its consolidated subsidiaries could 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 but not limited to statements of the plans, strategies and objectives of management for future operations; any statements concerning expected development, performance or market share relating to products and services; anticipated operational and financial results; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the achievement of expected results and other risks that are described from time to time in HP’s Securities and Exchange Commission reports, including but not limited to the risks described in HP’s Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2006 and other reports filed after that Form 10-K. HP assumes no obligation and does not intend to update these forward-looking statements.

© 2007 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

Contact Information

Press Hotline

HP

Contact via E-mail