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HP To Acquire Leading Online Photo Service Snapfish

Acquisition will enable HP to provide consumers with more choice for sharing, storing and printing their photos

PALO ALTO, Calif., - March 21, 2005 - HP today announced that it has signed a definitive agreement to acquire Snapfish, a leading online photo service. Snapfish's expertise in online photo services coupled with HP's worldwide customer reach will rapidly enhance HP's ability to capitalize on the growing market for online photo printing.

San Francisco-based Snapfish offers high-quality photo products and services, including free online photo sharing, photo storage and management, free editing tools and software, online print ordering, wireless imaging services for camera phone and color handset users, and more than 70 personalized photo products. Snapfish also provides infrastructure services to leading retailers, internet service providers and wireless carriers, allowing them to offer these same products and services to their own consumers.

"Bringing Snapfish into HP's digital photography portfolio is a strategic move for both companies," said Larry Lesley, senior vice president, HP Consumer Imaging and Printing. By offering a superior online photo service through Snapfish, we will be able to offer the home photographer greater choice when deciding exactly how, when and where they share, store and print their photos."

Currently, Snapfish has more than 13 million members and is growing at a rate of more than 500,000 members per month due in large part to high customer satisfaction - 90 percent of Snapfish's customers have recommended the service to others. According to IDC, the online photofinishing market is expected to grow at rate of more than fifty percent over the next few years, reaching annual revenue of approximately $5.50 billion in 2008.

"This combination of HP's leadership in digital imaging and home printing with Snapfish's leadership in online photography, will provide our customers and partners with an expanded mix of quality, value and choice that no comparable business can provide," said Ben Nelson, president of Snapfish, who will lead the new division within HP. "Snapfish customers should know that, following the acquisition, the key benefits of our service and their overall digital photography experience will only get better."

Snapfish customers will enjoy the same benefits they receive today, along with added benefits from HP's digital photography portfolio, including easy access to products and information that will help enhance their digital photography experience. Importantly, all of their images and personal information with remain safe and secure.

Whether a consumer wants the immediate gratification of printing photos at home, or the simplicity of ordering a large batch of prints or photo merchandise online, consumers will have access to a more simple, affordable and comprehensive digital photography experience through HP and Snapfish.

Snapfish will remain in San Francisco and all of its approximately 80 employees will be retained. The acquisition, which is subject to various standard closing conditions, is expected to close in April 2005.

About Snapfish
Snapfish is a leading online photo service, with more than 13 million members and 350 million unique photos stored online. Snapfish enables film camera, digital camera and camera phone users to share, print and store their most important photo memories at the lowest prices - online or off. Snapfish is the most often used site for printing online, according to InfoTrends, and has received a Rising Star Award as the site demonstrating the fastest growth on the Internet, as measured by Nielsen//NetRatings. Additional information is available at www.snapfish.com.

About HP
HP is a technology solutions provider to consumers, businesses and institutions globally. The company's offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended Jan. 31, 2005, HP revenue totaled $81.80 billion. More information about HP (NYSE, Nasdaq: HPQ) is available at http://www.hp.com.

This news release contains forward-looking statements that involve risks and uncertainties, as well as assumptions. If the risks and uncertainties ever materialize or the 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 related to the closing of the proposed acquisition; statements of the plans, strategies and objectives of management for future product and service availability or functionality; and statements relating to the execution of integration plans. The risks, uncertainties and assumptions referred to above include the possibility that the proposed acquisition may not be completed on the terms, or within the timeframe, currently contemplated or at all; that the intended application of, and market for, these technologies, products and services may not develop as expected; that development and performance of these technologies, products and services may not proceed as planned; the failure to realize anticipated benefits of the related photofinishing fulfillment arrangement with District Photo, Inc.; employee management issues; the challenges of integrating Snapfish into HP; the challenges of maintaining customers following the acquisition; 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 quarterly report for the fiscal quarter ended January 31, 2005 and subsequently filed reports. HP assumes no obligation and does not intend to update these forward-looking statements.