©2010 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice Glen Hopkins Vice President and General Manager Imaging and Printing Group, HP O’Reilly Tools of Change | February 2010 The Digital Publishing of new age

Explosion of information touch points 2Confidential

Worldwide page opportunity 3Confidential 56T pages will be printed in % will be digitally printed 200+ billion pages tip to digital annually

Market dynamics and printing ecosystems 1 HP internal analysis Growth of Services Based Models Analog to Digital Transformation Explosion of Printable Content and Color output Mobility and Wireless Printing Market dynamics $27B$90B$121B$30B WW 2012 market 1 4Confidential

Publishing Industry Publishing Trends Publishing – a multi-billion dollar global industry – is searching for a digital on-ramp to the Information Superhighway Internally, publishers have gone digital. Books, magazines and newspapers are created digitally − computers replaced typewriters − pages constructed on monitors − cameras take digital images The world has gone digital. Publishers determined to follow. 5Confidential

Traditional Print Process Though content creation is digital, printing remains mostly analog. − Start up costs diminish only with large runs of content − content is selected and locked to format early in process − Every copy is identical Personalization is not possible Content providers have little flexibility to change the output. 6Confidential

Distribution and Delivery Publications distributed by truck − networks of distribution centers − warehouses full of books − unpredictable market demand for unsold titles and copies creates waste Delivery done by hand − newspapers to the doorstep − magazines and books in the mail − books sit on store shelf until interested customer comes along Analog copies are delivered to stores & front steps. 7Confidential

Digital Delivery Leapfrogs Analog HP digital publishing systems can leapfrog analog and deliver directly to the home, a PSP, a retail location or a warehouse content may remain digital from creation to delivery – from start to finish digitization enables − customization − reduce cost and waste Transmission of content can be immediate, effective and efficient. 8 Confidential

Customers Take Control and “Pull” What they want − Hard-to-find content becomes easy to find When they want it − Offering both immediate and scheduled content How they want it Digital broadens availability while focusing audiences. 9 Confidential

I want to Mash-up my content with my favorite licensed content… $35 billion In printable licensed merchandise is sold in retail today 10 Confidential

I want to print from my mobile device 11 Confidential 85% of smart phone owners want to print HP will offer printing from 75% of mobile devices by the end of 2010 HP/RIM CloudPrint 84% of pilot users say they will continue using it iPrint Photo App 600,000 downloads World’s first web- connected printer At home, on campus, in a café, at the library…

Extend digital content creation and publishing platform −Centralized digital library −Build vertical - deliver horizontal Make it easier to find, assemble, order, print and distribute −Print to Order −True Global Network Deliver next-generation digital printing platforms −Without comprise in quality or economics 12 Confidential HP – The Vision

Mass digitalization of content now seen as strategic Operational Improvement and cost reductions in the supply chain Fiscal impact of move to micro/virtual inventory model increasingly compelling Technology and Intelligent Infrastructures Environmental issues Improvements in digital printing and finishing technologies Opportunities 13 Confidential

The Pain Point Millions of books that people want are not readily available. 4% In Print ~20% Public Domain ~75% or more The Twilight Zone 90 Million Books NOT In Print 14 Confidential

Long Tail Book Formatting Economics High up-front investment at significant risk − Eighty percent of titles will lose money for publishers High risk business model. 15 Confidential Book scanning (i.e. Google, IA, libraries) Book StoresPrint to Order Formatting Sales Fulfillment Scanning

BookPrep as a Web Service BookPrep Publisher Book Digitized Book Raw Book Files Scan book pages Publishing metadata BookPrep Designed to scale Prepare for PoD Image Processing Interactive Tools Print-On-Demand PoD ready files Uploaded to PSP Consumer Printed to order Personalized 16 Confidential

Examples of Original Digitized Pages Challenges: - Identify page / content boundaries - Crop - De-skew - Color and illumination correction - Text sharpening 17 Confidential

Mash-up: Underlying Magic / Technology Book Chapters or subchapters New Book Other content 1.Original content is scanned, “chunked” and tagged 2.Smart user interface guides selection of appropriate chunked sections to recombine into new book 3.New layouts / designs for mashup output a future capability 18 Confidential

Make a “Mash-up” Book Gardening and cookbooks Travel books with maps, restaurant pages, coupons Textbooks assembled from multiple sources Personal and Professional content Gather and bind information from different sources. Mashup Book 19 Confidential

The Traditional Publishing Industry Today 35% of all hard covers come back to be pulped 55% of all soft covers come back to be pulped 20 Confidential

Breakthrough Digital Print Technologies Two complementary print platforms serving two major sensitivities of quality and economics for digital book manufacturing Indigo platform delivers quality and media flexibility with excellent digital economics and productivity IHPS (Inkjet) platform delivers digital economics and productivity with excellent quality for high volume production requirements Print and workflow automation Total cost of ownership Increased business and customer value Print to Order Environmental 21 Confidential

Books: Print To Order New Business Model − Never miss a sale − No inventory, handling or warehouse costs − 24 hour availability − Allows for customization No more out of print; No more out of stock. 22 Confidential

Print To Order can help reduce carbon footprint of printing 23 Confidential Economics that allow cost effective short runs – printing what you need, when and where you need it more customized and targeted content, allowing the same result to be achieved with less printed material drastically reduced printing process WASTE reduced print Transportation from printing less and the potential to print closer to the end user Potential to reduce carbon foot print by 30% A better choice for the environment

The new age of publishing… Digital Anytime Anywhere 24