1. HP’s ILLICIT PROFIT MOTIVE HP’s Documents suggest the “smart chip” and SureSupply implementation were based on the desire to increase ink sales.

2. HP00058758

3. “Vendors sell consumer printers at cost, or even sometimes at a 20 percent loss, say financial analysts at Bear Stearns who track Epson and HP. But on the flip side, both firms earn a 60 percent gross margin on ink jet and toner cartridges, says Bill Hand, financial analyst with Bear Stearns.” – Why Do Ink Cartridges Cost So Much? Tom Spring, 9/28/03

4. 4.6 + 5.8 = 10.4 Cartridges Over Life of Printer

5. Speed of Ordering Nearly two-thirds of surveyed consumers place an order immediately or shortly after they are alerted that a supply is low: Nearly two-thirds of surveyed consumers place an order immediately or shortly after they are alerted that a supply is low: HP00000738?

6. Amount Ordered Half of surveyed consumers buy what SureSupply suggests or more. Half of surveyed consumers buy what SureSupply suggests or more. HP00000738?

7. DAMAGE MODEL

8. Damage Model Per HP’s Mediation Brief 2 Million Subject Printers 2 Million Subject Printers 3% of total inkjet printers 3% of total inkjet printers 10.4 Cartridges over printer life 10.4 Cartridges over printer life 20.8 Million Subject Cartridges 20.8 Million Subject Cartridges $16.8 Average Profit per Cartridge $16.8 Average Profit per Cartridge Total = $350 Million Total = $350 Million Independently Verifiable Analysis 62 Million Subject Printers 62 Million Subject Printers 100% of total inkjet printers 100% of total inkjet printers 10.4 Cartridges over printer life 10.4 Cartridges over printer life 645 Million Subject Cartridges 645 Million Subject Cartridges $16.8 Average Profit per Cartridge $16.8 Average Profit per Cartridge Total = $10.8 Billion Total = $10.8 Billion

9. Damage Model Household Ink Jet Printer Installations by Brand Household Ink Jet Printer Installations by Brand Source: Lyra Research, Inc., 2005 U.S. Ink Jet Supplies Survey N = 977

10. Damage Model HP’s Ink Jet Cartridges and Revenue HP’s Ink Jet Cartridges and Revenue 2002-2005 $20,134,000,000