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PALO ALTO, Calif. -- HP today announced that it has completed itsacquisition of Neoware Inc., a provider of thin client computingand virtualization solutions, at a fully diluted, enterprise value(net of cash) basis of approximately $214 million.

With the acquisition ofKing of Prussia, Pa.-based Neoware, HP plans to use the best ofboth companies’ technologies to create thin clients that are easierto deploy, more secure and more affordable. The deal will alsoextend HP’s regional sales reach.

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Thin clients provide ahigher level of security, can reduce maintenance costs, and consumeless electricity compared to other desk-based computing productsbecause they contain no local data, no moving parts, utilizelow-power components and connect over a network to remote blade PCsand servers where data processing and storage occurs.

“The integration of Neowarewill enable us to offer the industry’s broadest portfolio of remoteclient solutions that deliver the most secure, reliable and easilymanaged computing infrastructure available today,” said KevinFrost, vice president, Business Desktops, Personal Systems Group,HP. “Our top priority is to ensure that Neoware and HP deliveruncompromised product and business continuity to our combinedcustomers.“

Neoware

Prior to the acquisition,HP was the worldwide leader in each of the Microsoft Windows® XPe,Windows CE and Linux thin client categories. Acquiring Neoware isexpected to boost HP’s thin-client business in the areas of Linuxsoftware, client virtualization and customization capabilities.

Under the terms of themerger agreement, Neoware stockholders will receive $16.25 for eachshare of Neoware stock that they held at the closing of theacquisition and the company will be integrated into the BusinessDesktop unit of HP’s Personal Systems Group.

Microsoft andWindows are U.S. registered trademarks of Microsoft Corp. Neowareis a trademark of Neoware, Inc.

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This news releasecontains forward-looking statements that involve risks,uncertainties and assumptions. If such risks or uncertaintiesmaterialize or such assumptions prove incorrect, the results of HPand its consolidated subsidiaries could differ materially fromthose expressed or implied by such forward-looking statements andassumptions. All statements other than statements of historicalfact are statements that could be deemed forward-lookingstatements, including the expected benefits and costs of thetransaction; management plans relating to the transaction; anystatements of the plans, strategies and objectives of managementfor future operations, including the execution of integrationplans; any statements of expectation or belief; and any statementsof assumptions underlying any of the foregoing. Risks,uncertainties and assumptions include the possibility that expectedbenefits may not materialize as expected; that Neoware's businessmay not perform as expected due to transaction-related uncertaintyor other factors; that the parties are unable to successfullyimplement integration strategies; and other risks that aredescribed in HP's and Neoware's Securities and Exchange Commissionreports, including but not limited to the risks described in HP'sQuarterly Report on Form 10-Q for the fiscal quarter ended July 31,2007 and Neoware's Quarterly Report on Form 10-Q for the fiscalquarter ended June 30 2007. HP assumes no obligation and does notintend to update these forward-looking statements.

© 2007Hewlett-Packard Development Company, L.P. The information containedherein is subject to change without notice. HP shall not be liablefor technical or editorial errors or omissions containedherein.

Neoware, one of the largest producers of thin-client PCs in the United States, is launching a new hardware platform that includes three revamped models with additional RAM and flash memory capacities.

The company, based in King of Prussia, Pa., is launching the three refreshed models—Neoware c50, e90 and e140—starting May 29.

All three models will include DDR2 (double data rate 2) RAM, which promises to offer a 25 percent increase in performance from previous models that used traditional DDR RAM.

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In addition, the three models will also offer a minimum of 256MB of RAM and Neoware can now configure its thin clients with up to 1GB of flash memory, said Bill Bredbenner, the companys chief technology officer.

'We consider ourselves a leader in some of the key technological innovation in the thin-client space,' Bredbenner said. 'What our thin-client models offer are solutions for our customers interested in virtualization, security and energy savings. There are a lot of modern problems in IT and we are attempting to provide computing solutions for those problems.'

Unlike traditional desktop PCs, thin-client PCs provide a user with a keyboard, mouse and display but eliminate most of the moving parts, like the hard drive, that are found in traditional computers. Thin-client PCs and PC blades store the applications on a server that is maintained in the data center.

Click here to read about Neowares first thin-client laptop.

With Neowares thin-client PCs, the operating system can be stored on the client itself or on a server in the data center. By adding flash memory to the hardware itself, the company allows its thin clients to boot up faster without adding traditional hard disk drives.

Thin clients and PC blades are getting a second look by companies concerned about a number of issues that these PCs can address, such as better security, cost management and the ability to deploy virtualization throughout a desktop fleet.

Lou Donofrio, the vice president of product management for Neoware, said that while the average product life of a traditional desktop is about four years, his companys thin clients have life cycles of between five and seven years.

Neoware is the No. 2 producer of thin clients in the United States and ranks third in the worldwide market, according to Bob ODonnell, an analyst with IDC. The traditional users of thin clients include financial institutions and the health care, government and educational fields.

Hewlett-Packard has revamped its thin-client lineup. Click here to read more.

In addition to traditional thin-client makers like Wyse Technology and Neoware that have been in the market for years, some larger IT vendors, notably Hewlett-Packard, have also started increasing the number of thin-client PC offerings.

The three new Neoware models, the low-end c50, the midrange e90 and the high-end e140, offer a combination of Via x86 microprocessors, including the chip makers C7 and Eden models.

All three thin-client PCs also support Linux and Microsofts Windows CE and XPe (XP Embedded) operating systems, as well as the companys own Linux-based operating system. Neoware is planning to offer thin clients that support Vista.

The e140 model uses 30 watts of power compared with older models, which use 33 watts of power. This thin-client model also includes a PCI Express expansion slot.

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The low-end c50 starts at $259, while the e140 has a starting price of $549, according to Neoware. The company plans on selling its thin-client PCs through direct sales, channel partners and its partnership with Lenovo.

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