Innovation at Hewlett Tries to Evade the Ax

[Dave Farber <dave () farber net>]

Innovation at Hewlett Tries to Evade the Ax

May 5, 2003
By JOHN MARKOFF 




 

KEYSTONE, Colo., April 29 - The gathering here of 400 of
Hewlett-Packard's top scientists and engineers was intended
to reassure them that the company was determined not to
depart from its historic focus on research and development.


"HP Invent is not just an advertising logo," Carleton S.
Fiorina, Hewlett-Packard's chief executive, told the
audience in her Monday keynote address. "It is a
fundamental representation of our past, present and
future." 

A year after orchestrating a controversial takeover of
Compaq Computer, Ms. Fiorina likes to boast that the
company is one year and a half-billion dollars ahead of
schedule in combining the two operations. And as she framed
it here, a leaner and meaner research and development
operation will not just preserve the Hewlett-Packard brand,
it will also help extend it.

But that $3 billion cost-cutting effort, crucial as it is
to the company's success, also poses a serious challenge to
its ability to innovate in the fast-consolidating computer
industry, analysts say.

Indeed, as John Grebenkemper, a veteran engineer who came
to Hewlett by way of Compaq and Tandem Computer, rehearsed
his presentation for the research group, he could not help
quietly admitting some bad news to another manager. "It's
been a very hard week for me," he said. "I had to lay off
40 percent of my group."

And one engineer received lively applause when he told Ms.
Fiorina during a question-and-answer session that "the
thing that gets hit first" in the rush to meet the
company's quarterly financial targets "are those new
ideas." 

The company believes it still has plenty of big ones.

As
an internal showcase for Hewlett's hot new technologies,
the conference was a winner. On display was everything from
just-over-the-horizon three-dimensional printers to more
futuristic devices, like electron beams that could one day
pave the way for 10 gigabit memory chips 20 times more
capacious than the current generation.

Many of those who attended said it was a promising first
effort toward what Ms. Fiorina considers crucial:
exploiting cooperation among engineers and scientists to
restore the company's ability to compete.

Hewlett's overall research and development efforts are now
being guided by Shane V. Robison, a veteran of Compaq and
Apple Computer. He has indicated that the company will
concentrate its research in areas like software for
corporate computing centers, computer security and privacy,
along with designing new mobile devices.

But for many outside experts on corporate research it is
still an open question whether Hewlett can rekindle the
synergies it once enjoyed in computing and materials
science research before 1999, when it spun off Agilent, its
scientific equipment and medical instrument business.

"They took away what was really powerful about HP Labs,"
said Robert Buderi, editor of Technology Review magazine
and an expert on corporate research laboratories. "They
haven't gotten their edge back."

Mr. Buderi stressed that Hewlett-Packard was still very
strong in several areas of promising research. And, Mr.
Robison said, that is the way the company wants it to be.

In the old days, Mr. Robison explained, big companies like
I.B.M. and AT&T were able to support research into a vast
array of subjects. But "given the pace of change and the
amount of change, that's not possible," he said. "I want to
reach deep in the areas we care about."

At the same time, Hewlett-Packard must find a way to change
its product development culture to enable it to move more
quickly and respond more nimbly. It is a problem that
Hewlett-Packard acknowledges has plagued it in the past.

"We certainly have the technology," said Thomas J. Perkins,
a Hewlett director who heads the new technology
subcommittee of the company's board. "But sometimes we
haven't capitalized as quickly as we should have."

Mr. Perkins, a founder of Kleiner, Perkins, Caufield &
Byers, the Silicon Valley venture capital firm, originally
helped start Hewlett's computer business during the 1960's.
A member of the Compaq Computer board of directors, he
returned to Hewlett-Packard as a director as a result of
the merger. 

Mr. Perkins said he agreed to stay on as a board member
after meeting Ms. Fiorina for dinner before the merger was
announced and persuading her to create the technology
subcommittee. Hewlett is the first company of any size to
create such a group, he said, and Mr. Perkins argued that
it would help the company make smarter and more rapid
technology decisions.

Whether Ms. Fiorina and Mr. Robison will be able to move
technologies from the lab to the market more quickly is
still to be proven. But in executing the combination of
Hewlett and Compaq more effectively than many analysts had
expected, Ms. Fiorina is making the case that she can also
bring a new level of decisiveness to a company that has
lacked a strong sales and marketing orientation.

Regis McKenna, the Silicon Valley marketing and public
relations guru, once said that if Hewlett-Packard started a
sushi restaurant it would hang a sign in front that read,
"Cold Dead Fish." 

Under Ms. Fiorina that is no longer true. She is at the
center of a whirlwind of marketing and sales activities,
frequently visiting major corporate customers herself.

Still, the computer industry is barely growing, and
Hewlett's ability to outdistance its rivals will depend on
decisions it makes about creating new markets. This
quandary is exemplified by what Hewlett engineers are
calling the Bunny Burner project.

Today, specialized stereo lithographic printers are able to
create three-dimensional objects directly from drawing on a
computer screen, but they cost tens of thousands of
dollars. A group of Hewlett-Packard engineers in Corvallis,
Ore., has built a prototype of a printer that would sell
for as little as $1,000 and that might one day permit
ordinary consumers to translate their own computer designs
directly into plastic objects.

But a more ambitious project to build a high-cost stereo
lithographic printer, code-named Zorro, has been canceled,
and the low-cost project may be vulnerable to the same
pressures. 

"It's not clear that 3-D printing has the support needed to
solve all of our problems," one of the researchers here
said. 

If Hewlett does pursue the Bunny Burner it would be a
striking example of the "high-tech, low-cost" strategy that
Ms. Fiorina described to the company's researchers. She
said that I.B.M. had a "high-tech, high-cost" strategy,
while Dell Computer had a "low-cost, low-tech" approach.
Her company's method, she said, will be to outwit its
competitors with advanced technologies sold at consumer
prices. 

It is a strategy the company is hoping to extend to
corporate computing, where it plans to challenge I.B.M.,
Microsoft and Sun Microsystems - all of them racing to
persuade large companies to deploy software designed to
combine a range of business applications.

On May 6, Hewlett plans to roll out its own corporate
computing strategy, which will include initiatives like the
one sketched here by Chandrakant Patel, a mechanical
engineer in the company's labs near its headquarters in
Palo Alto, Calif. 

Mr. Patel showed how it was possible to lower the annual
electricity budget for cooling a larger corporate data
center - which can run $4 million or more - by modeling the
flow of air much as aerodynamics engineers model airflow
over the wing of an aircraft.

The market for corporate data management software is one
where Hewlett-Packard is now likely to compete directly
with Microsoft, which it has often avoided confronting in
the past. 

"I've warned Gates and Ballmer that we consider management
of the data center to be our territory," Mr. Robison said,
speaking of Bill Gates, Microsoft's chairman, and Steven A.
Ballmer, its chief executive.

Another area where Microsoft and Hewlett may soon clash is
at the opposite end of the computing spectrum, in the
market for handheld gadgets.

Currently Hewlett sells its popular iPaq personal digital
assistant with Microsoft's Windows CE operating system. But
Hewlett-Packard has sophisticated efforts under way using
the freely shared Linux operating system. Mr. Robison
hinted strongly that the company planned to challenge
Microsoft's software dominance in a number of consumer
electronics markets.

If a collision is coming, it appears that the new
Hewlett-Packard will be better armed. Many of the
researchers here came away from the conference enthusiastic
believers in the power of cooperation.

Susie Wee, an R&D manager at HP Labs in Palo Alto who is an
expert in sending multimedia over wired and wireless
networks, said the meeting was a breakthrough for her
project. Her presentation allowed her to meet people in
many different parts of the company who were interested in
sharing work in the field.

"H.P. has all the right parts," she said, "but until now we
haven't been able to bring them together."

http://www.nytimes.com/2003/05/05/technology/05HEWL.html?ex=1053118483&ei=1&;
en=94725a6ac618a8a6



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