Tuesday, May 26, 2009

Still asking about the book

Stanford University Press, available in September 2009, 640 pp. We've been through picture collection, approvals from various sources, vetting by many, and not a few disclaimers and skirmishes in the past year. Difficult to write a book that has so much (debatable) history; much like the old "telephone" game used as an icebreaker at parties.

One venerable Valley leader re-wrote his quoted passages six times over two weekends; several shied away from their oral interviews but allowed some of the material to survive the scrutiny of day. HP PR made it absolutely clear that HP was not a supporter of the book -- it is not ENDORSED by the current regime. But they did agree to let Mark Hurd's picture appear alongside the five previous CEO portraits.

The book is not a quick read. It doesn't fit the Harvard Business Press model, of a simple thesis repeated four times in 200 pp, with a catchy phrase that becomes the next fad. Think for example about the catch phrase "Core Competence" that has led to more companies outsourcing their crown jewels and chance for innovative corpoate renewal than anyone would ever have conceived when the article was first published.

What it does do is outline how HP, more than any other company in history, was able to renew itself time after time, building new strengths in areas hardly recognizable to the earlier teams, and doing so successfully enough to keep the company on a strong growth trajectory for seven decades. It is a story we think worth telling, and it is a shame that an average of only ten pages are available for each $2 Billion in sales and year of existence. Obviously it had to be culled mercilessly to get to a mere 640 pp. And all that for only $35.00 at your neighborhood retail bookstore.

Attending the HP35 IEEE Milestone event

I had the privilege of an invitation to this singular event, held in the HP Labs cafeteria at 1501 Page Mill Road. Eighty-three people attended, including eleven of the original design team and some twenty-three family members for them and a couple of deceased contributors. It was an extraordinary event, for an extraordinary product for the world and for this venerable company's history.

Dave Cochran was the instigator of the application for the award, and it was indeed fitting that Lewis Terman was the presenter, as the outgoing IEEE President, and son of the famed Fred Terman who gave Bill 'n Dave the impetus to start HP in the first place. Cochran related that Fred, not known either for his computer knowledge or his software awareness, actually found the first bug in the HP35 prototype, a fitting tribute to the "founder of Silicon Valley" who really never had anything to do with silicon except maybe this product.

HP's press release noted that the HP35 "put HP into the consumer electronics space". This is worth putting into context -- HP had 1,600 products in the catalog after 32 years in business, none of which sold more than ten units per day. The HP35, in its fifth month of sales, sold 1,000 units per day, completely upsetting production schedules, inventory control, sales approaches (no one knew how to cash a check in the sales offices!), among other things.

The HP35 accounted for 6% of sales in its first year, and a whopping 41% of profits. Sales in the second year approached $100M, about the same as the current product line. Back then, it was 13% of the company, today the same revenue is one-tenth of 1%. The company grew 38% that year in revenue, almost double the typical growth rate of the corporation. It would stand as the highest growth year in the company's long history, and nearly 40% of that total growth came from the HP35 alone.

More importantly, it changed HP designs (with Chris Clare and Tom Whitney teaching algorithmic design methods to the entire company), HP marketing (doing "shelf-space" instead of "made-to-order"), and the perception of the world about this "little Palo Alto instrument company".

IEEE Milestone for HP35 announcement

On April 14, 2009, the IEEE, the world's largest technical professional association, awarded HP the prestigious IEEE Milestone in Electrical Engineering and Computing award for its HP-35 Scientific Calculator.Introduced in 1972, the HP-35 was the world's first handheld-sized scientific calculator, standing apart from its peers, which could only perform four basic functions - addition, subtraction, multiplication and division.

The HP-35, named for its 35 keys, performed all the functions of the slide rule to 10-digit precision and could determine the decimal point or power-of-10 exponent through a full 200-decade range. This combination of features ultimately made the slide rule, which had been used by generations of engineers and scientists, obsolete.

The HP-35 was HP's first product that contained both integrated circuits and LEDs (light-emitting diodes). Both technologies had been developed in HP Labs, the company's central research arm.The HP-35 was an innovative culmination of mechanical design, state-of-the-art technology, algorithm development and application - all unique at the time of its development.

"The HP-35 fundamentally changed the way engineers, mathematicians, scientists and students worked, delivering unprecedented portable computing power," said Jason Zajac, vice president and general manager, Worldwide Attach Group, HP. "The HP-35 was the company's first consumer electronic device, and from that bright beginning, HP has continued to innovate and grow a technology portfolio that spans calculating solutions that dynamically capture physical data and leading-edge touch technology that is changing how people interact with technology."

The HP-35 was developed when HP co-founder Bill Hewlett challenged HP engineers to take their current desktop computer, the HP-9100, and create a similarly capable device that fit in his shirt pocket. Even as initial market research deemed the $395 product to be too expensive, HP recognized its significance and the market need and plunged ahead. While HP expected to sell 10,000 to break even, the demand for the HP-35 exceeded expectations and more than 100,000 were sold during its first year on the market.

IEEE established the Electrical Engineering Milestones program in 1983 to honor significant achievements in the history of electrical and electronics engineering. To be awarded, technologies must have stood the test of time. Currently, there are fewer than 100 IEEE milestones; among these are Benjamin Franklin's work with electricity and Volta's invention of the electrical battery."The HP-35 helped accelerate the pace of technological change and revolutionized the engineering profession by allowing almost-instantaneous, extremely accurate scientific calculations anywhere and anytime," said Lewis Terman, 2008 IEEE president. "The HP-35 made it possible to conduct complicated calculations wherever they were needed, with speed and accuracy that well surpassed the slide rule. It played a key role in the lives and projects of countless engineers and scientists."An IEEE Milestone plaque recording the award will be permanently displayed at HP Labs in Palo Alto, Calif., the site where the HP-35 was originally developed.

Since the introduction of the HP-35, HP has ushered in a new era of computing and redefined the way people learn, teach and use calculating technologies and solutions for students, professionals and consumers of all stages of life. HP continues its heritage of developing innovative calculating solutions for the scientific, financial, education and general home and office markets.Additional details about the HP Calculators and this news are available at www.hp.com/go/35celebration. The milestone event was broadcast online at Ustream.TV which could be viewed at http://www.ustream.tv/channel/hp-35-ieee-milestone-award-ceremony.

Whither HP Now

Ashlee Vance, in the Sunday New York Times, took on the role of critic -- in the grand tradition of many journalists and analysts over the years. His target, not untypically, was the current CEO, in this case the teflon-coated Mark Hurd.

See TECHNOLOGY / COMPANIES April 26, 2009 Does H.P. Need a Dose of Anarchy? By ASHLEE VANCE Mark V. Hurd took over Hewlett-Packard and made it the world's largest technology company. The giant is now finding its way in a world full of smaller, more agile rivals.

I was quoted as saying they were seemingly under-investing in R and D, to which Shane Robison gave a snarling reply. But the facts are irrefutable -- HP, after spending 9% of revenues for sixty years, almost like clockwork, cut that to 6% under Lew Platt's regime, and from the midpoint of Carly's time until now, it has been reduced by a cool 0.5% per year, until now it is only 3% of revenues, one-half of IBM's investments in the future. To cut R and D by two-thirds, to rework HP Labs to the point of only pursuing work that the divisions will market or that universities will support (huh, say that again?), is to sell out the future. Period.

One might confidently predict that the constant wellspring of "renewal" -- so long the hallmark of HP -- is running dry. The acquisitions had better work