HP's pygmy divisions and groups

 So, the last post was a bit chatty about Femcor, and 'our roots in McMinnville'.  But in truth, HP McMinnville didn't get a lot of play in HP history.   Mike Malone's 'Bill 'n Dave' book (2007, Portfolio Press, Penguin Books, 438pp.) doesn't mention any of the 'pygmy divisions or groups' (Medical, Analytic, Components), nor does Burgelman, McKinney's, and Meza's 'Becoming Hewlett-Packard' (2017, Oxford Press, 390 pp.).   Ray Price and I covered them moderately well in 'The HP Phenomenon'. (2009, Stanford Press, 638 pp.), but Femcor didn't get singled out.   The books about Carly Fiorina's reign (is that the right word?), both Anders' Perfect Enough and Burrows' Backfire don't mention any of these activities, but in fact the divestiture of the Instrument Groups had just been completed, so why bother?

Might be worth at least 'sizing' these groups, first from, say 1976-1978 and then from 1996-1998, two decades later.   Here's the early data for both revenues and profits by group:

So the earnings profile (using a standard 50% ratio from Operating to Net) was 12.1% for Test and Measurement including Components, and 8.0% for computers and the pair of Analytic and Med.

And here's the later revenue data (HP didn't show the 1998 earnings contributions, but the company earned $2.945 Billion).  Estimates I've heard were T&M still around 12.0% net; Med and Analytic about 8.0% net, and computers about 5.9% net.   Within computers, Peripherals were close to 9.0%, and CPUs and Systems were around 3.0%.    

So those numbers are 'telling'.   In 20 years, the Computer Groups grew from $761 Million to $39.4 Billion, while Medical and Analytic together grew from $261 Million to $2.374 Billion.   Test and Measurement (plus Components) grew from $740 Million to $5.22 Billion.  Growth rates per annum were thus 9.0% compound for T & M;  11.7% for Med and Analytic; and 21.8% (the historic rate for the entire company from 1947-1987) for the computer groups en totale.

Not too hard to figure out why the divestiture, and why most books ignore this 'sidebar' of HP.  On the other hand, there were some wonderful stories and products and 'making a difference for the world' contained within those instrument arenas.

There are 'memoirs' and anthologies about divisions and product groups within HP, again few that I know of with respect to any of the Pygmy divisons and groups.   Loveland and the Voltmeters, and later origins of the Desktop Calculators (really, early PCs), Colorado Springs, Boise Laser Printers, Corvallis handheld calculators, HP Labs in Palo Alto, and the South Queensferry, Scotland Division all have been recorded, some in considerable detail.   And the computer divisions, as a group, make the news for Malone and the Oxford Press book

Here, for example from The HP Phenomenon is the one sentence that mentions that such a group existed: p. 127.  "By 1975, the Medical Group had been fully formed, with two divisions in Massachusetts (Waltham and Andover), one in Germany,  another in Oregon, and an operation in Brazil."

The segment goes on to describe an issue that led to establishing the German Medical Division: "The grup quickly found that medicine had regional and local idiosyncratic methods that needed to be considered in product features as well as sales and marketing."

One might wonder just why authors haven't done more justice to these groups, and I'd commend any readers interested in that question to read our book from pages 126-130 closely.   The three pygmy groups built great products that enhanced HP's reputation amongst scientist and engineers and doctors worldwide--but the revenues and growth rates were swamped out by the more established instrument lines and then by the rampaging computer divisions and fierce competition.

Thus, stories such as the three that follow in the next three posts never made it into 'the books' and in most cases, not even into the lore.  But, now that I've spent a couple of wakeful nights rehashing the events and the take-aways from them, I feel compelled to put them into a written form.  Stay tuned.