Hewlett-Packard: the Flight of the Kittyhawk

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In 1992, Hewlett Packard made the decision to produce 1.3 inch disk drives, leapfrogging over the 1.8 inch format to position themselves as market leaders for the smaller drive. Prior to this time, HP prided itself on its leadership position within this industry and its ability to innovate more quickly than its competitors. However, the Disk Memory Division (DMD) was lagging behind the company standard, comprising only 3.2% of total HP revenues in 1992. HP was trying to use the Kittyhawk project to propel the company into a higher profile position within the disk drive market. Potential uses for the drive included game equipment, PDA's, notebook and sub-notebook computers, handheld pen technologies and digital film cartridges. If…show more content…
4. Could build a small, cheap, dumb drive. --- Could not manufacture the drive cheaply enough to gain widespread use. 5. Always though prosperity was just around the corner. --- Never secured a real, high-volume customer. 6. Could achieve huge amounts of revenue for HP. --- No one was willing to pay the price. 7. Kittyhawk group had performed adequate market research. Market research was subjective and not extensive enough because there was no real market. In such a competent and market-leading organization, how did HP overlook these incorrect assumptions? Root cause analysis showed these reasons: • HP culture was innovation-driven and had an incentive structure that rewarded innovation and not the commercialization of the investment. • Both the marketplace and the product had highly uncertain futures. The combination of these two unknowns made for an exponentially uncertain outlook. • All of HP's other divisions are leaders in their particular products and DMD felt pressure to be a "winner" as well. • HP listened too closely to their customers because they always thought prosperity was close on the horizon, even though the customer didn't always know exactly what he wanted. • HP did not realize that complementary technologies were immature and not well-developed. • The market was not ready to embrace a product of this nature at a $250 price tag. Given the learnings from this

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