On New Year’s Day in 1939, David Packard and William R. Hewlett tossed a coin in a rented Palo Alto garage to decide the order of names for their new company. They had started their business months earlier, with $538 and a few product ideas. In 2007, Hewlett-Packard Company has 156,000 employees doing business in more than 170 countries and the company’s offerings span printing, personal computing, software, services and IT infrastructure, with revenues totaling $97 billion.
When Packard and Hewlett , who were classmates in Frederick E. Terman’s radio engineering program at Stanford University, neared graduation, it was 1934 and the Depression gripped America. As Packard told it, “Bill and I had said if we can’t get a job ourselves we’ll just start our own company. . . .Fred encouraged us to do that.”
Before HP started, however, Packard accepted a position with General Electric in Schenectady, N.Y. Hewlett became a graduate student at Massachusett s Institute of Technology and then studied with Terman again at Stanford, where he developed a resistance-tuned oscillator. The two men’s business start marked time until Terman drew Packard back to Stanford on a graduate fellowship. In 1938, Hewlett and Packard began part-time work in the garage behind Dave and Lucile Packard’s ground floor flat at 367 Addison Avenue. Hewlett bunked in the backyard shed.
Before long, Walt Disney Studios placed an order for eight HP 200B audio oscillators for the movie Fantasia—HP’s first big sale. By 1942, the company had built a plant in Palo Alto, though it was still a small operation when World War II, as Hewlett put it, “changed everything.” The Army Signal Corps called Hewlett to duty; Packard ran HP as it moved into war work, making audio oscillators used in proximity fuzes and microwave-signal generators used in radar and counter-radar measures.
An incentive plan allowing employees to share in earnings enabled HP to keep a strong work force despite wartime wage controls; later it became the basis for a profit-sharing plan widely emulated throughout Silicon Valley and beyond. Other “people-centered” practices followed as the founders fostered a work environment that aimed for innovation and achievement, promoted trust in people and teamwork, and rewarded employees for HP’s success.
In 1947, the year HP incorporated, revenues topped $1.5 million. Three years later, when the Korean conflict began and electronics production soared, the company had in place an expanded line of test equipment, including microwave and high-frequency products. In 1957, HP had its first public stock offering and began manufacturing at its new flagship site in Stanford Research Park, home of HP’s current corporate offices.
Soon HP grew its product offerings through a series of acquisitions, all within its focused field of interest—electronics manufacturing. HP pursued new opportunities in data printing, medical electronics, and analytical instrumentation in the United States and entered international markets in 1959 with marketing operations in Geneva, Switzerland and a manufacturing plant in Böblingen, Germany. In 1966, HP Laboratories— today among the world’s premier technology labs—was formed as the company’s central research facility. HP’s first computer, designed as a controller for test and measurement instruments, was also introduced in 1966.
In 1970, recession hit. Rather than reduce its work force, HP instituted a temporary 10% hours-and pay reduction. Everyone contributed to the necessary cost savings, and six months later, everyone returned to a full work week. Despite adverse economic trends, HP continued to develop new technologies and products, tightening its belt rather than incurring longterm debt.
The slide rule, once the tool of every engineer, slipped into obsolescence after HP introduced the first scientific handheld calculator, the HP-35, in 1972. Also in 1972, the company ventured into business computing with the HP 3000 minicomputer.
In 1973, HP became the fi rst company in the U.S. to institute another people-centric policy borrowed from HP GmbH in Germany: flextime. The practice of off ering employees fl exible working hours had met with great success in Europe and the decision was made to transplant it to HP sites in the U.S. It did not take long for this fresh approach to time management to spread throughout the technology sector.
After sales passed $1 billion in 1976, the founders again showed their willingness to delegate responsibility. John Young became president in 1977 and chief executive officer in 1978, supported by three executive vice presidents. Hewlett and Packard remained on the board of directors.
Focusing on innovation and quality, HP stayed a steady, profi table course as it introduced its first personal computer for technical users in 1980. Yokogawa Hewlett -Packard of Tokyo, Japan, a joint venture formed in 1963, won the prestigious Deming Prize for quality in 1982.
The new management team had its hands full during the 1980s, a time of increasing global competition and rapid change. Young led HP’s success in the computer business. He also ousted the “not-invented- here” syndrome, contending that HP need not do everything itself but could use supplier alliances while capitalizing on its key strengths.
In 1984, HP helped create a new market for fast, inexpensive printing with the debut of the ThinkJet printer and the LaserJet printer, HP’s most successful product ever. The next year, an epic R&D effort gave birth to an industry-leading family of Precision Architecture computer systems.
In 1987, Bill Hewlett retired as a director; Dave Packard relinquished his board chairmanship in 1993. Through separate family philanthropic foundations, both founders became significant benefactors of educational, scientific, and health-care institutions. Lewis E. (Lew) Platt succeeded John Young as president and CEO in 1992. Platt , steeped in HP values, championed diversity in the workplace, a balance between work and personal life, and community involvement.
By 1995, HP’s product lines spanned a broad spectrum, including electronic test and measurement instruments and systems, networking products, medical electronic equipment, instruments and systems for chemical analysis, handheld calculators, and electronic components, as well as computer and computer-related products and services.
By the mid-1990s, more than two-thirds of the company’s revenues were generated abroad, principally in Europe. By then, HP manufacturing and research centers were widely dispersed in Europe, the Asia Pacifi c region, Latin America, Canada, and more than two dozen U.S. locations. More than 600 sales offices or independent distributorships served more than 120 countries.
During Platt ’s tenure, HP continued to be widely recognized for the company’s culture, known as “The HP Way,” once described by Bill Hewlett as “the policies and actions that flow from the belief that men and women want to do a good job, a creative job, and that if they are provided with the proper environment they will do so. Closely coupled with this is the HP tradition of treating each individual with consideration and respect, and recognizing individual achievements.” Related values include uncompromising integrity, emphasis on teamwork to achieve common objectives and encouraging flexibility and innovation.
In 1995, Dave Packard published The HP Way: How Bill Hewlett and I Built Our Company. The book chronicled the rise of HP,giving readers a firsthand look at the culture, business practices, and decentralized management style—management by objective and “management by walking around”—central to the company’s sustained and remarkable success. Under Platt ’s direction, the company’s long track record of technical innovation continued, with emphasis on its expansion into computing through such corporate business systems as the HP 3000 and HP 9000 (1992). At the other end of the computing spectrum, the three-pound HP OmniBook 300, a laptop-sized “super-portable” computer (1993) boasted enough battery power to last during a flight across the continental U.S. In 1994 the company introduced its first color laser printer, the HP Color LaserJet, and shipped its 10 millionth LaserJet printer. In 1995 the introduction of the HP Pavilion PC marked the company’s highly successful introduction into the home computer market, and in 1997 HP became one of the 30 stocks that comprised the Dow Jones Industrial Average. HP’s printer business continued its ascent with such new products as the OfficeJet printer-fax-copier, the company’s first entry in the space-saving, all-in-one line.
By 1995, environmental guidelines in product design,Energy Star certification, and a robust recycling program established the company as an industry leader in addressing issues of environmental responsibility. On the employee front, HP became one of the fi rst companies to encourage telecommuting around the world (1994).
In 1996, the year of co-founder David Packard’s death, HP revenue had risen to an astounding $38.4 billion annually and the company that made its first hire in 1939 employed 112,000 people worldwide.
At the pinnacle of the tech boom, in 1999, HP’s board of directors announced the decision to spin off a new company in order to sharpen the strategic focus of HP’s businesses. HP’s former measurement, components, chemical and analysis and medical businesses became Agilent Technologies in Silicon Valley’s largest IPO to date. HP retained its computing, printing and imaging businesses.
In July of 1999, Lew Platt retired. HP named Carleton (Carly) Fiorina, a former Lucent executive, as president and CEO. Even after the spin-off of Agilent, HP revenues in 1999 were $42 billion and the company employed 84,400 employees.
At the time of co-founder Bill Hewlett ’s death, in 2001, HP was focused on reducing the cost and complexity of information technology (IT) systems for business and on improving the overall technology experience of its customers. Following a history-making merger with Compaq Computer Corporation, in 2002, the company became a global technology giant serving more than one billion customers across 162 countries. HP’s offerings spanned IT infrastructure, personal computing and access devices, global services, and imaging and printing.
In 2005, HP Chairman and CEO Fiorina was succeeded by Mark Hurd, former CEO of NCR Corporation, who was named by the board to serve as CEO and president. Hurd’s leadership focuses on growing HP’s businesses while lowering costs, building determination and excitement in the work force, realigning reporting structures, and returning the company to consistent profi tability. Today the revitalized company continues on its march to become the world’s leading IT company.
In 2007, HP is a Fortune 14 company with $97 billion in revenue and 156,000 employees, doing business in more than 170 countries. A technology solutions provider to consumers, businesses, and institutions globally, the company’s off erings span IT infrastructure, global services, business and home computing, and imaging and printing. HP Labs continues to invent for the future by delivering breakthrough technology advancements in areas such as nanotechnology, color science, and social and economic systems. HP continues to be a company fueled by progress and innovation and focusing on the desire to create valued experiences and better lives with technology. Because it has long held citizenship as a top priority, as relevant to the company as profi ts, HP also continues as a leading contributor to education and other important human needs in its communities.
From their start in a garage, which was listed in the National Register of Historic Places in 2007, Hewlett and Packard’s legacy of humanistic management continues to evolve to meet the challenges of business in the 21st century. While embracing its rich heritage, Hewlett-Packard Company is blazing a path to a future full of opportunities.
This company history was written in 2008 by the Santa Clara Valley Historical Association.