Hewlett Packard Essay

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Introduction
 
I. High potential of the DMD and the project
1. Place of HP through DMD in the disk drive market
2. An innovation: the Kittyhawk
3. Flexibility of a start up and resources of a big structure
 
II. The reasons for failure
1. Sustaining versus disruptive innovation
2. The target market
3. The strategic objectives
 
III. The Kittyhawk should have been considered as a disruptive technology
1. Defining the disruptive product
2. Which ...view middle of the document...

 
The Kittyhawk was a disk drive that HP designed to be the need of next-generation. In this study, we will try to answer the following question: how did an organisation that appeared to do everything right eventually fail ?
 
First, we will present the high-potential of the DMD and Kittyhawk project, through the disk-drive market, by characterizing the Kittyhawk innovation, and the HP way of management. Then, we will analyse the reasons for failure, defining sustaining and disruptive innovations and the market and strategic objectives that were taken. Finally, we will see how HP could have avoided this failure by suggesting some solutions.

 
I. High potential of the DMD and the project
 
1.     Place of HP through DMD in the disk drive market
 
The Disk Memory Division activity is based on the development and the commercialisation of disk drive models. The hard disk drives are magnetic information storage and retrieval devices used with computers. The first disk drives invented in the middle of the 50s were huge and heavy with a small capacity. In the space of 30 years those parameters had changed considerably: weight and size were steadily reduced whereas capacity was increased. A disk drive’s architecture was categorized by the size of the disk’s diameter.
 
The DMD product line offered a substantially higher capacity in megabytes than the industry norm. Most of the HP engineers concentrated their work on increasing the disk drive’s capacity, and HP was the first to introduce one and two gigabytes drives. This division had a small weight in the corporate revenue in the 80s: from 1983 to 1991 this weight never exceeded 5.7% of the corporate net revenue. While the global revenue had been rising permanently from 1983 to 1992, the DMD revenue hardly kept the same level and even sank from $315.5 million to $251.3 million (1984 to 1986) and from $533.4 million to 280.7 millions in 1991 which came to be one of the worst years the DMD had known in this decade. It wouldn’t be an exageration to define this Division as an anomaly in HP for the group was often the leader in other businesses.
 
But even thanks to their research of higher capacity that supplied high profit margins, the place of the DMD in the disk drive market was small compared to its competitors. In 1992 the capacity of the median model sold by the industry was 400MB, but the market leaders Seagate Technology and IBM sold 500MB and 700MB models respectively, whereas HP median models had a capacity of 1.027GB. However this overhang allowed $519 million sales when Seagate Technology disk drives sales reached $4 billion and IBM disk drives sales reached $3 billion. In 1992 the DMD only positioned itself as a niche player.
 
The competition in this field was intense. The supply was evolving very quickly and products always changed into smaller size and higher capacity. Innovation was the keyword of HP but didn’t seem to fit with the large market at this moment.
 
2.    ...

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