HP Case Analysis The new HP hard disk drive was the world's smallest in 1992, and at the size of a couple of postage stamps the drive was intended to revolutionize the way the industry thought of computing, launching a new mobile era. Yet two years later, sales had failed to reflect this revolution, and the leader of the disk drive project, Rick Seymour, had to decide whether to keep pushing the program or abandon it altogether.

The vision of Bruce Spenner, who came to HP in 1978 in order to expand the horizons of the Disk Memory Division, was for large data storage to be used by personal computers and mobile, handheld devices. It was the emerging market of the future and the 1.3-inch drive was at the heart of it. The project to implement and market the drive was called Kittyhawk and its goals included to introduce the drive within a year and to achieve $100 million revenue rate in two years.

At the same time, competitors were developing flash memory as well as a 1.8-inch disk drive. As decreases in size historically leapt in 8-inch intervals, this seemed like the next logical progression. The Kittyhawk, on the other hand, aimed to overstep this next stop and proceed to an even smaller drive. The rationale was that the smaller drive would require less space and less power, perfect for PC and mobile units.

A problem arose by the 3rd month of production: HP assessed that the 1.3-inch drive was...

Kittyhawk had anticipated this by planning the release of a 2nd generation drive with increased storage capacity, but HP did not view this favorably. At the same time, the market that Spenner envisioned was slow to come about. The technology, in other words, that the project anticipated accompanying the disk drive had yet to really catch on. Thus, Seymour had to decide what to do. Sales were not meeting projected revenues. A few options presented themselves: abandon the project, make the drive larger and more accommodating for the stalled marketplace, or design a cheap, crash-resistant drive with superior storage capabilities. The Kittyhawk team preferred the challenge of option 3.
The team behind Kittyhawk is obviously enthusiastic about what it can do, but in its enthusiasm it overestimated the market response. With that said, attention should be diverted from market reaction at this point and concentrated on research and development. The Kittyhawk teams should be allowed to produce the 2nd generation device that is stronger and more capable than the first generation device. In the meantime, it may be expected that the marketplace will catch up, as more and more personal computer and handheld devices become popular.

One way to boost the demand for this 2nd generation drive, meanwhile, will be to promote the PC era and begin…