February 8, 2007


And the men behind the brand are...
David Packard and William Hewlett

David Packard came to Stanford University as a track star from Pueblo, Colorado. William Hewlett was an underachieving student who came to Stanford University from Ann Arbor, Michigan because his father was an alumnus. Together they were star students in electrical engineering.

They graduated in 1934, Packard taking a job with General Electric in Schnectady, New York and Hewlett going on for his masters degree at MIT. After three years Packard surrendered his secure job in the Depression to return to Stanford and join his friend Hewlett who was engaged in making an oscillator.

The two men put together $538 and went to work in Packard's garage. In a short time they had invented a weight-reducing machine, an electronic harmonica tuner and a bowling alley foul light indicator. But Hewlett's oscillator was their star product. The first sale was to Walt Disney who bought eight oscillators at $71.50 each to use on his sound track of Fantasia.

First year sales totalled $5,369 worth of electronics and Hewlett and Packard moved to Stanford's 8000-acre industrial park as one the pioneers in Silicon Valley. Company sales reached $100,000 when Hewlett was called into active duty in World War II. Packard ran the company during America's first high-tech war. Orders for sonar, radar and other electronics flooded the assembly plant in Santa Clara Valley. Hewlett returned to discover 200 employees building two million dollars worth of electronics.

But the government orders disappeared after the war. Hewlett and Packard were forced to pare the work force by half. The move traumatized the partners. They vowed never to be so dependent on the vagaries of government orders again, orders that were the lifeblood of high-tech firms. They would finance growth and research only through earnings.

The cut-back spawned an intense devotion to Hewlett-Packard employees. They promised never to lay off employees again - and they never did. Recessions forced cuts in hours and wages, but never jobs. A liberal profit-sharing plan was instituted. The partners were routinely known as "Bill" and "Dave" to employees. Their style of informal management became known as "management by walking around."

By the late 1950s Hewlett-Packard made more than 300 products and ten years later there were 2,163. Hewlett-Packard's 13,340 employees tested the informal structure of operation. Packard left for Washington in 1969 to serve as deputy secretary of defense for three years. Now it was Hewlett's turn to run the company.

Sales rose but profits dipped as Hewlett-Packard's technological prowess didn't always translate to markets. They introduced the minicomputer in 1967 but were quickly superseded by rivals and switched to the time-sharing market rather than compete in the mass market.

Prior to the 1970s Hewlett-Packard never made consumer products. Then in 1972 they announced the HP-35, a revolutionary hand-held scientific calculator. Market research experts called it a toy, company executives said it didn't adhere to Hewlett-Packard's philosophy, but Bill Hewlett persisted. Overnight the calculator replaced the venerable slide rule in the pockets of engineers. Suddenly Hewlett-Packard was thrust into an enormous mass market.

Texas Instruments immediately seized the low end of the calculator market and challenged Hewlett-Packard with cheap knock-offs of the scientific calculator. Flustered, Hewlett-Packard fought back not with price cuts but with technological advances. But their new wrist-calculator, selling for $795, hardly sold at all.

It was a rare misstep for the partners. In 1978 Hewlett and Packard departed to buy a cattle ranch in Idaho. Packard donated his 450,000 shares of Hewlett-Packard to the David & Lucille Packard Foundation they had set up in 1964 to support scientific and health research. The shares were worth more than two billion dollars.

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