The History of Hewlett Packard Computers
Today, the Silicon Valley in California is world-renowned as the center of technology and innovation. Many of the startup companies from Palo Alto, like Google and Facebook, have become household names throughout the world. Yet, the birth of Palo Alto was not signaled by the birth of the Internet. In fact, the area was home to technology startups as early as the 1930s. In 1938, two friends from Stanford University got together in a one car garage and created one of the world’s first computing and technology companies: HP. The story of Hewlett Packard is the story of two young men with a passion for electronics and technology. These two men wanted to make a difference not only in the world of electrical engineering but in the world of business. Today, HP maintains a consistent standing at the top of the Fortune 500 list. HP has carried the passion for innovation that their founders, Bill and Dave, established in the company. They continue to make innovative products that are sold around the world. Even 80 years after their initial startup, HP enjoys an impressive 17% market share in computing.
In this article, I explore 1) the original Palo Alto tech startup – HP, 2) world war II – at home and abroad, 3) the 1950s growth, 4) 1960s expansion, and 5) Silicon Valley – costant innovation.
THE ORIGINAL PALO ALTO TECH STARTUP – HEWLETT PACKARD
Bill Hewlett and Dave Packard both earned degrees in electrical engineering from the prestigious Stanford University in 1935. After school, Hewlett returned to education for a postgraduate degree. He graduated with a Master’s degree from MIT in 1936 before returning to Stanford.
After graduation, Packard left California for Colorado but quickly moved on to take a position at General Electric in New York. Packard returned to Stanford after a few years in New York. He then earned a Master’s degree in electrical engineering from Stanford.
The pair of friends had become close friends after they met and bonded on a camping trip during their undergraduate years at Stanford. They each had an insatiable curiosity in the field of electronics as well as a passion for being outdoors. The pair spent many weekends of their undergraduate careers on fishing and camping trips throughout the American West.
After both Hewlett and Packard had returned to Stanford, they were encouraged by their mentor Fred Terman, a Stanford professor, to harness their curiosity and creativity and start their own business. Terman’s advice was worth the price of gold. Terman, a talented engineer, became known as the ‘Father of Silicon Valley’. He encouraged his most talented students to start their own businesses and occasionally personally invested in them.
Hewlett Packard was born in a garage in Palo Alto in 1938. The pair managed to raise a notable startup investment of $538 (and one used drill press). They set up their new offices in the garage behind Packard’s home. When it came time to choose a name for their startup, they found it difficult to decide. Hewlett Packard or Packard Hewlett? Unable to choose, the friends flipped a coin, and the result of the coin toss was Hewlett Packard. They continued to remember their humble origins through many years of the life of their company. They began giving bonuses to their staff as early as 1940, and they were one of the first companies to give blanket health coverage to their employees. They also began contributing to charitable organizations very early in their business. They made their first donation in 1940.
In 1938, HP created its first product. The product was a resistance-capacitance audio oscillator. The pair developed the machine based upon the results of Hewlett’s master’s thesis. The machine was used to test sound equipment such as telephones, radios, and stereos. They dubbed it the HP Model 200A. The oscillators were so well designed that Walt Disney ordered eight of the 200B model to test the sound in movie theaters.
In 1940, HP moved out of the garage behind Packard’s house and into a rented office space. The office space was on Page Mill Road in Palo Alto. This new, larger building was only the first step creating one of the first technology companies of the Silicon Valley movement. The new office suited the inventor’s families, as well. Packard used the oven in his home to bake the paint tiles for the first oscillators and his wife, Lucile, claimed that dinner never tasted the same afterwards.
Although HP had outgrown their single car garage, the garage was not forgotten. In 1985, the HP garage became a City of Palo Alto landmark. Only two years later, in 1987, the garage was granted the status of California Historical Landmark No 976.
WORLD WAR II: AT HOME AND ABROAD
During this period of war and turmoil, Hewlett Packard was run primarily by Packard. He volunteered to lead the company and keep it alive single-handedly when Hewlett was sent to fight in Europe. Hewlett served as an officer in the United States Army until after the end of the war. He returned to the company in 1947.
Hewlett Packard continued operations during World War II. The United State’s late entry into the war provided them time that their European manufacturing counterparts were not granted. When the United States did enter the war, HP became busy fulfilling the order of the United States government for related defense projects. These projects turned out to provide the early success of the company. By 1943, these defense projects had boosted HP’s sales to $1 million.
It was during this period of growth that HP began innovating in ways outside of electronic engineering. The extra capital allowed them integrate their new health insurance plan during this period. The health insurance policy covered all of their employees. This was only a small part of the policies that Hewlett and Packard had set up to offer their employees. These policies included a generous set of benefits that were extremely uncommon in business at this time.
After the war was over, the need for large-scale defense projects began to disappear. There no longer a huge desire for large scale counter-radar technology and artillery shell fuses. However, the new electronics market allowed HP to continue down the path of prosperity. In 1943, HP made a transition into the development of microwaves. This enabled them to become a future leader in electronics and signal generators.
The growth during the war period meant that HP needed to incorporate their company. This process happened in 1947. On August 18th, Dave Packard was named the president of the newly incorporated company HP. Bill Hewlett was named vice president. Dave remained president until 1964 when he was elected CEO, and Bill was renamed president.
THE 1950s GROWTH
The 1950s were a period of substantial economic growth as industries across the world flourished. Electronics, in particular, was a field of high movement and innovation. HP’s line of products expanded rapidly during the 1950s, and its staff grew with it. The 1950s were also the foundation years of Palo Alto as the world’s technology center. Only 10 years before, sleepy little Palo Alto was just a small town near a prestigious university. An influx of spending and a population boom formed the foundation of the prosperous town that is now referred to as Silicon Valley.
As HP’s product line grew, their technology became more innovative than ever before. In 1951, they invented a high-speed frequency calculator. They also released an oscilloscope in 1956. These products signaled the beginning of a long line of test and measurement products that HP would successfully sell to researchers and engineers around the world.
A decade after HP first became an incorporated company, they made the move to go public. The IPO was released on November 6, 1957. Shares of HP sold for $16 per share. There were two main motivations behind HP’s IPO. The first was for Hewlett and Packard to begin planning their estates. The second was to continue the trend of allowing their employees real participation in the company. Employees at any level were gifted HP stock after six months of service with the company. They also became eligible for a stock option program.
During this period of growth and expansion, HP also took on a new mission and direction. Under the leadership of Dave and Bill, the company was guided by a philosophy that trickled down from the upper management to the junior and assistant levels. They called it ‘The HP Way’. It was a corporate structure that followed the themes that had been carried with them since they started their business in their garage. The new philosophy and corporate responsibility included a new management philosophy that was essentially unheard of at the time. Management in the company were given the autonomy they needed to be productive. They did not need to seek approval to develop plans and make their decisions. This new corporate philosophy stretched across seven different categories. These categories included: growth, management, people, citizenship, profit, customers, and fields of interest. The founders knew that for their company to continue to be innovative in the field of electronics, they would have to shift away from a traditional top-down management style.
These guidelines did not begin and end with management structures. HP was also the first company in the United States to offer their workers flexible working hours. After their IPO, HP also began to build a new headquarters in the Stanford Research Park. Their offices followed their corporate philosophy and were designed to break down barriers. By creating a working environment that maximized creativity and encouraged innovation while making employees feel respected and valued, HP laid the foundation stones of an organization that was built to last.
The year after their public stock offering, HP made their first acquisition. They purchased F.L. Moseley Company. The company created and produced graphic recorders that were of very high quality. This purchase would eventually translate into HP’s very successful printing business.
If the 1950s were a period of growth, then the 1960s was a period of epic expansion. The company reached new financial and industry landmarks almost every year of the decade. In 1961, HP was listed on the New York Stock Exchange for the first time. Only one year later, the company cracked the Fortune 500 list coming in a #460. Many of today’s top companies on the Fortune 500 list were the same companies at the top of the list 1962. Exxon Mobil, General Motors, General Electric and Ford Motor Company have all sat at the top of the list since 1962. Today, HP has joined these prestigious brands at spot #19.
In 1962, HP embarked on their first joint venture while simultaneously entering the Asian market. They partnered with Yokogawa Electric to develop products for the Asian market. The joint venture was not a wild success. The products were of high quality; however, there were significant costs involved in creating products in Japan that resembled the HP style. Yokogawa-Hewlett-Packard of Tokyo remained in operation with the purpose of marketing HP’s products in Japan. In 1999, HP bought back Yokogawa Electric’s shares in the company.
HP saw several technological advances during the 1960s, as well. Their HP 5060A atomic clock set the time for the entire world in 1964. HP traveled to 18 countries to use their product to perform the function of synchronizing international time standards. As a result, the atomic clock began to keep the entire world on track.
In 1966, HP introduced their very first computer. The computer was not the kind of personal computer that they sell in stores across the world today. It was part of their growing line of test and measurement products that were so vital to their early successes in electrical engineering. The very first HP computer was sold to Woods Hole Oceanographic Institute. Woods Hole Oceanographic Institute is the largest independent oceanographic institution in the United States. They used their computer onboard one of their research ships for over a decade.
The first personal computer made an appearance only two years later. In 1968, HP released a desktop scientific calculator. The design and function were that of the first basic personal computer. It was able to solve mathematical science and engineering problems over ten times faster than the other machines available at the time. Though it is unrecognizable from the PC that many people use today, this is the first time a machine was referred to as a ‘personal computer’ in public advertising.
SILICON VALLEY: CONSTANT INNOVATION
At the end of the 1960’s, Dave Packard left HP to serve as Richard Nixon’s Deputy Secretary of Defense. He left Bill Hewlett in charge of the company for a few years. However, he returned to the company in 1972 and was reinstated as the Chairman of the Board of HP. Both men had been in the leadership of their company for several decades and were beginning to approach retirement age. However, they did not let their 60’s slow them down. Hewlett remained active in the company until 1987 and Packard retired in 1993.
The company introduced the HP-75C in 1982, and it became the company’s first handheld computer. The machine could be connected to printers and cassette drives and is the forerunner of mobile computing. This innovation was followed by the first touch screen PC in 1983 and their very first laptop in 1984. Home computers hit the market in 1995. The iconic HP Pavillion became available for customers to enjoy in home settings as well as in their offices.
Printing became one of the cornerstones of HP’s sales market. The ThinkJet printing system debuted in the year 1984. HP had managed to change printing from an expensive, power-consuming process into a function that could be done from an office desk. In 1988, the Deskjet brought ink printing to the masses. In 1991, HP launched a new Deskjet model that made color printing attainable for homes and small businesses. The HP scientists and engineers were able to compress color ink cartridges in a manner that made printing in color possible without the expense. The first all-in-one printer debuted in 1994 with a design that is not so different from the ubiquitous all-in-one machines available today.
HP’s growth from a two-man operation to one of the largest, most profitable companies in the United States is the product of the spirit of innovation and creativity that has been instilled in its company culture since 1938. Bill Hewlett and Dave Packard have succeeded in their mission to change the world of electronic engineering as well as the way businesses are run. Many of the attributes that today’s tech companies are so revered for can be traced back to the Packard family’s single car garage in Palo Alto in 1938.
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