HBR Case Study – Hewlett-Packard: The Flight of the Kittyhawk (A)

In June of 1992 Hewlett-Packard (HP) announced the company's newest innovation, the smallest (1.3 inch) drive disk in the world named Kittyhawk. The drive was developed by Disk Memory Division (DMD) and had a smaller capacity then the industry's currently existing smallest disk drive. After two years, the effort to achieve substantial sales of this device was not successful.

Prior to the Kittyhawk project DMD had a very profitable position in this established markets. Its high-performance products within 5.25-3.5 inch drives were very competitive due to their drivers having a higher megabytes capacity than the industry norm. The division was making plans for the new 1.3 inch drive disk based on the existing market trends and treating it as a sustainable innovation. The company's plans were to expand its computing market share and make HP a major player in the disk-drive industry.

The main causes for Kittyhawk's failure were as follows:

• The company had failed to recognize the new product as a disruptive innovation that was not ready to compete in the existing market
• The DMD picked the wrong target customers and built the wrong product because corporate expectations left no other choice
• The product could not storm any other emerging market in as short a period of time as was expected
• Positioning on the market was done not based on realistic market opportunities but by the company's aggressive revenue expectations
• Existing computing market trends were driven by capacity and cost per megabyte, not by size. Kittyhawk didn't offer any value for the established markets
• Even having a substantial opportunity in emerging markets, DMD attempted to please customers in established markets, where performance expectations were high. It included features that made Kittyhawk too expensive to satisfy customers in emerging markets.

To avoid Kittyhawk failure HP needed to put into consideration that disruptive innovations often see failure before success. Flexibility is critical to survival. The company could be more flexible by initially focusing on a low-cost drive whose requirements would satisfy the lowest common denominator. This way, breakthroughs in manufacturing and design could still be leveraged in the event that the product architecture needed to be redesigned for higher-margin products.

What could HP have done differently to support the Kittyhawk development team, and implement the marketing strategy to introduce the Kittyhawk product?

• Attract and retain resources experienced in developing new architectures or cultivating emerging markets
• Take into consideration the history of HP's average cycle time for a new disk-drive development time of 18 months and align the project schedule accordingly
• Don't make a statement that this product will be the company's future
• Not try to analyze markets for this product. Markets did not exist yet
• Use in-house manufacturing to provide flexibility while market demand is formed and until the right product is developed.