HP Kittyhawk

BUS 286 Prof. Larry Gee

Team 3 Knights of the Round Table

PM: Dao, Lisa
Rezaei, Ali
Hoang, Dustin
Mamak, Adhiraj S

Date: 11/02/2012

# 2511
# 4128
# 9494
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Table of Contents
Up to Date Background Information on HP ............................................................................ 3-7
HP in Comparison to Competitors ............................................................................................ 3-5
Recent Major Losses.................................................................................................................... 5
HP's Work Culture .................................................................................................................... 5-6
SWOT Analysis .......................................................................................................................... 6-8
SWOT Analysis of HP's Strength ................................................................................................ 6
SWOT Analysis of HP's Weakness .......................................................................................... 6-7
SWOT Analysis of HP's Opportunities ....................................................................................... 7
SWOT Analysis of HP's Threats ................................................................................................. 7
SWOT Analysis Conclusion ........................................................................................................ 8
Strengths and Weaknesses in the Kittyhawk Project Development Team ......................... 8-13
Kittyhawk Project Strengths ................................................................................................... 8-11
HP's Work Culture ................................................................................................................ 8-9
Bruce Spenner .......................................................................................................................... 9
High Prioritization of the Kittyhawk Project ......................................................................... 10
Executive Support & Exceptional Employees ....................................................................... 10
Leverage of DMD's Technology....................................................................................... 10-11
Early Launch Thanks to Management Style .......................................................................... 11
Kittyhawk Project Weaknesses............................................................................................. 11-13
Overlooked Mistakes In Pursued Markets ........................................................................ 11-12
Opposition .............................................................................................................................. 12
High Expectations ............................................................................................................. 12-13
The Kittyhawk Market .......................................................................................................... 13-16
Mobile Computing and an Economical Drive ...................................................................... 13-14
Nintendo's Challenge ................................................................................................................. 14
Challenge of Mobile Computing ............................................................................................... 14
Which Market Was Pursued ...................................................................................................... 14

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Investing in a Market Research Firm......................................................................................... 15
Marketing Mistakes .............................................................................................................. 15-16
Root Causes for Failure ......................................................................................................... 16-21
Disruptive Technology ......................................................................................................... 17-18
Expenditure of Unnecessary Resources..................................................................................... 18
Ignoring Potential Clients ..................................................................................................... 18-19
Rick Seymour's Lack of Specialization ..................................................................................... 19
Pursuing an Unproven Market .............................................................................................. 19-20
Unrealistic Goals. ................................................................................................................. 20-21
Conclusion .................................................................................................................................... 21
Works Cited ................................................................................................................................. 22

Dao, Rezaei, Hoang, & Mamak 3

HP Kittyhawk
Before we discuss the Kittyhawk, we will look into the company background information.
Hewlett-Packard (HP) is a large company with an organizational structure that differs from its key
competitors. HP values technical innovation as a key to success. HP's work culture supports
innovation, creativity, and out of the box thinking. The key question is why did the Kittyhawk
project fail commercially? This research papers includes an in-depth look into HPs work culture
and its practices that will answer the question. The work culture of HP helped launch of a number of
products but the work culture also was responsible for the failure of a few good ideas. If
management was approached differently, HP might have changed the face of the industry.

UP TO DATE BACKGROUND INFORMATION ON HP (Key Contributor: Adhiraj S Mamak)

HP has four major business organizations Test and Measurement, Computer Systems,
Measurement Systems, and Computer Products. The Computer Products organization consists of
the companys laser printer, ink-jet printer, personal computer, and mass storage product groups.
HP had shipped its first LaserJet printer in 1984 and 100 millionth LaserJet printer in September
2006. It also produced its 1 billionth ink cartridge made from recycled plastic in 2010. In 2007, HP
had achieved the milestone of recycling 1 billion pounds of electronics
(http://www8.hp.com/us/en/hp-information/about-hp/history/hp-timeline/hp-timeline.html).
HP in Comparison to Competitors: HP is currently ranked 10th in the Fortune 500 list and is the
highest ranked company in its industry. The closest rival is Apple which is ranked at the 17th
position followed by Dell at the 44th position. HP had revenue of $127,245 million and profits of
$7,074 million in the last financial year. However, HP has not been doing really well in the last
couple of years. HP's former CEO, Leo Apotheker was relieved of his duties barely after a year in
the position and was succeeded by Meg Whitman. Their stock is currently at $14.72 compared to

Dao, Rezaei, Hoang, & Mamak 4

the stock prices of Apple and IBM at $644.61 and $200.63, respectively. HP has been blaming the
economy for their problems. But how are Apple and IBM doing well in the same economy? The
problem lies within HP's structure and management. According to Sterne Agee analyst Shawn Wu,
HP's stock should be valued at negative two. The fact that HP's balance sheet is a mess adds to their
misery (http://news.yahoo.com/analyst-values-hp-stock-negative-2-calls-company181801620.html).
HP prides in being the number one in whatever it does. It has the highest market share in
printers and personal computers. However, it needs to be noted that HP is slowly losing its hold in
the personal computer market too. In a recent press release by International Data Corporation (IDC)
on October 10, 2012, Lenovo has nearly caught up with HP for the Worldwide Market Leadership
Position (http://www.idc.com/getdoc.jsp?containerId=prUS23730212).
Vendor

3Q12

3Q12

3Q11

3Q11

3Q12/3Q11

Shipments

Market

Shipments

Market

Growth

Share

Share

1. HP

13,946

15.9%

16,679

17.4%

-16.4%

2. Lenovo

13,824

15.7%

12,543

13.1%

10.2%

3. Dell

9,499

10.8%

11,039

11.5%

-14.0%

4. Acer

8,414

9.6%

9,307

9.7%

-9.6%

5. Asus

6,381

7.3%

5,798

6.0%

10.0%

Table A: Top 5 Vendors, Worldwide PC Shipments, Third quarter 2012 (Preliminary) (unit
shipments in thousands)
As observed from Table A, even though HP still holds the first position for worldwide
market shipments, it can be observed that they only lead Lenovo by 0.2%. Keep in mind that HP led

Dao, Rezaei, Hoang, & Mamak 5

Lenovo by 3.3% last year, a significant difference from 0.2%. Another important factor to note is
that of the top five vendors, HP is the worst in terms of growth in the last year. When you compare
HP's numbers to Lenovo or even Asus for that matter, it seems like the worst is still not over for HP.
Recent Major Losses: HP had announced on August 8, 2012 that they will be suffering an $8.85
billion loss for the third quarter of fiscal 2012. This loss was suffered because of HP's acquisition of
Electronic Data System in 2008 (http://www.bgr.com/2012/08/08/hp-q3-2012-earnings-guidance-9billion-loss/). Such a loss was the worst HP had to face in the last few years. However, HP is still
not done writing off additional losses. On September 28, 2012, Brad Reed published an article for
BGR on their website reporting that HP could be poised to write off an additional $3 billion loss for
its 2011 acquisition of enterprise information technology firm Autonomy
(http://www.bgr.com/2012/09/28/hp-3-billion-write-off-rumor/). However, the latest press release
on October 17, 2012 on HPs website stated that Belfius, a Belgian bank, has decided to select
Autonomy's product Scrittura for end-to-end post-trade management
(http://www8.hp.com/us/en/hp-news/press-release.html?id=1313913#.UH87acVi4s8). On October
16, 2012 HP had made a press release announcing that Dechert LLP, an international law firm, has
selected Autonomy's product WorkSite to manage and access more than fifty million electronic and
paper documents across its 26 offices in 12 countries (http://www8.hp.com/us/en/hp-news/pressrelease.html?id=1313582#.UH86r8Vi4s8). If Autonomy provides HP more business opportunities
like the aforementioned ones in the near future, the acquisition might not be a bad investment after
all.
HP's Work Culture: A facet of HP's work culture is the application of the management by
objective (MBO) process. Management by objective is a process of defining objectives within an
organization so that management and employees agree to the objectives and understand what they

Dao, Rezaei, Hoang, & Mamak 6

need to do in the organization in order to achieve them. MBO allowed HP's people to focus on the
potential paths of innovation and strategy to achieve key goals. The essence of MBO is participative
goal setting, choosing a course of action, and decision making. An important part of this process is
the measurement and the comparison of the employees actual performance with the standards set
by HP. Ideally, when employees are involved with goal setting and have the course of action chosen
for them, they are more likely to fulfill their responsibilities. Some of the ideas put forward by the
employees are noteworthy. However, it has its detractors too. HP fully believed in this management
process and to an extent it worked well for them. In lieu of this management process, HP favored a
decentralized organizational structure in order to allow the business freedom of decision making
and movement.
SWOT ANALYSIS (Key Contributor: Adhiraj S Mamak)
If a SWOT analysis were to be done on HP, it would not be the easiest thing to do. There are
many factors which have proved to be useful for HP. However at the same time there are factors
that caused them to be in their present state. Such factors lead to an interesting analysis.
SWOT Analysis of HPs Strength: HPs foremost strength is their work culture. It is a culture that
supports and nurtures creativity and innovation. They owe a lot of their success to such a work
culture. A lot of products probably would not have been able to see the day of light if HPs culture
did not support creativity and innovation. The main reason why an idea like the Kittyhawk got so
much backing was because of HPs work culture and their appreciation for out-of-the-box thinking.
The aforementioned statement is an explanation of why HP is one of the only companies that uses
the management by objective process.
SWOT Analysis of HP's Weakness: As ironic as it might sound, HPs strength is also their
weakness. HP's work culture did serve them well in their initial years, but it is also the reason why a

Dao, Rezaei, Hoang, & Mamak 7

lot of their recent products or attempts have failed. In the present day and time, when the economy
is down and the industry is facing a lot of problems, all companies needed to streamline both their
functioning and budget. In the aforementioned environment, companies need to invest in projects
which have a higher probability of success even if the projects are not innovative. HP failed at
doing what other companies did properly in a bad economy. HP kept on financing risky projects
that unfortunately did not give the expected return on investments. For example, the Kittyhawk was
a risky financial project due to the nature of its disruptive technology. Even though the Kittyhawk
sounded like a great idea, it was known that it was a risky project in a niche market. The fact that
their main targeted market was unproven in the marketplace (PDA devices), it illustrates the amount
of risk involved. Kittyhawk failed to meet its expected revenue and hence could never reach its
expected sales figures.
SWOT Analysis of HP's Opportunities: On a positive note, HP has a lot of opportunities which
can turn around their fortunes. At the end of the day, it is still a large company. Even though HP is
losing their market share in the personal computer market, it still has the highest market share
internationally and it also has other products which bring in revenue. Since HP is a Fortune 500
company, the best engineers and managers still want to work for them. HP has a chance to get back
on its feet. It just needs to be more judicious in picking their projects and to ensure they do not
suffer anymore huge losses.
SWOT Analysis of HP's Threats: The biggest threat to HP is their competitors. Companies like
Apple, Asus, Lenovo, and Dell are breathing down HPs necks and are giving them a lot of
competition. Especially in the personal computer market, the above mentioned companies have
taken major strides to cut down the difference in percent market share. HP needs to re-assess their
strategy in dealing with their competitors.

Dao, Rezaei, Hoang, & Mamak 8

SWOT Analysis Conclusion: HP is a strong company with many successful products. They are
structured differently from their competitors. Due to its structure, HP is one of the most innovating
companies in the high tech industry. Hewlett-Packard's work culture supports both innovation and
creativity. Although many products have been successfully launched due to HP's work culture, a
few products have not achieved the same success.
What would you rate as the strengths and weaknesses of the way Hewlett-Packard structured and
supported the Kittyhawk development team? (Key contributor: Lisa Dao)
STRENGTHS AND WEAKNESSES IN THE KITTHAWK PROJECT DEVELOPEMENT TEAM
Kittyhawk was launched under the same work culture and structure mentioned previously.
Along with the aforementioned work culture come the strengths and weaknesses associated with the
way HP was structured in addition to the type of support provided to the Kittyhawk's development
team. We will first discuss the strengths in which HP structured and support the Kittyhawk
development team.
Kittyhawk Project Strengths: Although the Kittyhawk turned out to be a complete commercial
failure, there was much strength in the way HP managed, developed, and launched the product. The
Kittyhawk project team had the full support of its senior management, full group autonomy to make
important business decisions, a heightened sense of urgency to launch the product earlier than
normal standard, great team unity/collaboration, strategic flexibility, familiarity with new
technology, great time and budget management by outsourcing production to a Japanese company,
and the potential to tap into a new market.
HP's Work Culture: As mentioned previously, one of the greatest strengths of HP's structure within
the Kittyhawk project was their work culture. HP's work culture and environment deeply valued
technical innovation as a key to success. Its decentralized organizational structure allowed HP to

Dao, Rezaei, Hoang, & Mamak 9

continue to encourage and support innovation and creativity. The structure and work culture
adopted with the Kittyhawk project are so unique they moved and separated the entire project from
the rest of the division. Because this project challenges a "new hill," its market and capabilities were
not fully known. Therefore HP had to move this project off site to fully support it. The Kittyhawk
operation was moved out of DMD's main building into trailers that were located at a remote corner
of the division site.
Bruce Spenner: Another strength of HP's structure that supported the development of the Kittyhawk
project was having Bruce Spenner as General Manager of the Disk Memory Division (DMD).
Although DMD was responsible for the development and launching of the Kittyhawk, Bruce
Spenner was the person who guided the idea to reality every step of the way. He was the person
who implemented RISC (Reduced Instruction Set Computing) architecture into HP's minicomputers
and workstations. He led HP to be fully committed to the new type of architecture, which allowed
them to be the leader in Unix Computing at the time. Spenner often asked questions that sparked his
entrepreneurial spirit and was known as a "fast thinker." He fully believed in new disk-drive
architecture with an innovative design taking the computing market by storm. He believed in
"attacking an entirely new hill" and "never to take a fortified hill", which provided the consensus to
launch the Kittyhawk.
Kittyhawk was led by a great visionary. Spenner envisioned the future of storage in the form
of large data library servers. He believed the "new hill" is DMD's creation of a suitably small disk
drive, which eventually became the Kittyhawk project. Spenner saw handheld computers and small
forms of computing technology as a representation of potential emerging markets for DMD. He
envisioned the Kittyhawk being used in any product that utilizes a microprocessor.

Dao, Rezaei, Hoang, & Mamak 10

High Prioritization of the Kittyhawk Project: Another factor of HP's organizational structure with
the Kittyhawk project was that the Kittyhawk was a high priority project of the DMD. The DMD
had been among the first in the industry to introduce one to two gigabyte drives. Disk drives
developed from DMD were extremely successful in the marketplace at the time. Due to DMD's high
success, initial costs and investments to develop and launch the Kittyhawk were all covered by
profits from DMD's disk drives (one to two gigabytes products). One of the biggest strengths of
HP's structure was that it allowed the DMD to heavily endorse the development and launching of
the Kittyhawk.
Spenner considered the Kittyhawk DMD's highest priority. Spenner granted the Kittyhawk
team full power to make timely decisions. This was an "engineer's dream project. Due to HP's
structure and full support, the Kittyhawk operations were similar to a start-up business in that they
had the speed and flexibility of an entrepreneur. At the same time, the Kittyhawk project also had
financial and technical backing of HP.
Executive Support & Exceptional Employees: Due to the strength of HP's structure and support, the
Kittyhawk received executive support from top ranks of HP. The Kittyhawk project team was not
governed by the division's traditional development processes which gave the team autonomy to
develop the drive, find new markets, and cultivate a customer base. Managers carefully chose their
staff. Exceptional employees from within DMD were the prime candidates. The core team
extensively researched team dynamics and group development literature. Team members even set
their desks next to one another to boost productivity and collaboration.
Leverage of DMD's Technology: HP's full support of the Kittyhawk allowed the operation to
leverage off technology that the DMD had been developing for its larger drives. Traditional diskdrive platform development took 18 months. Due to the leveraging of the DMD's developing

Dao, Rezaei, Hoang, & Mamak 11

technology, the development of the Kittyhawk was reduced to 12 months. The strengths of HP's
support in the Kittyhawk's operation made it possible for this small hard-drive (which is no bigger
than 2 postage stamps adjacent to each other) to fit 50 Nintendo games into one Kittyhawk. But as
we will later discuss, business with Nintendo was never realized.
Early Launch Thanks to Management Style: HP's management style and involvement in the
Kittyhawk project made it possible to launch the Kittyhawk 6 months earlier than most projects.
The strengths also enabled the Kittyhawk to become the smallest drive produced at the time.
Kittyhawk Project Weaknesses: Due to the quick development and launching of the Kittyhawk in
12 months (from development to market), full capability and market sustainability were unclear.
This caused the team to fail in meeting the target sales after 2 years of launching the product (19921994). Launching a product 6 months ahead of traditional platforms caused a lot of financial risks
for HP. Although HP's involvement brought much strength to the Kittyhawk project, it brought
many weaknesses as well.
Overlooked Mistakes In Pursued Markets: While full support can be perceived as a strength in the
development of the Kittyhawk, it can also be seen as a weakness. Due to full support from senior
management of the Kittyhawk project, many mistakes were overlooked or simply ignored which
contributed to the failure of the Kittyhawk. The Kittyhawk team addressed a need identified from
Nintendo but decided pursued mobile computing instead. They failed to consider the needs of
desktop and notebook computer, which was a growing stable market. While mobile computing
could potentially create a new and untapped market for the Kittyhawk, the mobile computing
industry was so new that high risks and volatility was associated with it.
Opposition: Due to aforementioned risks, there were some people within HP that opposed the
Kittyhawk project. Most of the R&D sectional managers and a few of DMD's functional managers

Dao, Rezaei, Hoang, & Mamak 12

were against this project. They strongly felt that a new small architecture would conflict with the
needs of the division to stay atop its established markets. There was a feeling that priorities should
be to its next-generation higher-gigabyte product lines rather than a tiny drive with unclear markets
and technological capabilities. Due to differences of opinions about the Kittyhawk, the complete
Kittyhawk project had to be removed from DMD's main building to trailers off site. The difference
in opinions from top managers of HP brought in cultural biases. All engineers had to sign a creed
before they could join the Kittyhawk project. These differences of opinions and complete separation
of operation really hurt HP's work culture and dynamics in the Kittyhawk project.
High Expectations: A weakness from HP's structure and support of the Kittyhawk project were the
high expectations from top executives. The core members of the Kittyhawk team were not
experienced in developing new architectures or cultivating emerging markets. The core members
were considered to be "can do" people. The R&D section manager for the DMD came from a
manufacturing background in disk-drive heads and media. The manager has never led the
development of new architecture prior the Kittyhawk project.
The the decision to tap into an unknown market and consumer demand hurt the success of
the Kittyhawk. In addition, the anticipated revenue goals also contributed to the Kittyhawk's failure.
Without fully assessing the potential market or understanding the consumer demand, DMD set a
high goal of $100 million revenue generated after two years of product launch. That goal was
excessively high and unrealistic. In addition, DMD had a goal of breaking even in only 36 months
and achieving a revenue growth of 35%. Unfortunately, 2 years after the Kittyhawk launched, it
failed to meet any of these goals set by the DMD.
Although HP was known for their decentralized work structure (which led to many
innovative and creative products), its structure ultimately delivered both strengths and weaknesses

Dao, Rezaei, Hoang, & Mamak 13

to the development and launch of the Kittyhawk. Kittyhawk was the smallest drive in the world at
that time however; it failed just after two years of being launched in the market.
What do you think of the way the team set out to find a market for the Kittyhawk? What correct
turns, and what wrong turns did they make? (Key contributor: Ali Rezaei)
THE KITTYHAWK MARKET
The Kittyhawk project started in June of 1991. At the time Seymour and White were
researching and evaluating their options and market possibilities for the Kittyhawk product. Since
HP was on the cutting edge of technology and had set high values on innovation, the Kittyhawk
team wanted to penetrate a unique market with tremendous growth capabilities.
Early in the project, Seymour and White attended the Consumer Electronics Show with the
goal of identifying appropriate markets for the Kittyhawk. They looked passed desktop and
notebook computers to setout for newer and less developed technologies like mobile computing
products which included PDAs. Both Seymour and White found the PDA market to have attractive
opportunities. While attending the show, they uncovered an interesting market with Nintendo and
the possible storage opportunities with the game cartridges. After speaking with the Nintendo
marketing manager, the response was a high demand for a cost effective storage disk drive.
Additional market research was conducted in exploring new markets in electronics and in
contacting companies to receive insight in their future plans. Other stakeholders at HP were also
interviewed to gather intelligence on the future of electronics and the possible pathways for the
utilization of the Kittyhawk for maximum returns.
Mobile Computing and an Economical Drive: The initial list of business opportunities for the
Kittyhawk included mobile information technologies, communications technologies, consumer
electronics, automotive electronics, and new developments in computer technologies. With further

Dao, Rezaei, Hoang, & Mamak 14

discussions and due diligence in exploring possible markets, the Kittyhawk team decided to focus
and further evaluate the mobile computing market and an economically feasible disk drive to be
utilized with applications requiring storage. Both of these options presented pros and cons.
Nintendo's Challenge: Though the gaming market seemed vast, the Nintendo marketing manager
had specified the need for a cheap disk drive at $50 value. This seemed to pose a challenge, as the
lowest unit cost for a disk drive that had been achieved was $130. This meant that in order to go
after the gaming market, the disk drive would have to go through design modification with the
objective to reduce the cost to $50 per drive. In addition, Spenner had established an aggressive
timeline for the release of the Kittyhawk and at $50 per drive, it seemed doubtful that timelines
could be met.
Challenge of Mobile Computing: The mobile computing market had its challenges as well. This
market would require a disk drive with the capability to store more information than previously
achieved. The market research team realized great possibilities were possible with the PDA market.
Though the PDA market was in its infancy stage and not well developed, most technology experts
believed that the future was with the PDA market. Many large technology companies such as
Apple, IBM, Motorola, AT&T, and HP were venturing into the PDA market.
Which Market Was Pursued: In taking both options into consideration, the Kittyhawk team
decided to penetrate the mobile computing market first because of the volume at hand and to
eventually penetrate the gaming market by producing the next generation of cheap disk drives to
meet the $50 price point demands of the gaming industry. The team had high expectations for the
product and envisioned the Kittyhawk to be a required component in many consumer electronic
products ranging from Nintendo game cartridges, cell phones, and computers to access applications
stored on disk drive.

Dao, Rezaei, Hoang, & Mamak 15

Investing in a Market Research Firm: To validate their market research and decision to pursue
mobile computing, the team invested in a reputable technology market research firm to investigate
their findings. Since the firms research methodologies was designed to investigate products entering
existing markets, the firm was unable to provide a definitive response to the future success of
Kittyhawk since it was entering a new market. Eventually, the research firm endorsed HPs decision
to enter a new market.
To identify Kittyhawk's niche in the market, the research firm contacted potential clients and
discussed the product and studied their feedback and interest. Additionally, these findings were
shared with other HP stakeholders, technology experts, and much was invested in a market research
firm to re-confirm their vision and market plan for maximum growth potential. The goal was to
meet the breakeven timeline demands of the HP stakeholders. The Kittyhawk project team was very
firm in its direction to pursue a unique market and to break into the vast potentials of new
technology.
Marketing Mistakes: However, the team also displayed a narrow minded and stubborn mindset in
their pursuit for Kittyhawk success. Their decision to only pursue an unknown market placed the
future of the product at risk for failure. There was a high level of uncertainty and risk associated
with only marketing in an under developed market. There was just no way to predict what the future
will hold since there was no history, experience, or research in the PDA market.
To make it worse, the Kittyhawk project team double checked with the market research firm
that specialized in high-tech markets. This was a great initiative and could have materialized but
because mobile computing (PDAs) was so new, the firm could not get a clear understanding of
Kittyhawk's position in the marketplace. The market research firms methodologies were not
aligned to support or provide clear and concise information on a product that was so revolutionary

Dao, Rezaei, Hoang, & Mamak 16

and had no history. The research firms findings were based on the information that was originally
gathered by HP and not of any potential or current clients.
Another mistake was that the team ignored the desktop and notebook computer market. This
was a sure opportunity for them and one that easily could have translated into an ROI. But because
the team felt that it was a crowded market, the computer market was left aside.
The team also decided against Nintendo and the gaming market that had expressed interest
in the Kittyhawk product. This had the potential to become an immediate success because Nintendo
indicated a sense of urgency in their need for game increased game storage capability. But because
the product would have to undergo design modification to meet Nintendos specified needs for a
cheap disk drive, the team passed on the opportunity to partner up with Nintendo because it
would delay their breakeven goal. In addition, the team should have revaluated the break-even
timeline. Perhaps a less aggressive timeline would have allowed for further consideration of other
markets with a slower initial growth but high future potential.
The Kittyhawk team could have considered a market penetration approach that encompassed
both established and less developed markets. By going after an established market, HP would have
realized immediate gains in the desktop, notebook and gaming markets. These markets were a low
hanging fruit, which could have had a positive revenue impact in Kittyhawk sales but instead the
team pursued only the unknown riskier market, resulting in the failure of Kittyhawk. The
combination of both established and underdeveloped markets would have yielded higher chance of
success for the Kittyhawk.
What do you think are the root causes of the failure of the Kittyhawk program? Is there any way
HP could have avoided its fate by addressing those root causes? (Key contributor: Dustin Hoang)
ROOT CAUSES FOR FAILURE

Dao, Rezaei, Hoang, & Mamak 17

There are several root causes for the failure of the Kittyhawk project. Kittyhawk sales failed
after two years of its introduction to the marketplace. Some of the root causes have a higher impact
than others. In addition to discussing the root causes for failure, an explanation of how HP could
have avoided the aforementioned project failure will be discussed.
Disruptive Technology: HP allowed the DMD to spend many resources on the Kittyhawk project
without knowing exactly the outcome of the Kittyhawk itself. Christensen mentions that large
corporations were designed to work with sustaining technologies (The Innovator's Dilemma, 113).
Sustaining technology relies on incremental improvements to a technology already established by
the company. In contrast to sustaining technology, the Kittyhawk was based on the idea that a
potential form of disruptive technology could meet the demands that the marketplace did not even
know existed. Since HP was so eager to gain additional market share within the hard drive
business, disruptive technology was thought to be the answer in overtaking the hard drive business
against other competitors. Within just twelve months, HP introduced the smallest hard drive in the
world known as the Kittyhawk. The Kittyhawk also had low power consumption and the ability to
take a three foot fall. Such attractive specifications made the Kittyhawk look great on paper for
mobile computing and video game cartridges. But why then did the Kittyhawk fail in its
commercial sales? Previously, HP had focused its energy within the hard drive business with high
storage 5.25-inch and 3.5-inch disk drives. The idea that the DMD can become as successful as HP's
printer business made HP hungry for additional profits. HP felt that they had the ability gain a much
larger chunk of the market share in hard drive business. When you're that hungry, it can be easy to
not think about the consequences of what you're about to swallow. In HP's case, the consequences
were severe.

Dao, Rezaei, Hoang, & Mamak 18

According to Christensen, disruptive technology has performance problems (The Innovator's
Dilemma, 69). The performance problems stem from novel ideas which appeal mainly to an
audience open minded enough to give the disruptive technology a try. The DMD did not understand
that disruptive technology sometimes requires time for a market to develop. Since existing and
established customers are invested in sustaining technologies, the choice to adopt disruptive
technology made it difficult for existing customers to accept the Kittyhawk for further
consideration. Unlike existing and established customers, those open minded enough to give
disruptive technology a try do not possess the resources necessary to utilize the Kittyhawk.
Expenditure of Unnecessary Resources: Due to HP's success with the DMD's multi-gigabyte
products, funding for the Kittyhawk was easily attainable and justified. However, due to the lack of
HP's due diligence on the Kittyhawk project, the funding was not properly spent. For example, a
market research specializing in high-tech markets was hired to help the Kittyhawk project find
leads. The problem was that the disruptive technology of the Kittyhawk was too ground-breaking
which made finding customers difficult. The additional funds from the main division of HP made
Bruce Spenner (general manager of HP's DMD) overly confident in achieving ambitious goals with
the Kittyhawk project.
Ignoring Potential Clients: The Kittyhawk project team ignored some key potential clients at the
Consumer Electronics show who were involved in the desktop and notebook computer business. HP
focused more on mobile computing, a problem in itself due to the fact that mobile computing at the
time was a new industry and no standards were established. Mixing in a disruptive technology with
another disruptive technology with no proven market or consumer demand simply spells disaster.
Despite such alarms, the DMD believed in the Kittyhawk's success.

Dao, Rezaei, Hoang, & Mamak 19

One of the biggest key potential clients ignored was Nintendo. Despite the team's signed
statement of belief of I am going to build a small, dumb, cheap disk drive, they avoided
Nintendo's need of exactly what the team originally signed. Nintendo needed cheap drives but a
deal was never made. The Kittyhawk project team failed in every regard to act on the needs of the
market that was aligned with the team's mission. Instead of doing business with Nintendo, the
Kittyhawk project team increased their risk by pursuing business with clients involved in the PDA
business which at the time was an unproven market.
Rick Seymour's Lack of Specialization: The project leader of the Kittyhawk program was Rick
Seymour. Seymour has limited experience in new technology projects. Seymour, despite having
limited experience in new technology projects, had the ability to think quickly and take action
which allowed Seymour to leverage his position as project leader. Seymour can be seen as more of
a generalist rather than a specialist when it comes to project management. Due to the ever changing
nature of technology, a specialist would have been better equipped with industry experience to
better understand the client expectations.
Pursuing an Unproven Market: Spenner and Seymour believed in the Kittyhawk's success in
mobile computing despite any proven practical application. This led to poor management of the
expectations of the client. The Kittyhawk program went on to completion despite being unable to
meet or exceed the clients' expectations as evident from its failure in the marketplace. Even though
the project scope has been defined in the exact specifications of the product (such as product
dimensions and how much space the product will hold), this doesn't necessarily translate to meeting
the client expectations since client expectations can also include an emotional component that is not
easily defined. While the Kittyhawk project looked good on paper, fulfilling the client desires is a
different procedure which could have been better understood by the Kittyhawk team if the project

Dao, Rezaei, Hoang, & Mamak 20

leader had a background in new technology projects. The tight schedule of the project caused the
performance, features, and cost of the Kittyhawk to be sacrificed in order to meet deadlines. Scope
creep was inevitable as technology in the marketplace is always changing. Because of the fast paced
deadlines of the Kittyhawk project, project scope and marketplace changes were realized later in the
project. Later realization causes a greater increase to project costs (Darnall, Russell, and Preston,
14). Despite all of aforementioned sacrifices, the Kittyhawk still looked like it took leaps and
bounds ahead of the competition when it came to the technical specifications such as size, amount
of memory storage, and the cost versus features in comparison to present and future competitor
products. The product even won numerous awards and garnered much attention when released in
1992. Regardless of all of the innovation and attention that the Kittyhawk acquired, technology as
you might have guessed it changes rapidly. The rapid change in technology made the Kittyhawk go
from a hot product to a product that couldn't meet the demands and needs due to limited space
capacities. The 1.3" drive could not meet storage requirements for its customers. The PDA market,
a key partner in Kittyhawk sales in mobile computing, flopped, creating another problem for the
success of the Kittyhawk.
Unrealistic Goals: One of the most significant mistakes that the DMD made was in their goal
setting for the Kittyhawk. The team made some extremely large assumptions that a disruptive
technology can meet their goals. For example, the team made a goal of reaching $100 million
revenue in just two years and to achieve a revenue growth of 35%. How can you even make such
goals with an unproven product in which you don't know the marketplace demands? Instead of
going along the lines of the original signed statement of I am going to build a small, dumb, cheap
disk drive, the team completely missed out on the opportunity to business with Nintendo. Instead,
the team shot for a pipedream on unproven and unknown demands on disruptive technology that

Dao, Rezaei, Hoang, & Mamak 21

would not cost less than $130. It was almost as if the DMD of HP was betting that the Kittyhawk
would just succeed because it looked good paper.
CONCLUSION
The fact that the project leader was more of a generalist and that HP single handedly
allowed the Kittyhawk project to go on without much due diligence served the project's failure. Had
Spenner been more careful with hiring someone with industry experience and had HP been more
careful in allowing a project dealing with disruptive technology to go on with tight deadlines, the
demise of the Kittyhawk project could have been avoided. While the disruptive nature of the
Kittyhawk looked great on paper, meeting market demands that are unproven or unknown was a
risky decision made by HP's management. That uncertain decision ultimately led to the failure of
the Kittyhawk.

Dao, Rezaei, Hoang, & Mamak 22

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