The first hard drive, a magnetic information storage and retrieval device for computers and other
electronic products, was developed by IBM engineers in 1956 in San Jose, California. This hard drive
was the size of two side by side refrigerators and could store 5 MB of information. Incredible
technological progress ensued, and by the early 1990’s, disk drives had decreased from their original
bulky configuration to 2.5 square inches in diameter and had a four-fold increase in their data capacity to
The disk drive business had grown into a multi-billion dollar industry marked by frequent
innovation, rapid growth and intense competition amongst a few select firms such as IBM, Seagate,
Conner, Quantum, and Western Digital.
These technology manufacturers competed in the hard drive market by relentlessly pursuing two design
improvements: reduction in physical size and increase of data storage capacity.
These advances were
required by their customers, who were in an analogous race to bring smaller, cheaper, and higher utility
electronics to market.
At this time Hewlett-Packard’s (HP) Disk Memory Division (DMD) held a small but profitable piece of
the market with its high-performance, high-capacity 5.25- and 3.5-inch disk-drives.
Wanting DMD to
“become the next printer business for HP”, the group’s management seized the opportunity to grow by
attempting to leapfrog the competition.
In June 1992, twelve months after assigning the task to an
autonomous project group, HP introduced the world’s smallest hard drive.
Named Kittyhawk, the 1.3-
inch diameter drive had 20MG of storage, the durability to withstand a 3’ fall, and low power
These advantages made the drive seemingly ideal for applications in the burgeoning
mobile computing market as well as for increasingly thinner laptops, gaming devices and other new
products. The HP project team established productivity and financial goals they deemed reasonable, but
by mid 1994, device sales had failed to meet its targets. The team, and its project leader Rick Seymour,
met to discuss and determine the future of the project and its technologically remarkable tiny hard drive.
How successful is HP’s disk drive business (DMD) at the start of the case (1990-1991)?
How important is the disc drive business to HP? Is it getting more important or less important?
The DMD business is not a successful unit in the eyes of Hewlett Packard, which prides itself on being
the market leader for every product it enters.
The revenue for this department, at the time of the case
had been declining year over year, from a high of $533 million in 1989 to $280 million.
The business is
not important to HP revenue-wise, as it is a niche player in a very crowded field.
On the other hand, the
unit does allow for some level of halo effect as the leader in high-capacity, fast access drives which are