The Packard Doctrine: Instruments Over Everything
From the beginning, HP was a company built for engineers, by engineers. Their first product was an audio oscillator sold to Walt Disney Studios. This set the tone for Dave Packard’s vision. He believed HP’s purpose was to make indispensable, high-quality,
high-margin instruments for a niche audience of scientists and technicians. Packard was fiscally conservative, focused on steady, profitable growth without taking on debt. He saw the company as a provider of unique, technical contributions—not a mass-market player. The core business was building complex, expensive equipment that no one else could. This philosophy was the bedrock of HP’s early success and reputation. It was a low-volume, high-prestige model that valued precision and reliability above all else.
Hewlett's Gamble: A Calculator for the Masses
Bill Hewlett, while sharing Packard's commitment to quality engineering, had a more adventurous streak. Around 1970, he challenged his engineers with a radical idea: create a scientific calculator that could fit in his shirt pocket. At the time, calculators were clunky desktop machines limited to basic arithmetic. Engineers and scientists still relied on slide rules for complex functions. Hewlett envisioned a handheld device that could perform logarithmic and trigonometric functions—a 'shirt-pocket sized HP-9100,' referring to their popular desktop calculator. This was a move toward a consumer, or at least a professional-consumer, market. It was a high-volume, lower-margin proposition, a direct challenge to HP's established model.
The Showdown Over the HP-35
The project, which became the legendary HP-35, was a point of contention. Packard was famously skeptical. He was concerned about entering the competitive, low-margin calculator market and worried that it would dilute the brand's elite, high-end focus. A market research firm even concluded the device would never sell because, at a planned price of $395, it was deemed too expensive for a pocket gadget. But Hewlett championed the project relentlessly. He believed in its potential and pushed it forward despite the internal resistance and negative market report. In this case, Hewlett’s vision won the day. The HP-35 launched in 1972 and was a spectacular success. The company, which had hoped to sell 10,000 units to break even, sold 100,000 in the first year alone. It made the slide rule obsolete practically overnight and established HP as a major player in a new commercial market.
A Legacy of Creative Tension
The success of the HP-35 didn't end the disagreement; it institutionalized it. The clash between Packard's conservative, high-margin instrument philosophy and Hewlett's innovative, mass-market ambition became the central tension within HP for decades. This internal push-and-pull fueled the company's expansion into some of its most successful ventures, including printers and personal computers—products that were far from the original niche of scientific instruments. The famous “HP Way,” a management philosophy emphasizing employee respect and innovation, was born from their desire to manage this growing, diversifying company by empowering individuals. However, this dual identity also created persistent struggles. Later in its history, the company wrestled with its identity, leading to contentious decisions like the 2002 merger with Compaq, which was opposed by the founders' children who felt it betrayed the original HP Way. The company’s subsequent split into two separate entities—HP Inc. (computers and printers) and Hewlett Packard Enterprise (servers and business services)—can be seen as the ultimate resolution of the founders' original disagreement, finally separating the two competing visions into distinct companies.
