HP to Shrink Its Research Labs

Hewlett-Packard is looking for new ideas from its HP Labs arm in the wake of a restructuring that will cut research staff by about 10 percent and pare down some of its projects.

Hewlett-Packard is changing the way of its research labs.

The Palo Alto, Calif., computer giant will lay off about 10 percent of its 700 HP Labs researchers, close down several projects and part ways with its well-known Research Fellow, Alan Kay, as part of a reorganization.

The action is part of a wider restructuring, announced Tuesday by HP CEO Mark Hurd. The action will pare down Hewlett-Packard Co.s staff by about 14,500, or about 10 percent.

But it also signals a change in HP Labs focus. As the company seeks higher profits and a more competitive position in the computer marketplace—in part by beefing up its storage, software and server product lines, according to company executives—its shifting the focus of the labs toward projects that offer a higher potential for a return on investment.

"I think [still] were focusing on all the things weve always been focusing on. If you look at the portfolio of research investments, the big investments are in enterprise computing, printing and imaging, and research for IT services," said Dave Berman, HP Labs spokesman.

However, "Were shifting the resources behind the areas that we think offer the greatest promise and play to our core strengths," he said. "The focus is on those areas where there is a more clear path to profitability for HP."

Although HP said the restructuring would have a minimal impact on research and development, it plans to close its Cambridge Research Lab, in Cambridge, Mass., along with its Palo Alto-based Consumer Applications and Systems Laboratory and Emerging Technologies Laboratory.

Kays Advanced Software Research project, which was developing software for distributed devices and applications, also will be disbanded. Kay himself is best known for his work in graphical user interfaces and programming languages.

"Kays function is discontinued. Hes Alan Kay and he does what he does and has been doing for many years—thats not to say that area isnt very worthwhile—but its not clear how we would take advantage of this" in even the midterm, Berman said.

Some elements of the closing labs projects and some of their employees might be shifted to other areas of HP Labs. Meanwhile, the HP research arm will continue exploring nanotechnology, where its working on a new type of computer memory, and quantum computing efforts, he said.

The news might not be lauded by some well-known tech industry executives, however.

Bill Gates, Microsoft Corp.s chairman and chief software architect, said at a research summit earlier this week that technology companies in the United States should invest more in research and development.

Gates went on to cite Xerox Corp.s Palo Alto Research Center—an outfit where Kay worked on graphical user interfaces in the 1970s—and the technologies it spawned as an example. He said the Xerox PARC efforts helped Microsoft, Apple Computer Inc. and a host of other companies get their starts.

"Were saying to companies, You ought to invest more in R&D, this is our competitive edge," Gates said. "If you look at our competitors—put aside IBM, theyre sort of a special case—the investment [in R&D] is pretty small."

But HP isnt the only company seeking to get more out of the research dollars it spends. Intel Corp., for one, focuses on near-term projects and leaves much of the cutting-edge chip research to universities. Even research powerhouse IBM, under CEO Sam Palmisano, has been seeking to gain more revenue from its research efforts, analysts say.

Still, maintaining the right balance between long-term possibilities and short-term goals is like walking a tightrope. Thus it could be easy for HP or any other company to take a step in the wrong direction, said Richard Doherty, an analyst at Envisioneering in Seaford, N.Y.

"You need just plain old research that results in, Hey, this can be applied to a TV or this can work for an inkjet [printer] or this new software algorithm can be applied to a database," he said. "The problem is achieving the right mix [between near-term profits and long-term goals], because its expensive."

Greg Papadopoulos, chief technology officer at Sun Microsystems Inc., looked at the development another way, however.

Posting in his Weblog, Papadopoulos offered HP Labs staffers an invitation to inquire about Suns research labs.


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