Hewlett-Packard Kittyhawk business case is considered to be classics for management theory and practice. Named after historical place, HP new 1.3 inch hard drive could become a revolutionary product with bright prominent future had it been invented 3-5 years later. Manufacturing at the edge of technical progress always requires significant risk and careful evaluation of possible consequences of success as well as failure.

Hard disk has impressive 50 years history, however, major innovations to this technology came only at its last decade. Having decentralized organizational structure, Hewlett-Packard had specific divisions for every business line. In particular, the Disk Memory Division (DMD) located inside the Mass Storage Product Group was responsible for Kittyhawk product launch. In the beginning of 90’s position of HP Company in the hard disk market was relatively stable and profitable, regardless low sales volumes in comparison with other hard disk manufactures. The main reason for such situation is that DMD concentrated on high performance products within 5.25 and 3.5-inch architectures, targeting only industrial market. Although, obtaining such a niche in the marketplac

At the moment of its introduction to the market, Kittyhawk became most the interesting technological device. Based on the previous projections, it was expected to reach the volume of over 500,000 units in two years. That volume forecast would let to Kittyhawk’s business line to follow Spenner’s objectives and 36-motn Break-Even Time.

In the industrial market of PDA’s developers there was an enormous interest in small hard disk drive. Personal digital assistants were not able to work on 2.5-inch drive, because the primary focus of PDA was space and functionality. However, DMD new architecture could be possibly threaten with the appearance of Flash and 1.8-inch drive technology. However, the Flash memory was several times more expensive than Kittyhawk product, while potential 1.8-inch drive does not have competitive advantage in terms of timing.

Almost accidentally, Kittyhawk product had found some demand in unexpected markets of digital cameras and Japanese word processors. The analysis of White’s marketing plan shows that customers realized the final value of Kittyhawk only after sufficient time of product existence. Although, there were several interesting and promising inquiring for the product the main problem of 1.3-inch drive was the price. Moreover, according to Seymour opinion, at that period it was impossible to fit the production into $50 constrain, and even in if DMD was able to overcome this challenge, possible product margins were not interested for Hewlett-Packard. The sales of Kittyhawk were remaining far from the most liberal expectations and strategic forecasting. Sales volumes never crossed the measure of 100,000 units.

In that situation, developing a brand new architecture was considered to be a highly risky venture in term

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