Silicon Valley Historical Association

On New Year’s Day in 1939, David Packard and William R. Hewlett tossed a coin in a rented Palo Alto garage to decide the order of names for their new company. They had started their business months earlier, with $538 and a few product ideas. In 2007, Hewlett-Packard Company has 156,000 employees doing business in more than 170 countries and the company’s offerings span printing, personal computing, software, services and IT infrastructure, with revenues totaling $ 97 billion.

When Packard and Hewlett , who were classmates in Frederick E. Terman’s radio engineering program at Stanford University, neared graduation, it was 1934 and the Depression gripped America. As Packard told it, “Bill and I had said if we can’t get a job ourselves we’ll just start our own company. . . .Fred encouraged us to do that.”

Before HP started, however, Packard accepted a position with General Electric in Schenectady, N.Y. Hewlett became a graduate student at Massachusett s Institute of Technology and then studied with Terman again at Stanford, where he developed a resistance-tuned oscillator. The two men’s business start marked time until Terman drew Packard back to Stanford on a graduate fellowship. In 1938, Hewlett and Packard began part-time work in the garage behind Dave and Lucile Packard’s ground floor flat at 367 Addison Avenue. Hewlett bunked in the backyard shed.

Before long, Walt Disney Studios placed an order for eight HP 200B audio oscillators for the movie Fantasia—HP’s first big sale. By 1942, the company had built a plant in Palo Alto, though it was still a small operation when World War II, as Hewlett put it, “changed everything.” The Army Signal Corps called Hewlett to duty; Packard ran HP as it moved into war work, making audio oscillators used in proximity fuzes and microwave-signal generators used in radar and counter-radar measures.

An incentive plan allowing employees to share in earnings enabled HP to keep a strong work force despite wartime wage controls; later it became the basis for a profit-sharing plan widely emulated throughout Silicon Valley and beyond. Other “people-centered” practices followed as the founders fostered a work environment that aimed for innovation and achievement, promoted trust in people and teamwork, and rewarded employees for HP’s success.

In 1947, the year HP incorporated, revenues topped $1.5 million. Three years later, when the Korean conflict began and electronics production soared, the company had in place an expanded line of test equipment, including microwave and high-frequency products. In 1957, HP had its first public stock offering and began manufacturing at its new flagship site in Stanford Research Park, home of HP’s current corporate offices.

Soon HP grew its product offerings through a series of acquisitions, all within its focused field of interest—electronics manufacturing. HP pursued new opportunities in data printing, medical electronics, and analytical instrumentation in the United States and entered international markets in 1959 with marketing operations in Geneva, Switzerland and a manufacturing plant in Böblingen, Germany. In 1966, HP Laboratories— today among the world’s premier technology labs—was formed as the company’s central research facility. HP’s first computer, designed as a controller for test and measurement instruments, was also introduced in 1966.

This history was written by the Santa Clara Valley Historical Association in 2008.

Part One • Part Two • Part Three • Part Four