Page last updated at 21:45 GMT, Saturday, 14 March 2009

Riding the recession the HP way

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

Hewlett-Packard logo
HP has labs in 7 countries and employs more than 500 researchers

The world's largest technology company says a major reorganisation of research efforts last year will help it survive the downturn and secure its future.

In 2008 HP announced a "groundbreaking" move to align the work done in its labs more closely with business goals.

"Our approach has positioned us well to innovate in today's economy," said HP Labs director Prith Banerjee.

"R&D is the pipeline for future growth of the company," he said, ahead of the first annual report on the move.

One of the major shifts in how the labs now operate is to include the company's business unit in helping decide which research projects should be funded and which should not.

"This approach which we took before the recession hit has positioned us well to innovate in today's economy," said Mr Banerjee.

He admitted that had they not "sharpened their focus", business managers today would be asking: "In this economy why are you doing this?"

In fact when it comes to the economic downturn, Mr Banerjee said it is not a major focus of concern.

"We are not looking at the recession," he told the BBC. "We are looking at investment in technology for the long term so that HP is fully prepared to provide its customers with a variety of choices when we get out of the recession.

"Innovation is not for the next quarter, it is for the next two years, five years from now. The key is to invest in innovation that truly matters."

"Moved the needle"

HP Labs was formed more than 40 years ago by company founders Bill Hewlett and David Packard to focus on the future and not be hidebound by day-to-day business concerns.

While it is a company primarily known for making printers and photocopiers, the work done in the seven labs dotted around the world has been varied.

Over the years, HP has been responsible for giving us the atomic clock, light-emitting diodes or LED's, DNA analysis and computational fluid dynamics.

Prith Banerjee of HP Labs
"Innovation is the key towards growth," said HP's Prith Banerjee

Mr Banerjee also told a breakfast meeting of reporters that HP's scientists helped make the movies Shrek 2 and Madagascar for the film studio DreamWorks.

Today, the number of projects being funded has been scaled back and the focus has been clearly defined into eight main themes covering things like analytics, the cloud, information management and sustainability.

In the last year, 22 lab projects have produced new technologies or techniques that were said to have "moved the needle" towards improving HP's bottom line.

These included enhancements to HP's high-end video conferencing equipment, a high-speed wireless memory chip and a cloud-based publishing service.

"HP is a technology company and innovation is the key towards growth for any technology company in a downturn," said Mr Banerjee. "The man at the top [CEO Mark Hurd] recognises this and is very supportive because what Labs does is innovate on things beyond the roadmap."

He said HP's commitment to the future is evident in the $3.5bn budget it has allocated this year for R&D with $150m of that going into pure research.

Projects in the works at the moment range from voice and facial recognition to enhancing customer-relations with big stores, and from using lasers to transmit data between computers to researching ways to reduce energy consumption.

Open

While most companies keep their most valuable research projects under wraps, HP has taken a different tack.

Everything is out in the open and there is a real emphasis on collaboration with universities, government and other industry players.

Hp labs awards to universities
Collaboration is vital to future success, says the company

"Open innovation is a very key approach to our work. We can't build everything ourselves," said Mr Banerjee.

"We want to tap into the best ideas from around the globe and to bring those ideas to market faster," said Rich Friedrich, who develops research partnerships with universities and government agencies and is also the director of the Open Innovation office.

In its report due out on Monday, HP said it has made 45 awards to 35 universities across 14 countries. It will announce a second round in May.

HP said while it is intent on investing in innovation to ensure the company's continued success the government must also do the same to ensure the US does not lose out to the rest of the world

"A recent innovation report showed that the US ranks 6th out of 40 countries. If we continue to not invest in innovation this will continue to go down," warned Mr Banerjee.

Mr Friedrich went further and noted: "Clearly science, innovation and technology were not high priority programmes for the previous administration.

"If you think about the long-term viability of any nation these days, innovation and technology drives so much of the economy.

"You have to have educated citizens. There has to be a fund available for funding new ideas and you have to have the proper additional government incentives to mitigate some of the risks that industry has to take on," said Mr Friedrich.

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