The research and development budget used to be 9 percent of revenue, Mr. House told me; now it was closer to 2 percent. “In the personal computer group, it is seven-tenths of 1 percent,” he added. “That’s why H.P. had no response to the iPad.”
HP, by sales, the largest technology company in the world, can’t be bothered to spend money on R&D for its PC division. This is a surprise? Since when does any PC company spend any money on R&D? Put another way, even if they did spend the money, what would they be researching and developing? PCs are commodity products where any improvements would neither be valued nor used. On the measures of performance that everyone has for the PC, the product has been more than good enough for a decade.
They did not have a response to the iPad because they did not think anybody needed an iPad. And that is mostly because Microsoft did not think anybody needed an iPad.
None of this has anything to do with Mr. Hurd. His peer group all agree on these fundamentals.