May 26, 2004

The distributor vs. the innovator

CNET reports on the Intriguing battle of types of Innovation:

"The confrontation between Hewlett-Packard and Dell is more than a particularly lively bout of competition in the $106 billion-a-year printing industry. It is a clash--and an intriguing test case--of two different models of innovation and corporate strategy.
With its engineering roots and its corporate tagline 'HP Invent,' Hewlett-Packard is committed to spending heavily on research and then funneling that home-grown technology into new products. Those products, in turn, must be able to command profits high enough to keep financing the corporate invention machine. Hewlett-Packard's printing business is a showcase of success for internal innovation.
Dell, by contrast, is pursuing a 'virtual' research-and-development model. It does some engineering development work itself, but that typically amounts to tweaking an existing product. Dell's main role is to scour the world for technology, fine-tune the products of corporate partners, wring costs from the supply chain and sell products directly to customers. "