For 20 years, from its founding in 1939 until 1960, HP centered its R&D and manufacturing operations in the San Francisco Bay area radiating out from Palo Alto, the company’s home town. HP issued its first stock offering in 1957. At that point, the company started growing rapidly. In 1959, it expanded into international sales offices in Geneva, Switzerland and B÷blingen, near Stuttgart in Germany (West Germany at the time).
It was during this period that the company also decided to open its first manufacturing plant outside of California. Packard was born in Pueblo, Colorado so that’s where HP sent Stan Selby to look for a suitable plant site. His first stop was the area around Boulder, a beautiful community nestled into the foothills of the Rocky Mountains northwest of Denver. Boulder was home to both the University of Colorado at Boulder and the National Bureau of Standards (NBS, later renamed the National Institute of Standards and Technology or NIST). HP was attracted to both of these organizations—the university as a source of new HP engineering recruits and NBS as a potential customer and development partner.
However, Paul Rice and Bob Hipps of Loveland, Colorado had other ideas. Rice was president of the Loveland First National Bank and Hipps was a local appliance dealer who would later become Loveland’s mayor. Rice and Hipps had realized that Loveland, a sleepy agricultural and retirement community in northern Colorado, needed new industry to revitalize the town’s economy. The two men had started the Loveland Development Fund to acquire land for an industrial site.
When Rice and Hipps learned that a representative from HP was scouting for a plant site nearby, their first move was to investigate HP. The company was hardly a household name in the late 1950s because it sold products almost exclusively to engineers and scientists. Local Colorado bankers and appliance dealers had no reason to have ever heard of the company. Reassured that HP was a reputable firm, the Loveland businessmen invited Selby up to see the town and he reciprocated by inviting Rice, Hipps, and a representative from the Colorado governor’s office to Palo Alto so they could make the case for a Loveland plant site. Apparently, they were convincing because HP selected Loveland as the location for its first manufacturing plant outside of Califonia.
During the 1950s, HP’s centralized R&D labs in Palo Alto would develop products and then hand them over to manufacturing divisions for production. Back then, HP had four product groups (frequency & time, microwave, audio & video, and oscilloscopes). The R&D manager in each group reported to HP’s VP of R&D, Barney Oliver.
HP’s Loveland Division was established in 1960 while the company’s R&D was centralized. Consequently, the new Loveland Division’s charter was manufacturing when it opened in rented facilities. Initially, the Loveland Division manufactured voltmeters and power supplies that had been designed in California. It started manufacturing the HP 3440A digital voltmeter in 1963. By 1968, it had made more than 10,000 of this particular voltmeter model, which means that the HP 3440A was a very successful product for its day. Eventually, all of HP’s audio-video instrument production moved to Loveland. In 1962, HP opened another site in Colorado Springs to manufacture HP’s oscilloscopes.
With geographic dispersion, HP’s centralized R&D structure started to unravel. It became much harder for the R&D engineers in Palo Alto to learn about manufacturing issues arising at a remote location and they could not easily benefit from the knowledge manufacturing engineers were developing when ironing out design problems and manufacturing-process bugs. As it grew from both internal organic growth and by acquisition, HP developed a more decentralized R&D structure. Each HP division became more independent of Palo Alto by starting and nurturing its own R&D lab.
As an early step in the decentralization of HP’s R&D, the Loveland Division started its own R&D lab in a Quonset hut in 1961. The metal hut had no air conditioning so it was evaporatively cooled in the summer by a lawn sprinkler set at the apex of the hut’s curved roof. The Loveland R&D lab was run by Marco Negrete, who moved to Colorado from HP in Palo Alto to start the new R&D lab. The Quonset hut also housed Loveland Division’s transformer-manufacturing operation. Over time, HP Loveland assumed responsibility for the development of HP’s voltmeters, signal generators, and several other instruments.
A new building purpose-built for HP on land originally purchased by the Loveland Development Fund was ready to occupy by mid 1962. The HP Loveland campus started with one building, tersely called “A,” which had the largest manufacturing floor under one roof in all of HP at that time. Over the decades, buildings “B,” “C,” and “D” were added. Eventually, the HP Loveland facility would house the Loveland Instrument Division (LID), the Calculator Products Division (CPD), and the Civil Engineering Division (CED). CPD would become the Desktop Computer Division and move north to nearby Fort Collins. CED would flourish for a time making distance-measuring equipment but would close in 1982.
The Start of HP Labs
The decentralization of HP’s R&D culminated in 1966 with the formal creation of a separate corporate R&D entity within HP called HP Labs, headed by Barney Oliver and located in Palo Alto. Shortly after its creation, HP Labs finished development on a radical new product: a programmable, scientific desktop calculator. The first impulse was to move this new computing machine into production at HP’s brand new minicomputer division in Cupertino, California. The calculator obviously fit in with HP’s new computing division, which introduced HP’s first minicomputer, the 16-bit HP 2116A, late in 1966. However, the new calculator looked absolutely nothing like a “real” computer and HP’s Cupertino Division wouldn’t touch it but forward-looking lab manager Marco Negrete at HP’s Loveland Division saw a bright future for the calculator and made room for it amongst the voltmeters and signal generators in Colorado.
The HP Loveland Division in Colorado was the company’s first manufacturing operation to open outside of California. This photo of the Loveland facility is from the 1974 HP annual report.