Hewlett-Packard Watchers Fret R&D Shift

"When it comes to the global services market, if they [H-P] are going to become a major player, they're not going to do that organically," says Annex Research President Bob Djurdjevic, who owns H-P shares.

And for all the reverence that R&D receives in the tech world, the real-world payoff does not always match the investment.

A recently released study of the world's 1,000 largest corporate R&D spenders by the consulting firm Booz Allen Hamilton found that there is no significant statistical link between R&D spending and growth in sales and earnings.

That's not to say that companies can get away with no R&D spending, says Barry Jaruzelski, vice president of Booz Allen's strategy and innovation practice. But it's clear that companies can do more with less.

"The quality of the process, your understating of the market and customers, far outweigh trying to have some sort of arms race with your competitors in absolute [R&D] spending," Jaruzelski says.

Booz Allen identified 94 companies that spent less on R&D than the median in their industries over a five-year period yet were ahead of the pack in such key performance metrics as sales growth, gross profit growth and total shareholder return.

Among these so-called high-leverage innovators were Apple, Toyota(TM Quote) and Caterpillar(CAT Quote). Missing from the list was H-P.

If H-P's new-look R&D pays off, that may soon change.