Strategic Case Study

From Craft to Cost

Keysight Technologies and the Innovation Consequences

By Christine Pamela
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The Legacy of Precision

Keysight Technologies carries the engineering DNA of Hewlett-Packard's original Test & Measurement division. As a pure-play leader in electronic test and measurement, Keysight stands at a critical juncture—balancing operational efficiency with the innovation culture that defined its origins.

Annual Revenue

~$5.0B

Founded

2014

Heritage

HP Legacy

Market

Electronic Test

Origins and Lineage

1960s
HP pioneers precision electronic instruments, setting the tone for Silicon Valley's early inventor culture
1999
HP spins off measurement businesses into Agilent Technologies
2014
Agilent separates electronic measurement assets as Keysight Technologies (NYSE: November 3, 2014)
2025
Strategic expansion through major acquisitions including Spirent, broadening into network test

What Keysight Builds

Keysight enables electronic systems across the complete lifecycle: design → prototype → test → manufacturing → network/cloud optimization.

Core Solution Areas

Instrument Hardware Oscilloscopes, VNAs, signal/spectrum analyzers, 5G RF testers, field instruments
Software & Simulation PathWave: integrated design validation, modeling and digital twins
Network & Cloud Test 5G/6G network emulation, data center test, cybersecurity validation
Specialty Verticals Automotive ADAS and EV, aerospace & defense, semiconductor and photonics, quantum measurement
The strategy is clear: capture value earlier in the workflow, and shift from "boxes" to software-centric engineering platforms.

Innovation Portfolio Mapping

Zone Focus Area Keysight Position Weight
Core Incremental improvements to RF instruments Bread-and-butter revenue drivers 50%
Core Adjacent Expand test tech into new sectors EV, ADAS, optical 15%
Edge New software-driven workflows PathWave, cloud-based design and network emulation 20%
Beyond Transformational test for new markets Quantum, 6G, cybersecurity digital twins 10%
Frontier Speculative long-range bets Terahertz, novel sensing 5%

Key Insight: Core pays the bills; Edge is the bridge; Beyond seeds the future. But the shift from Core → Edge → Beyond is not fast enough.

The Reversal of the HP Way

HP's original philosophy was simple: the people who understand the product best should lead the product.

When You Offshore Hardware, You Offshore the Craft

From the mid-2000s, Agilent/Keysight relocated final assembly, calibration operations, and development support to Penang, Singapore, and China.

Tacit Knowledge Relocated RF calibration and analog front-end expertise shifted abroad
U.S. Engineering Pipeline Thinned Senior domain experts retired faster than successors emerged
Role Reversal SEA teams increasingly supporting U.S. engineering
Cultural Drift From hands-on experimentation → commercial optimization mindset
Authority is in California. Expertise is in Penang. Innovation becomes incremental because the true instrument builders are not the ones writing the roadmap.

This creates a clear inversion:

Keysight still delivers strong products. But the cultural engine that made HP a pioneer has shifted gears—and geography—without recalibrating who leads the future.

Strategic Crossroads

Path Forward

A software-defined measurement leader driving the future of 6G, photonics and quantum test

Path of Decline

A premium hardware vendor defending legacy margins in a commoditizing market

To Win the Next Decade

Build AI-Native Workflows

Instead of adding AI as a feature, fundamentally rethink measurement and test through an AI-first lens

Elevate SEA Teams

Treat Southeast Asia engineering teams as innovation centers, not operators—give them strategic authority

Revitalize US Lab Culture

Rebuild a innovation-first culture and reinvest in frontier labs and high-complexity manufacturing in the US so invention and production reinforce each other

Reconnect to HP Roots

Rediscover the courage to invent: prioritize invention before optimization, engineering mastery before margin

The Case Isn't Closed Yet

Keysight's evolution tells a larger story: when a company moves from craft to cost, innovation becomes an accounting line—and the future becomes incremental.

The next chapter depends on whether Keysight rediscovers the courage to invent.

You need the original "toolmakers" to build transformative test systems—and many aren't there anymore.