Hewlett-Packard Labs director Dick Lampman, whose research helped transform HP from a supplier of computer hardware and measurement instruments into a more diversified company, said Friday he would retire next year after 35 years with the company.

Lampman, 61, joined HP in 1971 and held a variety of research and management jobs until being named director of HP's research group in 1999. He also holds the title of senior VP. Under Lampman's direction, HP researchers helped the company enter the digital photography market, invent the architecture behind the Itanium processor, and build software and IT services business. Until then, HP was best known for its business computers, pocket calculators, and industrial measurement equipment.

More recently, HP researchers made contributions to fields including nanotechnology, grid computing, and digital printing. Hewlett-Packard employs 600 researchers at its Palo Alto, Calif. headquarters, as well as in Bangalore, India; Beijing; Bristol, England; Haifa, Israel; and Tokyo. The company is also scouting for a research location in Russia.

Lampman made the decision to retire personally, a company spokesman says. Executive VP Shane Robison, who leads technical strategy for HP, will lead an immediate search for a new labs director. HP is looking both inside and outside the company for a replacement, the spokesman says. He declined to name candidates or a deadline for making the decision. Lampman will stay with the company until his successor is named and assist with the transition.

Lampman's retirement comes as HP is recording strong revenue and profits under CEO Mark Hurd but fighting the aftermath of a boardroom spying scandal that led to the resignations of former board chairwoman Patricia Dunn, general counsel Ann Baskins, and other employees. On Thursday, HP agreed to pay $14.5 million to settle a civil lawsuit brought by California's attorney general related to the case.

HP reported revenue of $91.7 billion for its fiscal year ended Oct. 31, surpassing IBM to become the world's largest supplier of IT. Profits surged to $6.2 billion, from $2.4 billion the year before.

HP was awarded 1,797 U.S. patents last year, No. 3 on the U.S. Patent and Trademark Office's list of top recipients. Early contributions from HP Labs included the pocket scientific calculator, light-emitting diodes, and inkjet printing.