Mentioned Companies: DDD, HPQ, INTC, SSYS, XONE

Could Hewlett-Packard be a Serious 3D Printing Competitor Next Year?

February 09, 2015
5 min read
By: Tasha Keeney, CFA

At Consumer Electronics Show 2015, Intel [INTC] exhibited the new Hewlett-Packard [HPQ] Sprout desktop, the first component of HP’s 3D printing ecosystem. During the next two years, it will introduce a 3D printer and a new printing technology called Multi Jet Fusion.[1] Should players like Stratasys [SSYS] and 3D Systems [DDD] be worried about HP’s new solution entering the 3D printing space? Perhaps, but we will await the details when the product launches in roughly a year’s time.

HP claims that Multi Jet Fusion’s process will be faster and more precise than any existing printer technology, a claim that depends on what is being printed. Any company can target specific applications in an attempt to demonstrate outperformance. That said, HP boasts that Multi Jet Fusion will be able to print 1,000 gears in only three hours, compared to 83 and 38 hours, respectively, for material extrusion and laser sintering technologies which are commonly used by Stratasys’ and 3D Systems’.[2][3] HP also claims that Multi Jet printing precision will be roughly 20 microns, compared to the 200-400 micron precision of an average laser sintering machine. Yet, today Stratasys’ PolyJet technology is already 20% more precise than the expectation for Multi Jet a year from now, as shown in the table below.

sharing economy, 3D printing space, Active management, thematic, investing, disruptive innovation, manufacturing, production, robots, automation, 3d printing,

3D printing has taken over prototyping and small manufacturing batches for two reasons. First, 3D printing is better suited for creating low volume, complex, and customized parts, while injection molding and other traditional processes still win the economics for high volume production. Second, while today’s 3D printing lacks the speed and precision of traditional manufacturing methods, it is improving along a 10-20% technology cost curve, depending on the industry. HP could become a significant disruptor if it could produce in larger volumes than its competitors, which could be the company’s goal for the gear.

So far, 3D printing companies seem little worried about the potential competition from HP. They point out that HP has released few details about its printing process, and that its products won’t be released for at least a year. In the meantime, both Stratasys and 3D Systems and others will be innovating to stay ahead of the technology curve. While HP’s first version of the printer uses thermoplastics, it plans to expand to ceramics and metal parts. Metal focused companies like ExOne (XONE) will have a little more time to innovate.

Interestingly, HP is revisiting the 3D printing space after ending a two year partnership with Stratasys when it restructured in 2012. At that time the technology did not seem to fit into HP’s core technology competencies.

Perhaps HP’s reentry will validate Stratasys’ years of R&D spending, confirming that 3D printing is not a consumer fad. Indeed, the 3D printing space is poised to change the industrial sector dramatically during the next ten to twenty years. According to a McKinsey study, it will scale to hundreds of billions of dollar sales by 2025.

HP may have an advantage with its well-known brand in the printer industry, but its roots are not in the industrial sector (or the 3D printing space). That said, it has financial muscle with a market cap of $73 billion, compared to Stratasys’ and 3D Systems’ $2.8 billion and $3.2 billion respectively. In a year’s time we’ll see what Hewlett-Packard has to offer, and how much more Stratasys and 3D Systems can innovate.

You are leaving
By clicking below you acknowledge that you are navigating away from and will be connected to ARK Investment Management LLC manages both web domains. Please take note of ARK’s privacy policy, terms of use, and disclosures that may vary between sites.