Late to the party, Hewlett-Packard Co (HPQ) now wants in on the 3D printer business. Just breaking hours ago, according to The Register, CEO Meg Whitman told the Canalys Channels Forum in Bangkok that HP plans to get in the 3D printer market in mid-2014. And she alluded that their printers will be cheaper and faster than existing printers.
There’s been lots of speculation today on investing forums as to whether or not HP will grow their own or buy an existing company such as Stratasys (SSYS) or 3D Systems (DDD). And investors also wondered if HP developed their own printers, what the effect will be on both of these existing big players.
I’ve thought about this before today’s news, as it’s pretty obvious that HP needs a new business line and adding the Z axis to their printers makes obvious sense. My thinking is that they would be foolish not to purchase Stratasys sooner than later, before it becomes even more expensive. They are the right company for HP, as opposed to 3D Systems, who is just too spread out among all sorts of not necessarily well-connected businesses. As you may know, they have purchased about three dozen companies in about as many months — that’s a lot for HP to assimilate. Stratasys is much easier to digest with their laser focus on their main business.
If HP were to buid their own printers, it would be years before HP would be able to create the trust and leadership that the two existing printer companies already have. When companies invest tens or hundreds of thousands of dollars (let alone millions) in 3D printers, they want to know they are buying a solution that is proven to work with the staff to support it. While HP spent years creating this goodwill, Stratasys, 3D Systems and other companies would be making billions.
It would be far less expensive for HP to purchase Stratasys right now for a premium over the $5 billion market cap it now has. Let’s say it would cost them $8-9 billion to make the acquisition — that’s less expensive than the missed revenue while they take years to establish their own brand. And then there is the value of the hundreds of patents that would come with the company, and hundreds more pending.
What do you think? Please use the comments section to let me know.