3dp_memjetlawsuit_HP_logoLet’s be honest, at this point Hewlett-Packard is desperate for a win. After years of terrible leadership and subpar innovations the technology giant has watched its reputation crumble and its business presence start to wither. As a last ditch effort the company has decided to split itself into two independent businesses, spinning off their actually profitable server and business consulting services out on its own and leaving the beleaguered PC and printer half of the company to dig itself out of their hole. And the new company seems to be putting a lot of their hopes and dreams on 3D printing being the application that saves them.

The first thing that HP did after the split was officially announced was create a new 3D printing division for the company. Considering that HP has only built a single 3D printing application that hasn’t even come out yet, that was a pretty clear sign that they really, really need this to work. But the reality is that even for a huge company like HP to succeed in the relatively small 3D printing sector, it is going to take a lot of time and hard work to build a customer base. They certainly have an existing distribution network that is virtually unrivaled, even among their PC and 2D printer competition, but they’re still very new to the game.

3dp_hp3dprinting_printerBuying an existing 3D printing company is an obvious solution for HP, not only have they done it before with their 2D printer business, but in a year that has seen the larger 3D printer manufacturers finding themselves floundering a bit, several of them would make tantalizing targets. There have been rumors of them looking to buy for a while now, but it looks like those rumors are heating up again this week. According to a recent research note by Jefferies analyst Jason North, HP may be taking a good, long look at 3D printing giant Stratasys because simply buying their way into the industry would save the company one to two years of network building.

“HP Inc. said it’s open to make acquisitions and partnerships in 3D printing and that they’ll eventually need about 4 different 3D printing technologies. 3D printers are mostly sold via resellers that have exclusive relationships with a specific 3D printing OEM. Since HP will target the middle-to-high-end of the market, we don’t think that the general IT distribution channel or the high-end specialty printer channel where HP is well positioned will be of much use unless a substantial of amount of end-customer and reseller education occurs. An acquisition would likely expedite HP’s ramp by 1-2 years,” North wrote in his research note.

Stratasys is clearly the most obvious choice here, no doubt about that. They are the largest 3D printer manufacturer in the world, have a massive reseller network and produce multiple 3D printers with a wide variety of printing technologies and processes. Considering that HP so far seems to be skipping the desktop and consumer market in favor of the commercial and industrial, it makes sense to just buy the current leader in that area. The fact that they would be picking up MakerBot, and a huge pre-existing user base, would just be a nice cherry on top.

hp2Curiously, both companies are remaining silent on the issue, giving TCB some pretty strong “no comment” comments. Joe Hiemenz from Stratasys told them that they don’t comment on market speculation, and they received an echoing statement from HP’s Cherie Britt. Of course their lack of comments doesn’t necessarily mean that there has been talk of a buyout, but neither statement is especially convincing that there hasn’t at least been a discussion. And for the newly installed VP of the 3D printing division Stephen Nigro the idea isn’t even close to being out of the question.

“It’s a very dynamic industry right now. If you think about how we built our 2D printing business, it was built on ultimately three to four technologies. Some of that we’ve built organically and some of that we bought and some of that we partnered. As you think about this business going forward, we’re going drive it off organic innovation because we actually have some assets that will give us a fundamental advantage in the market. But as we understand the market, without a doubt we’ll look at partnering. And if there is a kind of the right opportunity out there, we could even acquire. If you think about our 2D model, how we’ve built it over the years, that’s probably not a bad roadmap of how we will build our 3D business,” Nigro said at a recent analyst meeting for HP.

3D Systems (source) logoStratasys isn’t the only option of course–their rival 3D Systems would also make a great deal of sense. While they don’t have nearly as large of a reseller network in place, especially throughout Europe and Asia, they have a strong presence in North America and a widely recognizable brand name. And the smaller reseller network may also be an advantage as there would be less pushback from partner companies uninterested in the massive changes that come from a buyout. The newly branded HP name, backed by 3D Systems technology, could be set up as an obvious alternative to Stratasys’ existing, and typically unchallenged, network.

As always with industry speculation, none of this will be confirmed until the companies either tell us, or make a different move. However, one thing is perfectly clear in all of this, HP is coming whether we want them or not, and damaged as the brand may be, they’re not stupid. The 3D printing industry isn’t suffering a shortage of commercial or industrial machines and applications, so there is a very real possibility that those developed by HP could receive a lukewarm response that would be disastrous to the newly slimmed down company. The obvious way to avoid that risk is to simply buy your way in and forgo the hard work of building up an industry presence yourself. And in a year that has seen the stock prices of both Stratasys and 3D Systems take some tumbles, it isn’t difficult to imagine either company being willing to sell in order to get themselves back on top.

What are your thoughts on HP’s possible forthcoming acquisition spree?  Let us know in the HP 3D Printing forum thread on 3DPB.com.

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