Hewlett-Packard Co. (NYSE: HPQ) is really trying to get its turnaround heading in the right direction. Whether laying off up to 16,000 more workers is the right answer is something we will leave up to the market. What has happened is that CEO Meg Whitman has clarified, outlined and pinpointed the strategy and timeline for when Hewlett-Packard will finally get into the 3D printing business.
As a reminder, Meg Whitman said earlier in 2014 that it could be summer when Hewlett-Packard gets into the 3D printing business. This statement caused a quite a stir, and it would seem that her chief engineers and technicians called her up and said “Meg, no-can-do!”
Again, now we know HP’s strategy for 3D printing. On a CNBC interview on Friday, Whitman said:
We’re focused on business 3D printing, not consumer 3D printing. We’ll announce a 3D printing technology at the end of this year, and we think there’s a real opportunity here.
Whitman further called 3D printing a growth opportunity by calling it an acorn. She said:
This (3D printing) is an acorn that we’re planting that will become an oak tree in the future. This is a business we need to be in. It’s very consistent with our heritage, but we’re doing that in a lot of businesses. You know, innovation, you have to plant those acorns before they become oak trees and you have to have patience in terms of development cycles. You have to continuously and consistently invest in R&D.
So, here is the 24/7 Wall St. interpretation of Whitman’s goal: Expect a roll-out from HP in late 2014 (assuming no further delays), but be patient in how fast this ramp up is. 3D printing leaders like Stratasys Ltd. (NASDAQ: SSYS) and 3D Systems Corp. (NYSE: DDD) will not have to worry about HP crushing them any time soon in their quest to bring 3D printing to the masses. They just have to worry about HP hurting their enterprise level 3D printing, which they of course cannot ignore. That being said, these two leaders will have limited or no real competition from HP this year. Even the competition in 2015 may be just ramping up.
We recently highlighted that a price war has already begun for the smaller format and lower end 3D printers for your home, office, classroom or dorm. 3D Systems and Stratasys have their products available for order now. Why is this a price war before it even gets off the ground? The prices are $999 to $1,395. Imagine what they may fall to over the next decade.
It may be a bit puzzling why HP would ignore a 3D printing ambition for the masses. Perhaps the company just feels like this will not become as ubiquitous as toasters and microwave ovens. Time will tell.
The real thing to consider is that this may only be half of the story. 3D Systems had $513.4 million in revenues in 2014, and Stratasys had $484.4 million in revenues in 2013. All of that was in commercial and enterprise level spending. Thomson Reuters expects that 3D Systems will have revenue of $915 million in 2015, versus $855 million in 2015 for Stratasys. How much of that will come from the big ticket 3D printers for commercial use and how much is from the lower-end market remains up for debate.
It seems as though 3D printing investors are at least somewhat thankful that HP will avoid the mass market consumer 3D printing business. After just over an hour of trading, 3D Systems shares were flattish around $54.95, but that is up from $48 just on this past Monday. Stratasys shares were up only 0.2% at $94.75, but this was down at $88 as recently as Wednesday.
With Friday being the last day before a three-day weekend, it may be a fool’s game to predict how these shares will react to this news on the same day. The real tell will come next week, particularly after all the Wall Street analysts get to chime in.