HP delivered a strong fiscal second quarter driven by PC average selling prices and a beefed up printing unit via acquisition, but the real question revolves around when 3D printing and additive manufacturing will be material to the company.
After all, HP won’t be able to keep growth going unless it finds a new trick. That trick is most likely 3D printing and its impact on additive manufacturing.
On those fronts, HP has been delivering some solid announcements of late. Consider:
- HP landed big 3D printing partnerships with Jabil, a contract equipment manufacturer, and reorders from Forecast 3D.
- The company has expanded its 3D printing efforts into Mexico, which is a major manufacturing hub.
- HP is also landing more orders and upgrades to its Jet Fusion 4210 3D printing platform.
- 3D printing is being used in HP’s own supply chain.
- And the company has been growing its partner and ecosystem for 3D printing.
If you add up the moving parts, there are good reasons to be bullish about HP’s 3D printing business. But you won’t get a ton of detail about the future of HP. HP’s second quarter earnings conference call featured a lot of talk about integrating the printing business from Samsung.
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Clearly, the Samsung integration is more pressing, but the growth, innovation and potential rests with HP’s 3D printing business. Yes, HP was late to the 3D printing party, but Stratasys is looking for a new CEO and 3D Systems has delivered up (and down) results. Both Stratasysand 3D Systems are struggling to hit estimates.
So why not talk up HP and 3D printing. CEO Dion Weisler noted that there’s a long runway for the business. He said 3D printing is more of a 5- to 10-year journey.
I’m really excited about the leadership position we’ve taken in 3D Printing and the segment where we operate in a very short period of time. We’re on the path towards disrupting this $12 trillion global manufacturing industry. But it’s a long path. I’ve always said this is a 5 to 10-year journey, and we’re making the investments today to really secure shareholder value, both today and for the future. We’re seeing significant sales momentum, including repeat orders from customers as well as service bureaus.
We’re expanding our adoption across key verticals. We’re seeing more than 50% of the customer benchmarks, so these are when a customer is contemplating buying 3D Printing, they’ll give us a file and I’ll say, can you make this path for us? We want to see and test this path, and we, of course, are checking what that path is for and then 50% of the cases, therefore, production applications, which is really what differentiates us with this technology.
In this quarter, we also continue to grow unit placement across all verticals and geographies, including new customers in the automotive and electronics industry. This is a great business for the long time and we remain really confident.
I don’t doubt that Weisler is upbeat, but some directional figures would be nice. What’s the annual run rate for the business? Given HP’s revenue base we may not know for a while what 3D printing can deliver in terms of sales.
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Patrick Moorhead, principal at Moor Insights & Strategy, said HP’s 3D printing business is promising because it is landing manufacturing deals instead of prototyping wins.
Moorhead has a point, but for now HP’s 3D printing business remains a guessing game. And we may not know for a while. HP’s 3D printing business would have to deliver sales of $5.6 billion mark to be material to an annual sales base estimated to be $56.5 billion in fiscal 2018.