Stratasys made big waves yesterday by announcing a distribution partnership with HP. It got Stratasys a lot of PR and goosed their stock by 40%+. It is a big announcement by the standards of additive fabrication, but I don’t think it is the turning point that Joris from Shapeways does. I think he is right on about the PR related aspects and share his general sense of enthusiasm. Read his post, it is well worth it. I see this deal as “Desktop Factory 2″. It is a great story that gets people excited about 3D printing, but delivers little substantive change in the end.
I work on a lot of private label deals. They can be great sources of distribution for smaller technology companies, but can also fizzle quickly if the distributor doesn’t see immediate returns, if the executive in charge is promoted, or a number of other factors change. I could very easily be wrong and this could be a sea change moment, but there are a number of roadblocks in the way.
- Technology differences are still very real. 2D printing is largely a commodity business now. There are differences in the 2D printing technologies, but the gulf between a Xerox and HP printer isn’t as vast as that of an Mcor to a ZCorp to an Objet to a UPrint. I’m sure HP’s team can muscle some extra sales, but Stratasys stated they expect this distribution to increase sales 25X per year. If a project requires the accuracy of a Viper or the versatility of Connex the Stratasys models won’t be viable substitutes.
- HP only gets access to the UPrint and Dimension lines, the lower end Stratasys products. Will the the customers who are in need of high end $20K HP printers be able to get by with entry level 3D printers?
- The Stratasys team stressed architects as an important growth market during the analyst call. I don’t see the Dimension or UPrint systems being good fits for this customer. They produce small, fairly lo-res, and monochrome parts better suited for product engineering. I think ZCorp has the most compelling solution for architects with large format, full color prints.
- Zcorp is powered by HP. At least their new ZPrinter 650 is. It would make sense for HP to push their own platform. HP may feel like they already have leverage over ZCorp so a deal isn’t needed, but it is hard to believe they wouldn’t want to highlight the “trusted ink jet technology”.
- Co-exclusivity: the deal is co-exclusive for one year. Stratasys can’t work with any other 2D printer companies and HP can’t work with another 3D printer company. This is a fairly normal term, but I can’t see HP ignoring all the amazing innovation happening at ZCorp, Objet, and 3D systems long term.
My guess would be that Stratasys facing a portfolio of expiring patents gave a great deal to a massive marketing partner in the hopes of quickly increasing their install base. It also gives the Stratasys stock a nice bump after a dismal year keeping shareholders happy. This deal could work out great, or in a years time HP could realize that there are a bunch of partners with new and improved technology and leave Stratasys for a newer, shinier partner. In any case HP is just taking on the B2B sales channel so it will still be a while still before we can pick up a Stratasys at Staples. It is exciting for sure, I just wouldn’t expect it to change the market dynamics drastically.
I’m increasingly impressed by the MakerBot project and believe they will be the more likely source for home 3D printing in the near term, if they want to be (as opposed to being a cool open source project). In any case, more proof that we live in exciting times!
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