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HP’s bold plan to become the first mainstream 3D printing company

HP’s vision to merge the digital and physical worlds — “Blended Reality” — could help it become the world’s first mainstream 3D printing company. (Evan Agostini/AP)

It’s a problem faced by every market leader: What do you do when your core products are showing signs of being disrupted by new technologies and nimbler competitors? You can either let someone else disrupt you, or you can disrupt your own business model. HP has apparently chosen the latter option, rolling out two innovative new products as part of a strategic vision (“Blended Reality”) to transform the company into the first mainstream 3D printing company.

“Blended Reality” describes the new ecosystem that HP is creating to blend together the physical and digital worlds. What it means for consumers is a new way to work in 3D rather than 2D by challenging conventional notions of what computers and printers can do. It’s about moving beyond the keyboard and mouse. The first of the two products — the $1,899 HP Sprout — is essentially an enhanced Windows PC that includes a 23-inch screen, a built-in projector with cameras, and a touch mat for manipulating images. In layman’s terms, the new HP Sprout means that consumers will be able to create, design and manipulate 3D designs with their hands in an immersive environment. Once consumers have a 3D design ready, they will be able to either order their creation online from a 3D printing service like Shapeways or go into a retail location, where it will be printed for them using HP’s new Multi Jet Fusion 3D printing technology.

That’s an important point — a consumer can’t go into a retail store yet and buy an HP-branded 3D printer. For now, if you want to 3D print at home, you’ll have to buy a 3D printer from a company like MakerBot. However, since HP already dominates the market for 2D desktop printers (two out of every three 2D printers sold are made by HP), it’s possible to imagine a point in the near-term future where HP could also sell personal 3D printers in a retail location such as Best Buy or Staples, right next to its 2D printers.

And, by partnering with Crayola, Skype and Martha Stewart to create new apps for its “Blended Reality” ecosystem, HP has plans to take 3D printing even deeper into the mainstream. This might mean anything from new educational experiences for kids and schools, to new creative experiences for designers. Imagine seeing a product on a 2D Web site, seeing exactly how it would look in your home while being hooked up via Skype, and then later ordering the product to be printed in 3D. That’s one of the scenarios being considered by HP.

HP is aiming as well at the commercial 3D printing market, where it wants to faster, cheaper and better 3D printing functionality to architects, industrial designers and urban planners. At the big launch event in New York City, HP highlighted an aggressive goal — to create a “tool for the next industrial revolution.” It’s not just about faster, cheaper and better 3D printing technologies — it’s about re-imagining old industries for the 3D printing revolution. Imagine automakers rapidly prototyping new types of cars or industrial designers creating new engines for airplanes, all in 3D.

Which is not to say that HP is going to make a 3D printing revolution happen overnight. The Multi Jet Fusion technology won’t be fully ready until 2016. And, while HP has received a lot of advanced praise for “Blended Reality” — with some suggesting that the new HP Sprout would be “a desktop for Dali” — there’s still the very real task of convincing average technology users who aren’t Da Vinci to embrace 3D printing technology.

Yet, if it does remake itself into a 3D printing company for the twenty-first century, the new HP would almost surely receive a higher valuation from Wall Street than it is getting now. By almost any estimate, the 3D printing market is en fuego while the 2D printer market has reached peak growth capacity. According to consensus estimates from Wall Street equity analysts — the people who are paid to value companies — the market for 3D printing could grow at a compound annual growth rate of between 18 percent and 34 percent between now and 2020. That’s the type of double-digit growth that HP wants to tap into.

Of course, critics will contend that HP is doomed to become the next Kodak, a once-great company that never recovered when its core market — analog photography — got disrupted. In the case of Kodak, you have a once-great company that completely failed to see the whole digital photography revolution happening. The company was forced to sell off its patents portfolio for peanuts. You could make the case that going from analog to digital photography requires the same leap as going from 2D to 3D printing. That’s a tough hurdle.

What gives hope that HP won’t become the next Kodak, though, is that HP is starting the process of reinventing itself for the 3D printing revolution early enough that it still has room to maneuver. The company is still the market leader in 2D printers, selling more than its next 10 competitors combined. The company still banks over $5.4 billion in profits annually.

And, as HP CEO Dion Weisler pointed out at the launch event in New York, in an effort to stay ahead of the curve, the company is now ready to accept products in the realm of “pure invention” – technologies that are even wilder than 3D printing, wearables or the Internet of Things. During the HP launch event, it was even suggested that “3D renderings” might one day replace the photograph. (If so, that means HP might become the next Kodak, but not in the way you might think.)

In the case of HP, you have a true Silicon Valley innovator that has already withstood the test of time. For 75 years, the company has been synonymous with innovation and the start-up culture. Now comes a huge new test — whether the company’s customers will be inspired to form their own 3D printing ventures in garages, lofts and studios the same way the computing industry’s pioneers once did.