Rise in graphics revenue
Revenues from HP’s Graphics business vertical continued to rise for the 13th consecutive quarter in fiscal 4Q16. The company supplied over 300 HP Indigo digital presses, driven by a healthy order pipeline.
In September 2016, HP announced its intention to acquire Samsung’s (SSNLF) printer business in a deal valued at $1.1 billion. HPQ is looking to disrupt the printer space using MFP (multifunction printer) technology. MFP technology will replace traditional copiers, and Samsung currently has a portfolio of A3 MFPs. This acquisition will be HP’s largest in the printing segment and is expected to close in 1Q17.
HP values the worldwide A3 copiers segment at $55 billion and expects the transaction to close in the second half of calendar 2017. HP announced that it will launch a “breakthrough portfolio of A3 multifunction printers and services” and will start shipping units in fiscal 2Q17.
Opportunities in 3D printing
HP has been a market leader in the traditional printing business for the past 30 years. The firm is now eyeing the lucrative and high-growth 3D printing market. In June 2016, HP delivered the world’s first production-ready commercial 3D printing system. Its management stated that the new HP Jet Fusion 3D Printing Solution produces superior physical parts at 50% of the cost as compared to current 3D printing systems.
HP further stated that it was building a whole new partner channel for 3D printing and plans to continue to grow its ecosystem of technology partners in industries such as automotive, medical, aerospace, and consumer goods.
As the chart above shows, HP expects the 3D Printing market to grow at a CAGR (compounded annual growth rate) of 30% through 2021. The firm also believes the plastics space will account for over $10 billion of the market. According to HP, it will be able to address approximately 77% of the 3D plastic market, which will drive revenue significantly over the next few years.
HP is working with a number of strategic partners like Nike (NKE), BMW, Autodesk (ADSK), Jabil (JBL), Johnson & Johnson (JNJ), and Siemens (SIEGY). HPQ also launched demo units and prototypes for the partners.