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Transcript of 3D Printing
What do Hewlett Packard and the Smith School have in common?
HEWLETT PACKARD -
A BRIEF HISTORY
Founded Jan 1, 1939; IPO in 1957
Audio Oscillator -first commercially successful product; Walt Disney - early customer
Transformed itself into a semiconductor company in the 60's; enters computer market in 1966
Focused desktop computing in the 70s
Entered the inkjet and laser printer market in the 80s
Expanded into personal computing space in the 90s
HP - Compaq merger in 2001; new ticker: HPQ
EDS and 3Com acquisition in 2008 and 2009 marked entry into technology services
HP's Foray into 3D Printing
Acquisition of a 3D printing company
Aerospace and/or Automotive:
Strategic partnership with current customers from enterprise offerings
Medical Product Manufacturing:
Acquisition of a prosthetic company
Strategic Partnership with Value Chain functions - either Suppliers or SW Developers
Personal Computing & Small Business Manufacturing (B2C)
Industrial Manufacturing (B2B)
Consumer Products: $490M
Aerospace & Automotive Manufacturing: $280M
Medical Product Manufacturing: $280M
Architectural Designing: $140M
BARRIERS TO ENTRY
Manufacturing 3D Printers = high capital costs
Requires skilled labor
The industry is in its nascent stage - Understanding the scope of 3D printing (in terms of capabilities and ability to mass produce/print) will take continued R&D
No brand notoriety yet
Demand is not particularly strong due to constraints
Loosening the above constraints wil increase Demand
Traditional manufacturing facilities still exist
Industry is in "introduction" stage and could replace traditional manufacturing facilities
I.e. 3D Printing is a substitute
Multiple suppliers that supply/feed printers w/raw materials ==> Downward pressure on price
Some of the raw material is very rare e.g. metal powders ==> Upward pressure on price
As 3D printers become more differentiated, Supplier Power will increase
HP's CEO from 1999 to 2005
1980 MBA graduate from the Robert H. Smith School of Business
HP is a mature company and has remained successful by expanding into new industries at the right time
HP: 2014 Industries and Earnings
HP: 2D Printer Manufacturing
3D Printing Industry
HP announced entry into 3D printer space on March 20, 2014
Why we are here?
Is 3D printing a natural progression of 2D printing?
Is the timing right?
How does the 3D printing industry look?How should HP position itself ?
Which market segment should HP focus on?
HP is a leader in the 2D printer market, and its market share was nearly 40% in 2013.
Uses the Razor-Blade strategy to sell 2D Printers
achieved economies of scale to subsidize printers and generate revenue from supplies/services
Well established distribution channel.
Revenue from Printing division has been decreasing (even though almost 25% revenue is from printing)
Peripherals manufacturing industry to reduce by 4-5% from 2015 - 2020.
BUMO 756 : Industry Analysis
Answer: Carly Fiorina
Revenue Growth (+) through 2020
Medical Device = Highest Growth
Auto = Lowest Growth
Consumer = Steady
HP core competency = printers
Printers and M&S account for > 60% of $1.4B
Moderate & Increasing
Additive Manufacturing Industry
Solid Image Processing Industry
Originally an automated method for producing prototypes.
Reductive vs. Additive processes:
Producing prototypes is typically a
manufacturing process e.g. concept car models
3D printing is an
process where each layer is printed and constructed forming a 3D object
Single Manufacturing Process
Demand is Dynamic
Potential for Highly Customized, Large Scale Manufacturing
Economies of Scale & Scope!!!
3D printing is now being thought of as a method of production that has the potential to challenge global delivery models.
Allows for a model driven by Cost AND Demand
3D Printing (Cont...)
Serious implications for the Value Chain...
Supply chain costs are ‘rebalanced’
Expect a transition away from producing goods in remote, low cost regions overseas i.e. 3rd world countries
From ‘outsourcing’ to ‘nearsourcing’
The Value Chain
Less emphasis upstream i.e. (supply side logistics) as these functions now bundled in manufacturing facilities
Less emphasis downstream (i.e. manufacturer-wholesale-retail relationship, end-user logistics) as build-to-order fulfillment by manufacturer
New role of Supply Chain Logistics emphasizing...
Reduced labor costs
Less material waste
Better quality control
Allows mass customization
Lower inventory levels
Lower batch quantities
Localized manufacturing and delivery
Removal of storage, handling and distribution costs
Greater responsiveness to market demand
Better for the environment
Lack of working knowledge
Offset reduced labor costs
Restrictions on materials
New Form of 'Pirating'
A quick looks at stock performance of the top two 3D Printer manufacturers indicates high growth and volatility!
High fixed Costs
Industry expected to grow
Moderate level of competitive offerings
Long Term & Short Term Strategies
Short Term: Focus on
Ready to adopt NOW
Reduce Supply Chain Costs
Transition to 'nearsourcing' to meet dynamic demand
* Viewed in the context of the Product Life Cycle
Long Term: Focus on
Continued R&D to enhance tech. and simplify consumer 3D Printing
Build a Platform & Manage Complimentors!!!
Focus on SW Development
Control the Supply Chain and/or
Control Downstream functions i.e. Retail
SW associated with 3D Image/Input is a major part of 3D Printing and could be a serious threat to entry as the industry matures
Market concentration is low
High reliance on suppliers of key inputs
Competing on price, then eventually differentiation
Barriers to entry are medium and are steady
Industry profitability is increasing
Analysis: Players’ Influence on Profitability