Now that investors have had a moment to digest the news that Hewlett-Packard Company (NYSE:HPQ) will be entering the 3D printing market in 2016, with a homegrown technology it's calling Multi Jet Fusion that it claims is at least 10 times faster than leading industrial 3D printing technologies, it's worth examining how it could affect 3D Systems Corporation's (NYSE:DDD) underlying business and corresponding stock price. After all, 3D Systems could have much to lose given HP's deep understanding of inkjet technology, which it's adapted for 3D printing.

3D Systems on competition
3D Systems' management subscribes to the belief that the best way to become a meaningful player in the 3D printing industry is to offer a wide array of 3D printing technologies, because different technologies are often best suited for different 3D printing applications. In theory, the more applications that a 3D printing company can target, the more opportunities it could have to generate revenues. 3D Systems' portfolio consists of seven distinct technologies, meaning it should have the biggest market opportunity in 3D printing.

Although mindful of the competition, 3D Systems believes that it's the most vertically integrated 3D printing company in terms of having the most expansive 3D printing technology portfolio in the industry, and this gives it a first-mover advantage over the competition. During 3D Systems' second-quarter earnings call, CEO Avi Reichental acknowledged HP as a competitor with "unlimited resources, capabilities, and technologies," but also acknowledged the high level of complexity required to become a meaningful and relevant 3D printing player in the design and manufacturing world.

Based on this logic, one could argue that HP's entrance into the 3D printing space will likely be muted, because it will initially be based on one technology. Historically, this logic has proven to be true, but it fails to take into account the potential for breakthrough innovations in 3D printing technology that could defy conventions.

The way it's been presented, HP's Multi Jet Fusion 3D printing technology holds the potential to become a dynamic 3D printing technology platform with far greater flexibility than anything available today. Beyond thermoplastics, HP is currently investigating whether Multi Jet Fusion will also be compatible with ceramics and metals. If HP can successfully create a 3D printing platform that can easily switch between materials, it could have profound implications for the 3D printing industry. For 3D printing service bureaus, the value proposition that this would offer would mean that they may be able to bring new materials online without having to purchase additional 3D printers -- currently the status quo.

Longer term, HP envisions it could leverage Multi Jet Fusion to modify color, elasticity, texture, strength, detail, and electrical and thermal conductivity -- within a single 3D-printed part -- at the voxel (3D pixel) level. Although this vision is currently a moon shot, it could fundamentally change how products are made and would likely help drive stronger 3D printing adoption in manufacturing longer term.   

Tick, tock
HP's 3D printer isn't expected to reach the market until sometime in 2016, meaning 3D Systems has a couple of years to respond to Multi Jet Fusion. In June, 3D Systems announced that it had delivered a working "factory from the future" prototype for Google's Project Ara, which aims to create customized modular smartphone components on a larger scale.

To meet the complicated needs of creating a larger-scale customized manufacturing platform, 3D Systems opted to create a 3D printing "racetrack" whereby print beds move on a track to different print head stations, and multi-material smartphone components with conductive properties can be made in a matter of minutes -- up to 50 times faster than existing jetting technology. The video below highlights this potentially breakthrough technology that could pave the way for larger-scale 3D printing manufacturing.

Source: 3D Systems 

Is HP a massive threat?
Later this month, 3D Systems is expected to showcase its 3D printing racetrack design in Frankfurt, Germany, at EuroMold 2014, the world's largest additive manufacturing conference, which should give investors an opportunity to better understand the technology and how it compares to HP's Multi Jet Fusion.

Until then, 3D Systems stockholders shouldn't discount that HP is a formidable competitor with deep pockets and comes armed with decades of experience manipulating droplets with 2D printers. Combined, these characteristics could allow HP to become a sizable threat to 3D Systems' underlying business and stockholders, especially if HP aggressively prices its 3D printer to attract market share.

While the financial impact on 3D Systems' underlying business will likely be negligible for the next few years, I still think it's advisable to monitor the trajectory of 3D Systems' printer revenues on a quarterly basis, because it may provide insight into how 3D Systems products are faring in the marketplace. Going a step further, investors could also monitor the company's 3D printer gross profit margins to determine if its products remain differentiated in an industry with increasing competition.

Steve Heller owns shares of 3D Systems and Google (A and C shares). The Motley Fool recommends and owns shares of 3D Systems and Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.