You would have to have your head in the sand to not notice the tremendous amount of mergers and acquisitions going on in the market today.  With all of the cash awash in the market (as noted in Ahsan’s excellent article last week) there is reason for even more buying in the future.  Indeed, many analysts see more M&A activity in the coming couple of years.  Even China came aboard, purchasing a part of a U.S. hedge fund last week.  Big companies are strategically grabbing up competitors and other players who they think can contribute to their package.  In light of this, we must ask when and if Hewlett Packard will consider Microvision (symbol MVIS) as an acquisition target.  Why?  Microvision has cutting edge technology that would upgrade HP’s intellectual property in an emerging area – MEMS.  Micro-Electro-Mechanical Systems (MEMS) is the integration of mechanical elements, sensors, actuators, and electronics on a common silicon substrate.  This technology is the next step in miniaturization of hardware for various types of equipment.  Microvision is putting this technology into a variety of areas.  One of the more interesting  and intriguing aspects is the incorporation of this new ability to capture light and put it into play in printers, scanners – and even copiers?   In 2005, Microvision made this interesting announcement:

Microvision Inc. (Nasdaq:MVIS), a leader in light scanning technologies, today announced that it has signed its third contract with a major Asian manufacturer of printers and office equipment for further development of a MEMS-based scanning engine for high-speed laser printers utilizing Microvision's proprietary technology. This contract builds on the design work and prototype development resulting from two earlier contract awards. For confidentiality reasons, the name of the manufacturer and other details were not disclosed.  "We are very pleased with the progress we have made to date in developing a radically new printing head design that is expected to provide advantages in size and cost not seen in today's laser printers."

One analyst speculated that Microvision’s partner, hidden by non-disclosure agreements, was Epson:

A piezo-electric mirror that can drive a color laser printer at 40 pages per minute: beyond the reach of anything ever built by Hewlett Packard.  This is being developed by an unnamed Japanese partner.  But if you had to guess, think Seiko-Epson (Tokyo: JP4314750004).

Indeed, that turns out to be the case as there are approximately 20 patents listed on the European patent listing with Microvision and Epson.  The latest in the string of these joint filings were listed just a few months ago.  The patent family can be seen here.

Is Microvision planning an end run around current printer technology?  Is it bringing a quantum leap that bypasses the current working machines?  If so, HP might be smart to stake out an ownership position in Microvision.  Cisco has been buying up promising competitors for years.  So has Google and Microsoft.  HP would be wise to take a play from their playbook.  And along with gaining access to the quantum leap in printer technology, HP also gets the bonus of several other promising revenue streams.  For instance, Microvision is going to put this technology into cars (dashboard visuals) and most promising – cell phones.  The cell phone market is going to be massive:

Nokia forecasts there will be four billion mobile users by 2010 and that growth will come from emerging markets in the Asia-Pacific region. Mobile-phone replacement already accounts for half of Nokia's total sales in emerging markets and China is the biggest single market for its most expensive multimedia phones. About 12 million subscribers are added each month in China and India combined – see this article.

And yes, Microvision has its foot in the computer arena as well.  Microvision is working with its former subsidiary, Lumera (Microvision currently owns stock in Lumera) in some high tech advances for computers.  The ability to grab this technology in its nascent stages would make HP a player in the world of technology to come, and would be a very smart business move.

(Disclosure – the author owns shares in some of the stocks mentioned in this article).

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