3D Printing: Some Perspective on Valuations and Why I Hate Clickbait

The other day I read a clickbait headline, fell for it, and read about how 3D printing is “dead”. I had to read down into the article to see that the writer was really saying the consumer side of the 3D printing market is dead, but that’s why they call it clickbait. 

The article and its tone made me realize that these are certainly interesting times we’re living in the 3D printing/additive manufacturing market. Now, I tend to think of things along the lines of Porter’s five forces model, which considers (1) the impact of suppliers, (2) the power of buyers, (3) the effect of new market entries, (4) the threat of replacement and (5) the influence of competitors. Let’s just have a look at that last piece, the influence of competitors for a moment and consider the “death” of 3D printing in light of the competitive environment. 

The two top suppliers of 3D printing systems worldwide, at least in terms of revenue, materials, and services, are 3D Systems and Stratasys. Both companies have had changes at the top in recent months, partially as a reaction to the fact that both companies are being punished in the stock market as they (wisely IMO) shift focus away from the consumer business and towards competition in the professional and manufacturing segments of the market.

Meanwhile, the metal printing segment of the 3D printing market (which includes 3D Systems and Stratasys) in addition to companies such as EOS, SLM Solutions, Arcam, ExOne and other, is in rapid expansion mode as the end-user companies that have been using the technology and reaping its benefits for many years are seeking ways to improve parts production, reduce costs, and dramatically increase cycle times for an ever-growing number of parts and products. The technology is delivering huge advantages right now, and we think it has only scratched the surface. 

Similarly, it seems like there are daily breakthroughs using 3D printing systems in the medical/healthcare industry, which can improve and save lives. Again, both 3D Systems and Stratasys are both key suppliers of 3D printing systems to the healthcare market, which is valued at $3 trillion in the US alone, so how valuable is being a leader in that segment? 

This is NOT just all about prototyping in these industries. First of all, there is nothing wrong with the prototyping use-case, as some of the users we have talked to report that the savings they realize using 3D printers as opposed to more traditional routing and milling processes are enormous. So much so that the running cost of their 3D printer is “irrelevant” given that they are savings days and even weeks of cycle times for product engineers. So it is true that the use of 3D printers for prototyping is really important in terms of reducing cycle times, but there are whole parts of key industries where 3D printing has a huge and important role in production already. Of course, many have probably read about the high profile examples of 3D printed parts in the aircraft industry such as the Airbus A350, where hundreds of parts are in use every day. Another example is in hearing aids, a segment of the healthcare market that manufacturers report is totally dominated by 3D printing as a production tool. There are about 15 million hearing aids sold annually worldwide and one vendor reports that 95% or more of those are 3D printed right now.  

The U.S. is probably the most mature region of the world in terms of 3D printer shipments. Even so we’re projecting shipments of 3D printers to grow at about a 16% rate through 2020. That’s a nice growth rate and factors in the pressure that today’s 3D printing market leaders are facing from competitors within the industry, and we’re presently tracking more than 150 3D printing system manufacturers worldwide. Worldwide is a key word there – as there are key suppliers to the 3D printing market that have emerged from all over the world. In addition to those already in the 3D printing market we’re watching the market leaders in the digital printing business, HP, Canon, and Ricoh, which have all increased their focus on the 3D printing segment in different ways. HP and Ricoh with their own market entries and Canon by expanding its partnership with 3D Systems. On top of that there are still lots of new products and companies entering the 3D printing market even on the consumer side. That doesn’t sound like a “dead” market to me. 

So, I hate clickbait because they often use mis-leading or oversimplified headlines, and I take the bait a lot! The point of the article was not that ALL of 3D printing is dead, just that the consumer side had failed to materialize as some had suggested. At IDC we were never big believers in the consumer side of the market because the use-cases for 3D printing at the consumer level are difficult to justify from a cost and time perspective and the annuity business is challenging as well. On the other hand as we  look ahead (at IDC we’ve just finished the latest iterations of our 3D printing forecasts and spending guides) we project the manufacturer opportunity for equipment, supplies, services in the U.S. alone to grow at a 21% CAGR, driven by professional and production environments embracing3D printing/additive manufacturing technologies.

For more information on IDC report into 3D Printing contact Tim Greene: tgreene@idc.com