I have been an admirer and believer of the 3D printing industry for some time and my previous posts have covered the overall industry as well as major players. Finally, some of the big Wall Street firms are now starting to weigh in and predict a massive 3D printing industry in the near future. Credit Suisse is saying that even the 3D printing companies are being conservative when it comes to stating the future growth of the industry. The 3D printing industry will be way bigger than the expected size in the near future. These predictions prompted me to take a look at the overall industry and the arguments for and against the 3D printing industry.
Like many other debates, the fans and non-believers are standing at the opposite extremes when it comes to the 3D printing industry. Fans believe that the industry will take over the conventional manufacturing and completely revolutionize the manufacturing industry. On the other hand, non-believers say that it is a hoax and 3D printing will disappear into thin air. For me, both of these arguments are wrong: the fans are overhyping the industry while the non-believers are undermining the actual potential of the industry.
We need to look at how the industry is working - a lot of manufacturers are using 3D printers to make tools, jigs and moulds to complement the conventional manufacturing process. Engineers at BMW use 3D printers to make tools to position parts - prototyping and designing is another way 3D printing is complementing the conventional manufacturing industry. So, 3D printing is not just a rival but a complement at the same time.
3D printing industry is still some way off from achieving full scale mass production. There are small components and some medical devices that are being manufactured, but the mass production is not to be seen anywhere. However, this does not mean that we will never see mass production by 3D printers (obviously not every segment of the manufacturing) - there will be some industries that will still require conventional manufacturing process due to the cost and size factors. In my previous article about the 3D printing industry, I mentioned the size of the global manufacturing industry (about $10.54 trillion). At the moment, 3D printing industry stands at just below $2 billion a year. It is clear from the overall size of the manufacturing industry that a small portion of the industry moving to 3D printing will massively boost the size of 3D printing industry. Taking these figures into account, it is easier to see why Credit Suisse is predicting explosive growth in the size of the industry.
Who Will Benefit the Most?
Now let's look at the players that stand to benefit the most from these changing dynamics of the industry. While there are many players in the industry; 3D Systems (DDD) and Stratasys (SSYS) have left most of the competitors behind and currently hold the largest chunks of the market. Before going into the company specific analysis, I will briefly explain the major segments of the industry.
- Medical Devices has been one of the most rapidly growing segments of the industry - a large number of labs are now using 3D printers to print medical devices. Stratasys has an upper hand in this segment (after Stratasys merged with Objet in December last year).
- Hobbyist and Small scale manufacturing market is also growing at an exceptional rate and 3D Systems have exploited this growth brilliantly by offering 3D printers and a large variety of materials. The company mainly faced competition from small manufacturers, but the recent acquisition of Makerbot by Stratasys has brought these two giants face-to-face in this segment of the industry.
- Industrial Application is the third and undoubtedly the most important segment of the industry. As I mentioned above, 3D printing is mainly used in the manufacturing process to make tools, prototypes and designs. There are a small number of the final products also available but the size is still too small to impact the industry. Stratasys has an edge in this segment due to its impressive portfolio of industrial printers. The main growth for the 3D printing industry will come from this segment in the future as the technology evolves and makes it possible for 3D printers to mass produce.
In my opinion, both of these companies have the portfolios to exploit the expected growth in the industry. Slowly, we will see competition intensify, but currently these companies are operating without serious competition - moves made by Stratasys indicate that we will see both these companies competing in the same segments. However, the growth prospects of the industry should be enough for both these giants to grow.
Investors who have shown confidence in the 3D industry have been rewarded handsomely over the past year. The next five years will be very exciting for these players as well as investors. I expect these companies to grow substantially and take the major portions of the market. Through their experience, the management teams of both these companies have built very impressive networks, which will be an important factor in the future when the industry starts to see some serious competition.