Stratasys, Ltd. (SSYS) Breaks Into Desktop 3D Printing

It has not been long since Amazon.com, Inc. (NASDAQ:AMZN) started selling 3D printers. This move was a signal to the market that 3D printers are not only for corporations and industrial designers, but for ordinary people as well. There are more ordinary people than industrial designers, right? This is why 3D printing firms have turned their attention towards the retail customer.

In my recent article, I noticed that Stratasys, Ltd. (NASDAQ:SSYS) lacks relatively cheap 3D printers that it can offer to the mass market. I stated that the company is risking losing the market to competitors like 3D Systems Corporation (NYSE:DDD) if it is not fast enough to enter the desktop printer market.

The deal

As it turned out, Stratasys’ management was thinking in the same direction. The company has announced that it is acquiring desktop 3D printing company MakerBot. MakerBot, which was founded in 2009, is a leader in desktop 3D printing. The company has sold more than 22,000 3D printers since it was founded. It has recently gained momentum, and has sold 11,000 of its latest MakerBot Replicator 2 desktop 3D printers in the last nine months.

The deal is expected to cost Stratasys, Ltd. (NASDAQ:SSYS) around $400 million. The transaction is expected to happen in stock, so cash position would not be affected. In addition to desktop 3D printers, MakerBot possesses the thingiverse.com portal. This portal offers 3D product files for download, and is the largest database of such files.

Back in the game

After this move by Stratasys, 3D Systems gets a serious competitor in the desktop 3D printing field. Sure, MakerBot already was a competitor before it was acquired by Stratasys, but now, it is powered by the financial and marketing strength of a bigger company and becomes even more dangerous.

The market is still in its early days. Stratasys, Ltd. (NASDAQ:SSYS) estimates that 70,000-80,000 desktop 3D printers would be sold this year. This is twice more than the amount that was sold last year. If we assume the same growth rates, the market would be eight times bigger in just three years. The price of leading desktop solutions is expected to fall to $1,000, and this brings us to a market size of $640 million. A sum worth fighting for.

Retail? Not for all

Not everyone is rushing into retail solutions. ExOne Co (NASDAQ:XONE) is making complex industrial 3D printing systems that typically cost around $1 million. ExOne’s unique selling point is the possibility of using sand as a material. It is its weakness at the same time. While producers can make money selling specific plastics for their printers, ExOne could not sell sand.