BLI took a deep dive with a number of industry insiders to sort through the technology, the fragmented market, the aftermarket potential, and what the future holds.
A Brief History
While the first 3D printer was built in 1992 by 3D Systems, the design process began nearly a decade earlier in 1983. At that time, Charles Hull, the co-founder, executive vice-president and chief technology officer of 3D Systems, was working for a company that made ultraviolet lamps used for curing coatings on tabletops. His invention was aimed at speeding up the prototyping of plastic parts, which at the time could take up to as much as two months. In comparison, today’s 3D printing technology allows for a new sneaker prototype, for example, to be ready within 8 to 12 hours. The designer can then fine-tune the prototype any number of times prior to signing off on further development.
3D printing technology has a wide range of applications in a wide range of industries. For example, it is used in surgical planning and in the development of highly customizable, functional and affordable prosthetic and bionic limbs and even rocket engine parts for NASA.
As the story goes, Hull was working with a patent lawyer, and as soon as he got the first 3D machine working, which used the additive manufacturing technique of stereolithography (SLA), the patent was written and submitted. Hull and his former boss raised $5.5 million and started 3D Systems in 1986. The company’s total revenue approached $713 million in 2014 and it was named one of Forbes’ World’s Most Innovative Growth Companies in 2015.
The other major player in the 3D printing space is Stratasys. The two companies collectively control about one-third of the industry's total revenue. Stratasys was founded in 1989, when S Scott Crump came up with the idea of making tools that could build objects layer by layer after using a glue gun to create shapes at his home. Today, Crump still holds the position of chairman at the organization. In 2014, Stratasys’ total revenue approached $750 million.
State of the Market
Outside of the big two, there are more than 150 other players with a piece of the market. Plus, conventional print leaders are now entering the market, some developing 3D printing products of their own, others through partnerships or acquisitions.
According to HP Spokesperson Scott Schiller, with such a fragmented market, it speaks volumes that a company like HP is looking to become a market leader in 3D printing. HP’s investment alone brings gravitas to the space, indicating to other potential investors and players that it is an industry that’s here to stay.
“We don’t want to be fighting over crumbs with our peers. There is a massive pie in front of us.” –HP’s Scott Schiller
No doubt, the opportunity for HP and the other 3D printing players is staggering, between aerospace and defense, industrial, automotive, medical, dental, life sciences and consumer applications. “We don’t want to be fighting over crumbs with our peers,” said Scott Schiller. There is a massive pie in front of us.”
Still, there is little doubt that HP’s upcoming entry into the 3D printing marketspace is at least partly to blame for the hold-up on sales 3D Systems and Stratasys are currently experiencing. The two big players recently cited manufacturing declines and lengthening sales cycles for their current struggles. Customers seem to be in a holding pattern pending HP’s entry into the market, which is expected to be in 2016. At the very least, HP’s entry will likely cause discounting and better deals for enterprises.
Talkin’ Technology
By definition, 3D printing is the process of manufacturing physical objects layer by layer using additive manufacturing techniques, including selective laser sintering (SLS), fused filament fabrication and the aforementioned stereolithography (SLA), out of materials such as plastics, metal, ceramic or even edible substances. The three-dimensional objects are “printed” directly from digital input.
With selective laser sintering (SLS), particles of plastic, ceramic, glass or metal are fused together by heat from a high-power laser to form a solid, three-dimensional object. This is a powder-based approach. In fused filament fabrication, a controller head releases melted materials that become a solid object once exposed to a cooler environment. Via stereolithography (SLA), which is a liquid-based approach, a controlled laser traces a pattern on the surface of liquid resin in a vat. Exposure to UV light solidifies the pattern. There are at least five additional 3D printing technologies currently being used in the market space, according to InfoTrends Senior Research Analyst Christine Dunne.
According to HP’s Schiller, the company’s Multi Jet Fusion 3D technology will be a “different animal altogether.” As he explained, the 3D market today includes technologies that produce smooth parts with good detail (stereolithography is an example of this type), and technologies that produce parts with good strength (SLS is an example of this type). But because of the materials that are currently used to produce smooth parts with good detail, this group of machines does not make parts with good strength. And because of the energy needed to produce parts with good strength, this group of machines does not produce smooth parts with detail.
Multi Jet Fusion, on the other hand, utilizes HP Thermal Inkjet arrays, which, with its high number of nozzles per inch, can image an entire area versus one point at a time. Explaining the difference between HP’s technology and SLS, Schiller said, “With SLS, a single point laser defines where you want materials to melt, and uses an intense amount of energy for a short period of time in a given spot. The thermal energy makes a round dot, so to speak, and it’s difficult to pinpoint the spot in which you want the penetration to stop in any given direction. HP’s Multi Jet Fusion technology creates a square drop, and we have agents that define fusing and immediately stop fusing in a specific spot. As a result, our technology will be able to produce smooth parts with detail that are also strong.”
Fun with File Formats
Schiller noted that because HP’s Multi Jet Fusion technology is so different from what the other 3D printers have to offer, the company partnered with Microsoft and others in the development of a new file format for 3D CAD software packages. He explained that the STL file format, the current standard in 3D printing, has no real scalability beyond prototyping. STL can also introduce errors in the process when extracting a file from a CAD software tool, for example, resulting in the need for more software in order to fix the errors it introduced.
“We needed to fix the gap between design intent and what comes out of the machines,” said Schiller. “We worked with a few partner companies, including Microsoft, and created a groundswell consortium behind a new format called 3MF. We quickly unified all of the major OEMs, major CAD providers for design tools and middleware solutions providers behind this new file format.”
According to the 3MF Consortium, the 3MF file format is:
● Rich enough to fully describe a model, retaining internal information, color and other characteristics
● Extensible so that it supports new innovations in 3D printing
● Interoperable
● Able to be broadly adopted
● Free of the issues besetting other widely used file formats
“The development of the 3MF file format is one of the reasons we made our public announcement of our intentions to enter the 3D printing market two years ahead of product entering the market,” Schiller said. “While we communicated to all of our competitors exactly what we were doing, we felt it was necessary to get the rest of the solutions providers ready for the capabilities of these machines.”
Schiller said that when HP first started engaging the CAD companies, they felt that existing technologies had been around for a while, and they were curtailing their investment into enhancing their capabilities because there were no machines to take advantage of it. “Once we explained to them the capabilities of our 3D products, they felt like they were behind and needed to accelerate their investments to catch up.”
While HP’s 3D printers will also support STL file format, Shiller believes the other players in the space will work as hard as they can to integrate with 3MF too, citing firmware upgrades as a possibility.
Segments, Service and Aftermarket
Much like copiers and printers, 3D printers can be separated into different segments and speed bands, with different price points. But whereas copiers and printers are grouped by pages per minute (ppm), 3D printers are grouped by inches per hour. And whereas a customer will be charged per click in a typical service contract for a copier, a 3D printer service contract could charge customers per cubic inch of material used. 3D printers also have different-size build areas, measured in inches, similar to how copiers and printers support different paper sizes and paper weights. “Certain people will be biased toward a service-based approach, while others will prefer a capital acquisition type approach, and HP plans to support both over time,” said Schiller.
And, as with copiers and printers, there is recurring revenue from an aftermarket, with consumables lasting a certain number of build hours before needing to be replaced. In the case of HP, its products will feature printheads, agents and consumable elements that will need to be replaced. “All parts have a certain wear life,” said Schiller. “We want predictable outcomes so there are no negative operation and economic impacts.”
OEM Strategies
Following is a list of vendors that already offer 3D printing technologies. Note that others may be in various phases of preparation, including Samsung, which according to Dunne, now has a team dedicated to research and development in various burgeoning technologies, including 3D printing.
Canon: For some vendors, such as Canon, the company’s approach to 3D printing depends on region. Canon has been reselling models from 3D Systems in Europe and Japan. Canon also announced its initial foray into a proprietary 3D printer at the Canon EXPO earlier this year. According to Canon, the device, which is under development, will be targeted at the manufacturing and commercial sectors for use in rapid prototyping and manufacturing, with its key differentiator being its lamination technology. With traditional 3D products, there is typically a polishing process at the end, but Canon’s lamination technology cuts down on polishing time, which enables items to be created faster, the vendor said. Canon Inc. Chairman and Chief Executive Fujio Mitarai also recently stated that the company is ready to spend at least $3.4 billion on acquisitions in higher-growth professional markets, including 3D printing.
HP: HP plans for a gradual introduction of its 3D products to the larger market over 2016. “We have invited some customers to work with us in the development process, and we’ll be putting machines into their floors in early 2016,” said Schiller. “While we’re still in the development process with products, we are using a scalable print architecture. And one thing’s for sure, at HP, we know how to populate a product portfolio.”
Konica Minolta: Konica Minolta announced a partnership with 3D Systems in July 2014, and continues to take an aggressive approach to the 3D printing market, selling products both directly and through its dealer channel. “The way we see it is there’s always going to be a question on ROI with any new technology,” said Dino Pagliarello, Konica Minolta’s director of product marketing. “We believe that 3D printing is going to be a tremendous opportunity in the near future, and that being in on it on the ground floor, and having our sales force knowledgeable about it, and better understanding the technology and how to sell it to customers, will be invaluable.”
Earlier this year, the company began selling the Cube and Cube Pro 3D printers, designed for the entry-level 3D market. The Cube, in particular, is targeted at the education space, with a retail price of just $999. It features a 6-inch build area, and up to two colors can be used at the same time. More than 20 colors are available to choose from. Consumables last approximately 120 build hours, and replacement consumables sell for $50 to $100. Consumables are currently available as AVS plastic, but nylon and a rubberized material are in the works. The CubePro, which is double the price of the Cube, features a life of 240 build hours for consumables, and a 12-inch build area. A third-party company, STEAMtrax, has developed a curriculum for teachers around 3D printing.
“We believe that 3D printing is going to be a tremendous opportunity in the near future, and that being in on it on the ground floor, and having our sales force knowledgeable about it, and better understanding the technology and how to sell it to customers, will be invaluable.” –Konica Minolta’s Dino Pagliarello
On the higher end, Konica Minolta also resells 3D Systems’ ProJet X60 Series and 3500 Series. SRP for the X60 Series ranges from $30,000 to $80,000; SRP for the 3500 Series ranges from $60,000 to $90,000. According to Russell Doucette, assistant product marketing manager at Konica Minolta, the X60 Series are full-color devices that target consumer products, healthcare and other vertical market customers that are interested in printing photo-realistic models for product design, prototypes and color concept models. The 3500 Series, on the other hand, are targeted at engineering, manufacturing and mechanical environments, and are said to be ideal for functional testing. To help commercial printers understand how to become profitable with 3D printing, Konica Minolta also has a partnership with ZVerse Inc., an applications company that offers a suite of software applications designed to make any 2D content 3D printable.
Stressing a “let’s learn for now” approach, Doucette said Konica Minolta believes that 3D printing is here for the long haul, and if financials dictate, the company would like to eventually develop its own 3D printers in conjunction with 3D Systems.
Ricoh: As with Canon, Ricoh’s approach to 3D printing is region-dependent. Ricoh Americas, for example, is not yet ready to enter the 3D printing space. According to Martin Brodigan, chairman and CEO of Ricoh Americas, 3D printing will require different people with different skill sets outside of the current core of hardware, and the company won’t make that leap until it’s sure it will be a revenue-positive and business-positive step. “While 3D printing is sexy, we really want to understand how we can help our direct operation and dealers make money and not complicate their current business strategies,” said Brodigan.
The wait-and-see approach of Ricoh Americas is one echoed by a few dealers we spoke with as well, who are currently in the “sticking our toes in the water” phase. According to some dealers we spoke with, most of the money is being made at the point of sale, and dealers would like to see more recurring revenue so it fits more with their current business models.
That being said, Ricoh Company, Ltd. recently announced the release of the Ricoh AM S5500P, the company’s first Ricoh-branded 3D printer in Japan. According to Dunne, Ricoh began taking orders for this at the end of October and plans to first expand sales to Europe, then beyond. Employing SLS technology, the product was developed in conjunction with Aspect, Inc., a manufacturer and seller of SLS machines and materials.
Ricoh Europe also recently announced a partnership with Leapfrog 3D printers that will make Ricoh an official reseller of the Leapfrog Creatr HS 3D printer and additional models in Europe. According to Dunne, the partnership will initially center on customers in the education sector, but expand to customers in the engineering and manufacturing sectors over time. “The extent to which Ricoh will sell third-party 3D printers as opposed to in-house developed products is still unclear, but likely will become clearer over the next year,” said Dunne.
Xerox: Xerox has been involved in the 3D printing market for more than a decade, as a developer and a supplier of the inkjet print heads used by leading 3D printing companies. Xerox has also used 3D printing to transform some of its own manufacturing and development processes.
“We believe in many areas, including this, that working with others with complementary capabilities and resources leads to a better outcome for customers and for Xerox.” –Xerox’s Karl Dueland
“Like others in the printing industry, Xerox views 3D Printing as a potential opportunity that is worth exploring,” said Karl Dueland, vice president and general manager of Digital Manufacturing for Xerox. “We’re interested in the growth potential and the opportunity in the 3D printing market, and we have numerous relevant technology assets to leverage. We also believe our technology, intellectual property and innovation initiatives will enable us to be a serious player in this field.”
Xerox also believes a partner-based approach is the best way to take advantage of the opportunity in this space. “Xerox continues to explore its participation strategy in this field inclusive of partnership models,” said Dueland. “We believe in many areas, including this, that working with others with complementary capabilities and resources leads to a better outcome for customers and for Xerox.”
What Does the Future Hold?
“We believe that 3D printing will be transformational to the market, and when we say that, we speak from experience,” said HP’s Schiller, noting that the move to 3D printing is very similar to that of the move from analog to digital in the production space. “We spent eight years identifying opportunities in much larger market spaces, such as book printing and direct mail. We knew we needed to take a robust approach, and worked to make mass customization a reality. At the same time, we needed third parties to develop substrates that would work with the machines, and needed connections between publishers and manufacturers to allow for a very high number of transactions. As with the move from analog to digital, partnering will be very critical to making the entire 3D printing industry move forward.”
Schiller sees the improvement of technology and capability over time. “At HP, we’ve gotten very good in the commercial space at driving wave after wave of improvements into platforms, and driving the industry forward,” Schiller said. “So we need to keep the heat on our development of 3D products as well to make sure we’re accelerating at a rate that is appropriate to our business strategy and commitments.”
“We believe that 3D printing will be transformational to the market.” –HP’s Scott Schiller
Based on our research with vendors and industry analysts, we believe that the open approach to product development, combined with the seemingly endless number of applications for the technology, will fuel growth in 3D printing. The currently fragmented market will likely begin to consolidate via mergers and acquisitions, while increased competition will result in faster product “printing” times and lower prices for devices and consumables before they eventually stabilize.
