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3D Printing: Unlocking New Dimensions

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The first 3D printer was created as early as 1984 by inventor, entrepreneur, and current Executive Vice President and CEO of 3D Systems (DDD) Charles “Chuck” Hull. But it has taken nearly three decades for this disruptive industry to gain momentum.

The global 3D printing industry is currently estimated to be worth more than $2 billion in terms of revenues. According to Gartner, Inc., around 42,000 3D printing units are expected to have been sold in 2013, which is 50% higher than sales in 2012. In 2014, sales are expected to grow to 72,000 units. Credit Suisse estimates that the industry will grow at a compound annual rate (CAGR) of 20-30% through 2014-2016, with revenues reaching $12 billion by 2020.

Buyers can buy a 3D printer from a reseller, an independent dealer, or the original equipment manufacturer (OEM) itself. Resellers and OEMs provide users with systems and replacement parts as well as after-sales service, while independent dealers pocket a commission from OEMs on sales, and leave after-sales service and parts replacement to OEMs.

As it grew over the years, the industry is no longer limited to the manufacturing and supply of 3D printers alone – it has spawned an entire ecosystem consisting of five major sub-industries: Printing, Materials, CAD/Design Software, Scanning and Service Bureaus.

It has also created a market for 3D printed parts for various applications, which are available on demand through various independent and OEM-owned service bureaus. These firms use 3D printers to provide customers with replacement parts that are tailored to specific requirements and designs. Currently, three OEMs operate such service bureaus in the US, namely: Quickparts, operated by 3D Systems; RedEye, owned by Stratasys (SSYS); and PSC, which is run by Exone (XONE).

These three companies are among the four publicly-traded firms in the US that offer 3D printers, with Voxeljet (VJET) rounding off the group. Combined revenues for these companies totaled $608.86 million in 2012, and they operated at an average gross margin of 47.29%.

Industry Trends

3D printers have widely varied applications: for instance, they can be used to manufacture components of heavy machinery, but also to make personalized gifts. As average selling prices (ASPs) decline and printers become more accurate, efficient and quick, the broad applications of three dimensional printing may mean that sales end up surpassing current estimates.

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Wohlers Associates – a company that “provides technical, market, and strategic consulting on new developments and trends in product design, prototyping, and tooling” – is very bullish on the 3D printing industry. According to data released by Wohlers, shipments of consumer 3D printers alone totaled 35,508 in 2012, and it expects sales of such devices to grow to 70,000 in 2013.

2

The US currently has the largest number of 3D printer installations in the world, followed by Europe.

3

Growth Drivers

Industrial Production

Industrials are becoming one of the strongest growth drivers for the 3D printing industry. As the aviation and automobile industry shifts from traditional production techniques to highly customizable ‘additive manufacturing’ (another term for 3D printing), the demand for 3D printers is expected to increase side by side.

A number of major corporations – including General Electric (GE), United Technologies (UTX), BMW, and Audi – are already using 3D printers to manufacture functional parts and fixtures for their products.

GE increased its usage of 3D printing in manufacturing processes in 2012, post its acquisition of Morris Technologies. Today, it is the largest user of 3D printers and is expected to maintain that status going forward.

GE uses 3D printing to print 19 fuel nozzles for its aircraft engines; similarly, United Technologies uses more than 24 3D-printed parts in its Pratt & Whitney LEAP engines (4,500 orders for which have already been placed).

Healthcare

Companies which produce medical devices and diagnostics equipment are increasingly switching to this new technology because it has proven to be a highly flexible tool in the fabrication of parts used in their devices.

There are countless ways in which 3D printers can be utilized by the healthcare industry. For example, more than 90% of all hearing aid shells are currently produced using 3D printers, and around 10% all dentures and dental implants are made using the technology. Furthermore, customized hip and knee replacement implants, bracing, supports, and even organs can be fabricated using a 3D printer.

According to Wohlers, the medical and dental industry bought more than $361 million worth of 3D printing equipment in 2012, which accounted for more than 16% of the 3D printing industry’s total revenues. The 3D printing market for healthcare industry buyers is expected to have grown to more than $500 million by the end of 2013.

Consumers

Consumer demand also holds great potential for 3D printing. The rapid decline in 3D printer prices means consumers can now buy one for as low as $300; however, penetration is still too low. Credit Suisse estimates that only 0.06% of all US households currently own a 3D printer, but the firm expects the number to increase to 0.12% by 2016 if ASPs fall to $1,500. However, Bidness Etc believes that market penetration will be far higher than these estimates, as ASPs are likely to drop below $1,000 by next year, given the rapid advances in the industry.

After Market Sales

3D printer system sales are just one growth driver for the 3D printing industry – after-market sales and service are nearly as important. After-market sales and services include the sales of printing materials (sand, plastics, and metals), direct parts, and services. The 3D printers after-market growing faster than growth in 3D printer sales: for example, sales from 3D printing systems increased 15% YoY in 2012, whereas revenues from materials, direct parts, and services increased 29%, 51% and 23%, respectively.

The Bottom Line

The 3D printing industry holds immense potential as different industries explore the technology and its applications to boost their productivity and efficiency. We expect the aerospace and automobile industries to remain the major demand drivers from the manufacturing side, while consumer demand for 3D printers will increase as ASPs fall. With Hewlett-Packard (HPQ) entering the market in 2014 along with a score of Japanese and Chinese companies, affordable 3D printers are no longer a distant dream, and we may see 3D printing becoming the next big consumer technology.

Check out our older articles for more details, and keep checking for updates.

For Bidness Etc’s favorite 3D printers, read: http://www.bidnessetc.com/business/3d-printers/

For an update on major players on the industry, read: http://www.bidnessetc.com/21077-3d-printing-which-dimension-is-the-industry-headed-in/

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