“The Business of 3D Printing: The First Three Decades,” a keynote talk given at RWTH Aachen conference on “The Business and Economic Impacts of 3D Printing” http://bit.ly/TpQmrw

1. 1
The Business of 3D Printing:
The First Three Decades
Joel West†
KGI – Keck Graduate Institute
The Claremont Colleges
3 Juni 2014
† Adapted from work with George Kuk, Nottingham Business School

2. 2
3D Printer Market
•3D printing is 30 years old
•Started with niche industrial markets
• Proliferation of patented technologies, new firms
• Limited applications due to price, performance
•Now: larger consumer markets
• Leveraging open source hardware
• Reaching hobbyist market like early PCs
• Still no “killer app”
•Today: a $1+ billion market

3. 3
Industrial 3D Printing,
1984-2000

4. 4
Additive Manufacturing
•“3D printing” once meant a specific
process
•Now it refers to any process of additive
manufacturing
• TLA: EBM, FDM, IJP, LOM, SGC, SLA, SLS
•Usually involves melting metal or plastic
TLA = “three letter acronym”

5. 5
Key 3D Printing Technologies
Process
First Patent
(Priority Date)
Key Inventor
(Employer) Feedstock
Stereolithography (SLA) 1984 Chuck Hill (UVP, later
3D Systems)
Liquid plastic
Selective Laser Sintering
(SLS)
1986 Carl Deckard (U.
Texas)
Plastic or metal powder
Fused Deposition
Modeling (FDM)
1989 Scott Crump
(Stratasys)
Continuous spool of
plastic (later metal)
Three-Dimensional
Printing (3DP)
1989 Michael Cima,
Emmanual Sachs
(MIT)
Liquid plastic or
plastic-metal
PolyJet 1999 Hanan Gothait (Objet) Liquid plastic

6. 6
3D Printing Startups (80s)
Founded Company
Spinoff
Parent HQ
Printing
Process
First
System Exit
1985 Helisys (née
Hydronetics)
Los
Angeles
LOM 1990 1996: IPO
2000: out of
business
1986 3D Systems UVP Los
Angeles
SLA 1987 1987: IPO
(Vancouver)
1986 Cubital, Ltd. Scitex Israel SGC 1991 2000: out of
business
1987 DTM
Corporation
UT
Austin
Austin SLS 1992 2001: Acquired
by 3D Systems
1989 Stratasys Minneapolis FDM 1992 1994: IPO
(NASDAQ)

7. 7
3D Printing Startups (90s)
Founded Company
Spinoff
Parent HQ
Printing
Process
First
System Exit
1993 Solidscape (née
Sanders
Prototype)
New
Hampshire
IJP 1994 2011: Acquired
by Stratasys
1994 Z Corp Boston 3DP 1997 2012: Acquired
by 3D Systems
1998 Objet Israel PolyJet 2001 2012: Acquired
by Stratasys
1996 ExOne Extrude
Hone
Pittsburgh 3DP 1999 2013: IPO
(NASDAQ)
1997 Arcam Chalmers Sweden EBM* 2002 2000: IPO
(NGM)

8. 8
3D Systems
•Chuck Hill
• Invented stereolithography and 3D printing (1984)
• Laser dries points in pool of liquid resin
• Founded 3D Systems (1986)
•IPO: 1987
•Growth much slower than expected
•Today the industry leader

9. 9
Stratasys
•Scott Crump
• invented fused deposition modeling (1989)
• Inspired by a glue gun, cheap spool of plastic (or metal)
• Founded Stratasys (1989)
•IPO: 1994
•Growing via M&A
• Merged with Objet (2012)
• Bought MakerBot (2013)

10. 10
Initial Applications of 3DP
•Rapid prototyping
• Aids industrial designers
•Mold-making
• Use fragile 3D printed part to make durable mold
•Short-run production
• Plastic: trinkets
• Metal: high-end industrial parts

11. 11
Business Challenges
•Premature IPO: 3D Systems, Arcam
• Today still have IPOs based on hype, not revenues
•Proliferation of technologies
•Cost, limitations delay adoption
•Initial growth fails to meet claims

12. 12
Barriers to 3DP Adoption
Category Attributes
Printer performance Speed, quality, output size, output durability
Cost Initial cost, cost of consumables
Computer
performance
CPU cycles, RAM, hard disk
Application software Computer Aided Design (CAD) applications
Ease of use Graphical interfaces, hardware operation,
integration
Content (digital
designs)
Self-designed, standardized components,
community donated content

13. 13
Consumer 3D Printing,
2005-2014

14. 14
Emerging Consumer Market
•Maker movement
•Open design communities
•Expiration of key FDM patents
•Entry by startups
• Chasing mass market
• Aided by new models of funding

15. 15
“Maker” movement
•Ca. 2005
•Hobbyists focused on making things
•DIY / “maker” / “hacker” movement
•Focus on creativity, invention
•Make magazine (2005)
•Maker Faire (2006)

16. 16
Open Design Communities
•Parallels to open source software
• Open IP
• Shared production
• See West & O’Mahony 2008
•Different from open source software
• Challenges of replicability for tangible goods
• Usually need a commercial sponsor to assure viability
• See Raasch et al, 2009; Balka, et al, 2009,2010

17. 17
RepRap Project
•Founded by Prof. Adrian Bowyer
• Senior Lecturer, Mechanical Engineering, Bath
• Has own Stratasys printer
•Modeled on open source software (Linux)
• Community collaboration, discussion
• Shared development of shared IP
•Uses FDM (spooled plastic)
•Announced 2005
•First self-printing in 2008

18. 18
Expiring Patents
•Industry with dozens of patents
•Patent litigation continues
•First Stratasys patent filed 1989
•FDM possible after 2006 expiration

19. 19
3D Printing Startups: 2000+
Founded Company
Spinoff
Parent HQ
Printing
Process
First
System Exit
2009 Afinia Minneapolis FDM 2012 n/a
2009 MakerBot New York
City
FDM 2009 2013:
Acquired by
Stratasys
2011 RepRap
Professional
RepRap
Project
UK FDM 2011 n/a
2011 Ultimaker Netherlands FDM 2011 n/a
2011 Formlabs Boston SLA 2012 n/a
5 of 100+ consumer 3DP companies
See Bock & Greul talk @ 1645

20. 20
MakerBot Industries
•Founded in Jan. 2009 in NYC
• Three members of hackerspace for DIY community
•Target consumer 3D printing
• Initial focus is hobbyists, but moves to consumers
• Analogous to Apple Computer
•Products adapted from RepRap designs
• FDM plastic filament
• First product April 2009

21. 21
MakerBot Business Strategies
•Apr. 2009: first open source hardware
•Aug. 2011: $10m in Series A VC
•Sept. 2012: shift to proprietary hardware
• Controversial with RepRap, other makers and hackers
•Aug. 2013: $450m exit
• Purchase by Stratasys, one of two surviving 80s firms

22. 22
Thingiverse Online Community
•Online community for sharing digital
designs
•2D, 3D designs
• Digital representation of physical objects
• Free for use, modification, sharing
• Examples: artwork, toys, novelty, utilitarian, maker
•Launched in 2008 to support RepRap
• Goal is to make the RepRap printer more useful
• Two founders (Smith, Pettis) are 2/3 of MakerBot
•Now controlled by MakerBot

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Today’s Consumer Segments
•Makerbot (Stratasys): > $2000
• Started with $750 kit
• Now most products $2000+
•3D Systems Cube: $1000-2000
•Hundreds of startups: < $1000
• Selling kits and assembled printers
• Most in the $250-1000 range
• Resembles PC industry of 1970s

24. 24
Analogues to Earlier Era
•Open source software
• External collaborative production
• Disruptive, low-cost business model
• Still has a tangible cost of goods
•Personal computing (1970s)
• Solution in search of a problem
• Not user-friendly
• Hype exceeds reality

25. 25
Industry Finances

26. 26
3D Printing Ecosystem
•Printer manufacturers
•3D modeling software
•Content libraries (user communities)
•Dealers/distributors
•Service bureaus
•Buyers
• Industrial
• Commercial
• Education
• Consumer

27. 27
Source: Wohlers Associates

28. 28
Printer Business Models
•Sell both hardware and consumables
• ala 2D printer “razor” / “razor blade” model
• Consumer materials are commodity
•Provide integrated solution (ala IBM)
• Hardware (consumables)
• Software
• Service
•Other parts of value chain
• Content (Stratasys - Thingiverse)
• Service bureaus (3D Systems)

29. 29
Recent Consolidation
•3D Systems acquisitions
• 2001: DTM: inventor of SLS
• 2012: Z Corp: licensee of MIT 3DP process
• 2011: Quickparts service bureau
•Stratasys acquisitions
• 2011: Solidscape: targets dental market
• 2012: Objet: Israeli PolyJet company
• Reverse acquisition, now based in Rehovot, Israel
• 2013: MakerBot consumer company

30. 30
Public 3D Printing Manufacturers
Revenues 2013 2012 2011
3D Systems $513 M $354 M $230 M
Stratasys $484 M $215 M $156 M
ExOne $39 M $29 M $15 M
Arcam $30 M $22 M $17 M
VoxelJet $12 M $9 M $7 M

31. 31
R&D Intensive Business
2013 Gross Margin R&D %
3D Systems 52.1% 8.5%
Stratasys 46.7% 10.8%
Microsoft 74.0% 13.4%
Google 56.8% 13.2%
IBM 48.6% 6.2%
Apple 37.6% 2.6%

32. 32
Conclusions
•Industry grew dramatically in 30 years
•Most of that was in past decade
• Entry of RepRap and consumer startups
• Highly fragmented consumer market
•Industry will continue to grow
•Many of original challenges remain
• Ease of use, durability, speed, cost