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The 3D Printer Supplier Shakeout

New OEM players are rushing to enter the 3D printer market to join the growing roster of over 100 suppliers worldwide. As volume shipments explode from a marginal 99,000 units in 2014 to over a million in just a few years, entrants hope to cash in on a sector that Gartner says will already be worth $669 million next year.

In terms of unit sales, the market is small but growing. 3D printer shipments worldwide reached 38,000 units in 2012 and will rise to 57,000 this year, Gartner said. In 2014, unit shipments will reach 98,000. By 2015, total shipments will reach 195,000.

But before 3D printer sales reach the 1 million unit mark, a few large suppliers should increasingly dominate the sector as economies of scale take effect. The market dynamics will make it harder for the smaller firms to compete, most of which should die, or if they are lucky, be acquired.

The leading OEMs are also fighting over which firm gets to define the industry-accepted form factor and standard. The Holy Grail, of course, for all firms is for their brand to be associated with 3D printers, especially if their product has a particular recognizable and market-defining form factor. The larger makers, of course, are in a better position to realize this goal thanks to their deeper-pocketed marketing and engineering budgets compared to their smaller rivals.

The top players, such as 3D Systems and Stratasys, should become even larger by leveraging their size in order to make 3D printers more affordable at price points of $1,300 and less. 3D printing has been around for decades, but the main driver behind the recent hype has been how the devices have recently become affordable.

Comparatively, 3D printers in the past could cost $100,000 or more and were mainly used for large-scale industrial applications.

The largest players will also continue to grow by acquisition, both as a way to boost their top-line growth and to gain new technologies. Stratasys, for example, purchased MakerBot, a leading player in its own right, earlier this year, securing its place as the second-largest 3D printer maker. The second-largest OEM, 3D Systems recently acquired Phenix Systems, which was its 39th company purchase since 2009.

The small player challenge
Many, and possibly most, of the smaller players that have entered the sector will likely be unable to establish a production base capable of producing and selling high volumes at a profit to meet demand in the $1,300 per-unit and less price category. Large producers are obviously in a better position to price the printers at a lower cost in the channel by producing the devices in large volumes.

The smaller players hoping to cater to demand for printers in the sub-$1,300 range will be forced to acquire the necessary capital to achieve high-volume production and sales or, for those with unique technologies, be acquired. As a result, the number of smaller players should shrink during the next three to five years.

The 2D sleeping giants
Established 2D printer makers are set to emerge as heavy-hitter 3D suppliers in the near future. Already, HP has announced that it will enter the space in 2014, while many of the 3D technologies commercialized today are supplied by 2D players, including Canon, HP, Kyocera, Rico, and Xerox, Gartner says. They often supply inks, while Xerox, for example, offer printer heads.

The consensus is that 2D printer makers have been waiting in the wings until the market becomes established and volume shipments take off. But for the time being, they continue to discreetly offer technologies and components to the industry before entering the market with something that is branded as their own.

However, established 2D printer makers should see less profit in ink sales for their 3D equipment. Indeed, replacement ink is by far more profitable compared to the margins they can squeeze out of printers. But 3D printers use an open standard for ink, which means that OEMs will not be able to command higher prices for proprietary formulations.

Fewer suppliers, lower prices
Within five years, 3D printers will unlikely be as ubiquitous as their 2D counterparts, but they will become a common fixture in many hobbyist households and small- to midsized businesses, especially those involved in design and manufacturing. The number of 3D printers OEMs sell should be comparable to that of big-ticket consumer items, such as HDTVs. By then, much of the hype should have died down as well and the supplier base will be that much smaller.

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10 comments on “The 3D Printer Supplier Shakeout

  1. FLYINGSCOT
    December 19, 2013

    I hope one of the premier small 3D suppliers makes it big and becomes a major high volume player long term however I expect they will be gobbled up by the bigger 2D folks with deeper pockets.

  2. Hailey Lynne McKeefry
    December 19, 2013

    This kind of shakeout is part of the market process and, on the whole, it seems like a good thing. IT's going to force manufacturers to get really strategic about product design and features–in order to stay ahead of the pack and stay competitive. I think it will mean that users will have better optoins in features, price and availability.

  3. Houngbo_Hospice
    December 21, 2013

    There is always hope for first comers in a new business. But I don't really see that bight future for small suppliers in the 3D printer industry as the market is small compared to the 2D printer industry which is more established.

  4. Houngbo_Hospice
    December 21, 2013

    @Hailey: The first winner in the fight between competitors in the same business is the end user who is offered better products at affordable prices.

  5. Anand
    December 27, 2013

    The 3D printing mainstream invasion can bring terror in the minds of smaller companies. 3D printing can cut down prices of production too, and by a healthy margin. This will again benefit the consumer if prices are cut down by a good percentage. 3D printing will be changing the market with their newest affordability schemes.

  6. Anand
    December 27, 2013

    @Hospice, Market strategists would not accept a product no matter how profitable it might turn out to be in the near future, statistics show that. Most manufacturers wouldn't court for a technology that is not made popular in the mainstream. Look what happened to Nokia when they endorsed Windows. When it was unpopular, Nokia Windows products hardly sold. Now, after the popularity, Nokia Lumia phones are selling like hot cakes.

  7. Hailey Lynne McKeefry
    December 30, 2013

    I think the consumer will eventually benefit, but it's going to take a couple of years.

  8. ahdand
    December 30, 2013

    @Hailey: Yes its time consuming. Anyway good things do take time. 

  9. jbond
    December 30, 2013

    I still think their are many things the 3D printer can't do and they will still need the employees they currently have.

  10. ahdand
    December 30, 2013

    @jbond: Exactly, even I feel the same. I too think we cannot expect everything to be done from technology. There are certain things which needs to be fine-tuned by the humans.

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