On a high level, 3-D printing is currently being used in two major ways: prototyping and manufacturing. In prototyping applications, the uses for 3-D printing are well established for companies like 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) that sell 3-D printers to help designers rapidly test and improve designs before they're sent off for manufacturing. As more products are developed using 3-D printing technology, it allows 3D Systems and Stratasys an opportunity to generate a greater stream of recurring revenues from highly profitable material sales. However, using 3-D printing in manufacturing settings is a totally different animal than using it simply for prototyping. Not only is it more challenging to use 3-D printing for actual manufacturing, it's still unclear how to make the best use of the technology.
Luckily, according to Terry Wohlers of Wohlers Associates, a 3-D printing insights firm, the 3-D printing industry is nearing the "chasm" in terms of manufacturing adoption rates. In the coming years, Wohlers expects that adoption rates of 3-D printing manufacturing applications will grow more rapidly as the industry collectively learns how to better use the technology in manufacturing settings. For investors, focusing on companies like 3D Systems that offer 3-D printing products for manufacturing applications may provide an opportunity to capitalize on this emerging trend. Many industry watchers believe that 3-D printing metal will be at the forefront of using 3-D printing in manufacturing settings, putting 3D Systems and its recent Phenix Systems acquisitions in position to benefit.
In the following video, 3-D printing specialist Steve Heller and industrials bureau chief Blake Bos break down the difference between 3-D printing prototyping and manufacturing, and show what Wohlers believes the adoption curve of each respective segment currently looks like. 3D Systems and Stratasys investors should watch how the industry adopts 3-D printing in manufacturing settings to help determine which 3-D printing companies are in the best position to benefit.
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Blake Bos has no position in any stocks mentioned. Steve Heller owns shares of 3D Systems. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.