Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Revealed: How 3D Systems Corporation Views Competitive Threats

During 3D Systems' (NYSE: DDD  ) 2014 first-quarter-earnings call, it came to light how the 3-D printing giant views competitive threats from Stratasys (NASDAQ: SSYS  ) and Hewlett-Packard (NYSE: HPQ  ) . Although mindful of the competition, 3D Systems believes its business is more vertically integrated, and therefore gives it a first-mover advantage over the competition.

Oh, the irony!
In an effort to broaden its horizons, Stratasys recently made a greater push into the 3-D printing service bureau space when it purchased Solid Concepts and Harvest Technologies, two leading independent 3-D printing service providers in the U.S. Together, with its existing Redeye 3-D printing service bureau, Stratasys will consolidate its servicing operations into a streamlined solution, offering a wider range of 3-D printing services, including small batch direct manufacturing with metal alloys.

For Stratasys, the greater push into the servicing space makes a lot of sense because it diversifies its technology portfolio, broadens its manufacturing expertise, builds out its sales channel, and potentially expands its customer base. The irony with this move is that Stratasys only sells 3-D printers based on two primary technologies, and in order to become a fully streamlined 3-D printing service bureau, it likely has to adopt 3-D printing technologies from 3D Systems, which offers seven different technologies under its umbrella.

According 3D Systems CEO Avi Reichental, the service centers Stratasys purchased were "by and large" already using its stereolithography, selective laser sintering, and direct metal 3-D printers. In other words, the potential exists for 3D Systems to win future purchase orders from Stratasys as it streamlines and grows its service operations.

It's complicated
As far as Hewlett-Packard is concerned, Reichental acknowledged that it takes HP very seriously because it has "unlimited resources, capabilities, and technologies." As terrifying as this sounds to 3D Systems investors, Reichental doesn't underestimate the high level of complexity required to become a meaningful and relevant 3-D printing player in the design and manufacturing world. Realistically, it'll likely take years until HP can reasonably be considered a formidable competitor.

In Reichental's view, a multi-faceted approach involving different 3-D printing technologies is the only way to make a big impact in the space. Emphasizing a diverse 3-D printing portfolio makes sense from a business perspective because different 3-D printing applications are best suited for different technologies. The technology needed to produce a titanium medical implant device is dramatically different than technology that produces plastic automotive dashboard prototypes. The company with the most diverse 3-D printing portfolio can cater to the most 3-D printing applications.

Still, investors should continue to monitor Hewlett-Packard's entry into the space, only because HP has deeper pockets than what the worldwide 3-D printing industry generated in annual sales last year.

A first-mover advantage?
3D Systems believes it has a first-mover advantage over the competition because no other 3-D printing company offers as expansive of a 3-D printing portfolio. In order to subscribe to this statement, deeper vertical integration will have to become an increasingly predominant theme throughout the 3-D printing industry so that competitors would have no choice but to build or acquire a broader portfolio. If the industry does in fact move in this direction, it would put 3D Systems and its already established portfolio of seven 3-D printing technologies in a rather opportune position while the industry mobilized.

The jury may still be out on how this will all shake out, but Stratasys' recent emphasis on services and diversification certainly puts some weight behind this line of thinking. Going forward, investors should watch how 3D Systems deepens its level of integration and continues to differentiate itself from the competition.

One must-own stock in 2014
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (3) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 06, 2014, at 6:56 AM, Noble3DPrinters wrote:

    As a prior employee of 3D Systems states that they put out products knowing that they are flawed, along with approx. 20 other employed and ex-employees, 90% say they would not recommend a friend work for 3D Systems, not to mention inside rumors about how Formlabs is in bed with 3D Systems, all makes for reasons to wonder just how long will 3D Systems last against deep pockets. One can Google "3D Systems rate this employer" to read about internal problems 3D Systems seems to have amongst its employees

  • Report this Comment On May 09, 2014, at 1:54 AM, spinindog wrote:

    To the previous comment by Noble3DPrinters...

    3D systems has been buying other companies, at an incredible pace, and consolidating. There will always be bitter employees of the purchased companies. If you think differently, you have never worked for a company that has been bought. A couple of disgruntled employees is to be expected.

    As well, 3D is in a stage of rapid growth. Most folks can't imagine the stress of working for a company that is growing at this pace. Some people thrive on it, while others get upset that lunch hour has become a thing of the past.

    If 3D System's employees are happy right now, I would be worried.

  • Report this Comment On May 29, 2014, at 2:19 AM, kamsmart wrote:

    Very interesting conversation here Noble3DPrinters and spinindog!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2940744, ~/Articles/ArticleHandler.aspx, 9/4/2015 5:19:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Steve Heller

Covering 3-D printing at the intersection of business, investing, and what it means for the future of manufacturing. Follow me on Twitter to keep up with the ever-changing 3-D printing landscape by clicking the button below.

Today's Market

updated Moments ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:00 PM
DDD $12.72 Down -0.31 -2.38%
3D Systems CAPS Rating: ****
HPQ $26.99 Down -0.96 -3.45%
Hewlett-Packard Co… CAPS Rating: ***
SSYS $28.39 Down -0.53 -1.83%
Stratasys CAPS Rating: ****