After attending the Inside 3D Printing Conference in New York City, it quickly became apparent that the consumer 3-D printing space has become overcrowded. Companies such as 3D Systems (NYSE: DDD ) and Stratasys (NASDAQ: SSYS ) are beginning to have a difficult time differentiating their latest and greatest consumer-oriented printers from the competition. As a result, the consumer 3-D printing industry is poised to face pricing pressures in the years ahead.
Although commoditization is a great dynamic for 3-D printing users because lower prices should help driver higher adoption rates, it'll likely produce profitability headwinds for 3D Systems and Stratasys. The good news for investors in the two companies is that the consumer 3-D printer space remains a relatively small percentage of the entire 3-D printing industry today, meaning the threat of commoditization should have a small impact on 3D Systems' and Stratasys' overall business for the time being.
Additionally, if 3D Systems or Stratasys face more severe pricing pressures in the years ahead, the hope is that they'll be able offset the decline through steady revenue from the sale of highly profitable materials, which are consumed when the printers are in operation. Of course, the price of plastic feedstock for consumer 3-D printers may also face pricing pressures in the future.
In the following video, 3-D printing specialist Steve Heller and industrials analyst Blake Bos discuss the threat of commoditization in the 3-D printing landscape and what that could mean for investors. Going forward, investors should monitor gross profit margins at 3D Systems and Stratasys to determine if commoditization is becoming a more severe threat.
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