In this Market Foolery video, Chris Hill tasks Motley Fool analysts Jason Moser and Taylor Muckerman with answering a listener question on 3D printing and the state of the industry. Their answer may surprise you, but it explains where they expect the industry to really gain momentum.
A full transcript follows the video.
This video was recorded on May 15, 2017.
Chris Hill: From Matt Riley, "Haven't heard you guys talk much about 3D printing in a while. I was wondering if you had any thoughts on companies, or the state of that industry."
Taylor Muckerman: Personally, I'm not investing in any of the 3D printing companies. If I'm going to benefit from it, GE (NYSE:GE) might be the first place I would look. They made a couple 3D printing acquisitions last year, up to about $1.5 billion. So they're using it in-house, and I'm sure they're going to work their way into providing additive manufacturing opportunities to some of their customers. But first and foremost, they're trying to get in there and reduce their cost by using it to their advantage, rather than trying to compete in the 3D printing market. I think that's where I would bet that it's really going to make a difference, internally for some of these giant manufacturing companies. I think 3D printing eliminated their consumer base business last year, because they just didn't see the future, and it was competitive, and there wasn't a huge market for it. Stratasys (NASDAQ:SSYS) is still trying to achieve some relevance in the consumer space. But I'm going to bet on that in the giant manufacturing space, rather than trying to pick the winners who are trying to sell these machines to folks individually.
Hill: Yeah, it's like the old adage in politics that I think was born out of the Watergate era and All The President's Men, "Follow the money." I think if you look at, maybe related to what we're seeing in artificial intelligence and home assistance and that sort of thing, where you see IBM and then Amazon, Google, Microsoft really starting to pour money into those home assistants, that sort of thing. I think Taylor is right, to see the next move or wave of 3D printing, keep an eye on where GE is spending and where the other big manufacturers are spending.
Jason Moser: Yeah. The technology is super cool, but the consumer implications are not directly tied to us. We benefit from Apple and Ford and GE all using that technology.
Hill: But you don't want one in your garage?
Muckerman: I mean, it requires some technical skill. There's a high hurdle for people, I can't imagine you can just go out and buy a 3D printer and plug it in and reading an instruction manual and then be cranking out a bicycle in the next two weeks.
Moser: And let's think about the level of frustration in having a regular printer. How often do you hit print, and it won't connect, or it's out of ink, or out of paper. So consumer-wise, the applications aren't there. So it's neat technology. I'm thinking that you'll see some consolidation, like you were saying, Stratasys 3D Printing was the other company that is very well-known. A company that doesn't get enough credit for the space is Proto Labs (NYSE:PRLB), because Proto Labs was focused more on the design software and prototype production for smaller businesses, individuals and whatnot making it very easy to get those types of 3D printed products without having to actually invest in that infrastructure. And they're buying some more 3D printing capabilities, as well.
Muckerman: The manufacturers turn to them, rather than trying to sell a product, they're selling a service.
Moser: Yeah. And just like we talked about before, I'll go back to that Jeff Bezos quote where he talked about the toaster, you can just click and buy a toaster on Amazon and in less than a day, have a toaster at your doorstep, or you could go buy a 3D printer, buy all of the things that comprise the toaster and then you print off the toaster, and that's going to be pretty cool, it's probably going to take a while, it probably won't work as well --
Muckerman: And you'll burn your house down.
Moser: Yeah, maybe. There won't be a warranty on that toaster. So there's just no reason to go through all of that other than to say, that's pretty cool technology. Like most things, like you said, follow the money. If this company is going to have the big money and the resources and the wherewithal to use those resources, they're going to.
Hill: In between the GEs and those types of companies spending and investing in this space, and using 3D printers, and presumably at some point in the far future, when a lot of people have these in their homes, when I think about an in-between step, I think about contractors. I think about people whose business is building homes. I think that could be an intermediate step, where you see, whether it's through a Home Depot or on their own, if you see contractors saying, you know what? This is actually worth it to me, for the supplies that I'm using, I don't have to order and keep an inventory of lots of different sizes of screws and nails and whatever --
Muckerman: Pipe fittings, whatever, yeah.
Hill: Yeah. I can just customize what I need on the spot.
Moser: The medical profession, I think that's another one where we're going to see more. Consumers are going to be the beneficiaries here, it's not going to be something where you're going to go print off your hip replacement. But there will be a company that's going to be able to do that in far less time for far less money. And so, yeah, again, you look at the industries that are going to really benefit from this disruptive technology. It's not quite like the internet, in that the internet has given us all of these opportunities in the public markets because of the way it's disrupted virtually everything we do. 3D printing technology is certainly disruptive, but it's just not as disruptive on the consumer front.
Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. the_motley_fool has no position in any stocks mentioned. Chris Hill owns shares of Amazon. Jason Moser owns shares of Apple. Taylor Muckerman owns shares of Amazon, General Electric, and Home Depot. The Motley Fool owns shares of and recommends Amazon, Apple, Ford, and Proto Labs. The Motley Fool owns shares of General Electric. The Motley Fool recommends Home Depot and Stratasys. The Motley Fool has a disclosure policy.