Back in 2005, two brothers set out on a journey to democratize access to professional quality 3-D printing for a fraction of the operating cost. The end result became Mcor Technologies, an Ireland-based 3-D printing company that uses standard copier paper you'd find in any office around the world as its primary material. What makes Mcor unique is that it doesn't try to lock customers into buying proprietary materials at a considerable markup throughout the printer's life. 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) both generate a significant portion of their revenue from the sale of highly profitable recurring consumable sales. In other words, Mcor is essentially threatening to disrupt the glorified razor-and-blade model that 3D Systems, Stratasys, and many other industry players have grown to enjoy.
Mcor's paper-based 3-D printing technology, selective deposition lamination, or SDL, involves a water-based adhesive and a tungsten carbide blade to precisely adhere and cut paper one sheet at a time to create a 3-D dimensional object after many repetitions. Mcor offers both full-color and monochrome 3-D printers that use standard A4 office paper, boasting an operating cost of 5%-20% of competing technologies from 3D Systems and Stratasys. To be clear, Mcor's 3-D printing technology is really only intended for prototyping and modeling applications for professionals seeking quick, affordable, high-quality prints. It is not nearly as versatile as 3D Systems' and Stratasys' professional 3-D printing technologies, but in return for the lower versatility are significant cost savings.
Although Mcor's total market opportunity may currently be more limited than 3D Systems and Stratasys, which offer 3-D printing technologies for a host of different applications beyond prototyping, the truth is that virtually every marketed product starts as an original prototype or model. In other words, the need for quick, high-quality, and affordable prototypes and models will likely remain strong for the foreseeable future, and a company like Mcor hopes it can make a meaningful impact in the space.
In the following video, 3-D printing specialist Steve Heller asks Mcor CEO Conor MacCormack about the company's competitive positioning. Going forward, 3D Systems and Stratasys investors should monitor the reception of Mcor's products to get a better sense of whether or not it will negatively affect their respective material sales businesses.
A transcript follows the video.
Steve Heller: Hey Fools, Steve Heller here. I'm joined today with Conor MacCormack, CEO of Mcor Technologies. Mcor is a very exciting company in the space; they are disrupting 3-D printing materials in particular.
I wanted to ask you, Conor, about your position in the marketplace compared to the competition, and what makes your product so unique.
Conor MacCormack: Thank you for the opportunity to speak here. Effectively, we have a very differentiated product. We looked at the industry almost 10 years ago, and we felt it was one thing that the price of the machines was coming down a little bit -- the capex -- but the running costs were going in the opposite direction.
Almost like, 10 years ago, you needed the same price per volume as gold; ridiculous things were going on then. So, we felt if we could build a machine that was really, really accessible, that anybody could load the material into the machine and almost have a zero running cost, that that's what everybody would want.
That was a challenge. We decided to build a machine that was very accessible, that was going to upset the status quo. We said, "What's the most readily available material, that anybody could get their hands on?"
We said, paper. Everybody can go to the photocopier or go to the printer, pull out a couple of reams of paper, and load it into a 3D printer, so we said, "Let's start at that point, build a paper-based 3D printer that ran on a water-based adhesive," because in time we could always see these machines in schools and in universities, and maybe in time, even homes -- but we're not there yet.
We felt it couldn't have extraction fans, powders, really complicated chemicals. We just wanted to really keep it simple, but really build a machine that was going to upset everybody -- and that's what we did.
At the very basic level, you take three reams of standard photocopier paper, you add it to our Mcor IRIS printer, and you get full-color, robust and durable, eco-friendly 3-D printed parts.
We're very different from everybody else. Everybody else has a traditional razor-and-blade model. We almost have an inverted model -- which can be a challenge because in the investor community they say, "These companies are making 40%-50% of their revenue on the consumables."
But the way we looked at it was, the penetration was so low, the problem why we're not getting bigger penetration is because the running cost was so high. We just really made a very strong statement that said, "Let's have a very low running cost, and let's try and get more penetration of the machine into the industry."
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.