Does Amazon Intend to Rule the "3-D Printing As a Service" Space? A 2013 Patent Indicates That Could Be the Case

This is likely how Amazon Intends to join 3D Systems and Stratasys as a major force in 3-D printing.

Beth McKenna
Beth McKenna
Jun 7, 2014 at 12:35PM
Industrials (NASDAQ:AMZN) -- a name that should strike fear in any industry in its Amazonian-sized path -- was granted a U.S. patent last year in the 3-D printing space. Should 3D Systems (NYSE:DDD)Stratasys (NASDAQ:SSYS), and other 3-D printing companies be concerned that the online retailing behemoth might further invade their turf?

I think the short answer is yes -- but, likely only to a degree, which we'll get to. After all, Amazon had $8.7 billion in cash as of the most recent quarter, which makes 3D Systems' and Stratasys' cash stashes look like chump change. 

Let's look at where Amazon currently stands in the 3-D printing realm, and where it seems to be going.

Amazon's first and second steps into 3-D printing
It seems fairly widely known that Amazon opened an online store for 3-D printers and 3-D printing accessories last summer. However, it appears to be flying under the radar that, earlier this year, it launched a pilot program involving several partners setting up Amazon marketplaces for 3-D printed products. The pilot involves four product categories: jewelry, home and kitchen, electronics, and toys and games. Amazon tapped privately held, Cincinnati-based 3DLT as the first to launch. 3DLT started with 50 items on Amazon's site. 

Screen shot of "toys and games" section of Amazon's 3-D printing store. Source: 

Amazon's likely next steps
Amazon's pilot currently only involves its partners offering a relatively limited number of 3-D printed goods on its site. It seems, however, that the e-commerce giant is heading toward a battle with Shapeways, a privately held company that I recently wrote about. Shapeways, which has locations in New York City and The Netherlands, operates the world's largest marketplace for 3-D-printed products. Designers, hobbyists, and others enter their designs into Shapeways' system, and the items are printed by the company's in-house printers, and those of its independent partners. Then, if the customer wishes, Shapeways includes his or her product(s) in its marketplace, where people can buy and sell 3-D printed goods. It handles everything for the sellers, including payment processing and shipping.

This business model offers an appealing way for people to design and sell their products. It removes the sizable upfront cost of buying one or more 3-D printers, eliminates the hassles of dealing with the post-production processes, and offers a much wider potential customer base than most would likely be able to drum up on their own. It's no wonder Amazon wants a piece of this action, as the business model is not only attractive, but also a great fit with Amazon's current model.

There are other possibilities, too. Amazon could act as a portal for businesses to sell custom 3-D printed products based on their existing product lines and licenses. Let's use Walt Disney, which owns the Star Wars franchise, as an example. If you were a Star Wars fanatic, you could scan, or otherwise enter, a picture of yourself into Amazon's site, and it would produce a 3-D printed figurine with your face sitting atop your favorite character's body.

Want some more support for this theory on where Amazon is likely heading? Let's turn to the patent it was granted last year.

Amazon's 3-D printing services and marketplace patent
Here's the abstract of patent US 8412588 B1 that Amazon was granted in 2013: 

Systems and methods are provided for fabricating products on demand. In some embodiments, a manufacturable model, which may include information about a three-dimensional representation of a product to be fabricated, is received by a user of an electronic system and may be validated by the electronic system. A prototype of the product can be generated based at least in part on the manufacturable model, and the manufacturable model and/or the product can be made available for selection by other users of the system. The product may be fabricated based at least in part on the manufacturable model using, for example, a three-dimensional printer, and may be delivered to users of the electronic system.

Here are what I gleaned to be several of the key takeaways from the patent: 

  • The marketplace for 3-D printed goods will be very similar to Amazon's current marketplace for third-party sellers.
  • Users will be able to sell not only their 3-D printed items, but also will be able to sell, rent, or license their designs.
  • Amazon could produce customers' products using its own 3-D printers, contract out the printing, or do both.

I'm somewhat surprised that the patent office gave out a patent for what looks to my non-expert eye to be just a business model, and one that doesn't seem too unique at that. I imagine, however, that Amazon's process involves something unique buried in the many pages of tech jargon.

Of course, just because a company patents an idea or invention doesn't mean it's going to implement it. In this case, however, it seems a safe bet that Amazon will start a 3-D printing services operation. Not only is the business model a perfect fit with the company's existing model, but the growth projections for 3-D printing are too irresistible to pass up. According to Wohlers Report 2014, the global 3-D printing industry grew 34.9% in 2013, and is projected to grow at a compounded annual growth rate of about 20% through 2021. Amazon's revenues are so gigantic that the company needs to keep entering new high-growth spaces if it wants to continue to grow revenue at a decent clip. 

Will 3D Systems and Stratasys be swept away by the Amazon?
3D Systems' and Stratasys' core businesses, their commercial and industrial ones, don't seem to be in Amazon's crosshairs. However, Amazon's 3-D printing initiatives could take some business from these companies' consumer and prosumer (professional consumer) businesses. 

If Amazon successfully set up a 3-D printing services operation, some designers who might have purchased a 3-D printer to produce their products will likely opt to simply use Amazon's services. This would result in some lost printer and materials sales for 3D Systems and Stratasys. Additionally, there could be some overlap in Amazon's 3-D printing services business and those of the two leading 3-D printing companies. However, it would only be some, because Amazon is likely to remain largely consumer-focused, while 3D Systems' and Stratasys' services operations are targeted at commercial and industrial businesses.

Foolish final thoughts
Amazon has two toes in the 3-D printing space, and we can probably expect it to dip in a third and a fourth relatively soon. Surely, it will want a bigger piece of an expanding pie. For now, it doesn't seem that investors in 3D Systems and Stratasys need concern themselves much with Amazon's 3-D printing initiatives. I'll be keeping investors apprised of Amazon's progress in this space, as well as how the company's moves might affect 3D Systems, Stratasys, and other 3-D printing companies.