According to Paul Eremenko, director of Google's (NASDAQ:GOOGL) (NASDAQ:GOOG) Project Ara, a modular smartphone-component project aimed at creating a customizable smartphone platform, 3D-printing technology -- and, therefore, 3D Systems (NYSE:DDD) -- will not be part of the customization process. Back in Nov. 2013, 3D Systems announced that it would be teaming up with Google on Project Ara, when Google tasked it with inventing a continuous, high-speed, 3D-printing production platform and fulfillment system for Project Ara.
However, in the video below, Eremenko explains his reasoning why 3D printing will no longer be used as part of Ara's initial debut. The relevant segment can be found between 56:20 and 58:05.
This development suggests that 3D Systems' racetrack design, whereby print beds move around a track and visit various print-head stations, isn't ready for creating finished parts that meet Project Ara's standards. This is despite 3D Systems' repeated claims that this platform is up to 50 times faster than existing material-jetting 3D-printing technologies, and multi-material smartphone components with conductive properties can be made in a matter of minutes.
Although dated, because it talks about the specific needs of Project Ara, the following video from 3D Systems explains the 3D-printing racetrack platform in more detail:
The bigger implications
Beyond the setback of no longer working with Google on Project Ara, investors could also view this development as a blow to 3D Systems' future R&D pipeline, because it puts into question whether 3D Systems will be able to create a viable 3D-printing manufacturing platform for larger-scale applications that demand high speeds in the next few years.
Previously, I had put a lot of weight behind 3D Systems' racetrack 3D-printing platform as a way for the company to fend off competitive threats, especially in light of Hewlett-Packard's upcoming Multi Jet Fusion 3D-printing technology that claims to be 10 times faster than today's material extrusion and selective laser sintering technology. Now, with Google's endorsement of 3D Systems' 3D printing racetrack platform off the table, I'm not as convinced that it's near ready for primetime -- and the company may not be as well insulated from the threat that HP's Multi Jet Fusion poses.
All is not lost?
According to Stacey Witten, 3D Systems' vice president of investor relations, the 3D-printing racetrack platform was already in development before Google's Project Ara came along, and investors should expect to see some monetization from it in 2015. In other words, 3D Systems is charging ahead with bringing this platform to market, despite losing Google's strategic endorsement.
Regardless of how 3D Systems wants to market its 3D-printing racetrack platform without Google onboard, Google's abandonment sends a message that puts into question the manufacturing capabilities of the platform, which isn't a positive development for investors.
Steve Heller owns shares of 3D Systems, Google (A shares), and Google (C shares). The Motley Fool recommends 3D Systems, Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of 3D Systems, Apple, Google (A shares), and Google (C shares). 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.
More from The Motley Fool
Why Exact Sciences, A10 Networks, and 3D Systems Slumped Today
Find out which of these companies could face new competition.
Why 3D Systems Stock Plummeted 29% in November
The 3D printing company's stock was walloped by poor third-quarter earnings and its withdrawal of full-year guidance.
Why 3D Systems Stock Popped 11% on Monday
Piper Jaffray likes the stock ... but only a little. And the gains for the 3-D printer maker's stock based on its upgrade wound up similarly small.