Apr. 23, 2015 | By Alec
As the 3D printing community entered the new year on a wave of innovative ideas and interesting products from late 2014, the future seemed very bright in January of 2015. The International CES was also very kind to lovers of 3D printers, but all that optimism has slightly ebbed away as the results of the first quarter of the year are coming in. In fact, it appears that the worldwide 3D printing market (though most data is from North America) has not done as well as many people expected.
This result was slightly expected, especially as we learned of the announcement that Makerbot has failed to hit certain economic targets and is forced to close down its three retail stores and lay off a fifth of its personnel. As Brian Deagon over at investors.com clarified, the market for 3D printer slowed down near the end of the first quarter. Not only is this apparent from the much more aggressive sales tactics and creative financing used in the last couple of months, but also from feedback from 3D printing resellers.
The feedback is especially telling. Piper Jaffray, a U.S. investment bank and asset management firm, got in touch with 62 3D printing resellers of printers and 3D printing service bureau operators (of which 82% were in North America), and all reported a similar picture. Piper reportedly asked resellers about their sales cycles , and about sixty percent of participants reported that sales have remained stable. While not sounding too bad, the last quarter of 2014 reported a stability of 68% and the quarter before that clocked in at 70%. ‘Total system sales in the March quarter were a bit discouraging compared to prior periods, with 23% of surveys responding with an above-plan quarter vs. 35% indicating they were below plan, which produced a net negative of 12%," Piper analysis Troy Jensen wrote.
The two biggest manufacturers of 3D printers, Stratasys and 3D Systems, also haven’t been doing very well on the stock market. On yesterday’s market, stock of 3D Systems stock was down 4.2%, near 31.13. Stratasys, meanwhile, was tradigin near 53.46, down approximately 5%. However, the survey by Piper was more positive about Stratasys than about 3D Systems. ‘Regarding 3D Systems, demand was once again poor, and the story remains the same with resellers unhappy with the company's channel management and product demand,’ Jensen wrote. He has a neutral rating of both, with Stratasys stock with a price target of 64 and 3D Systems of 32. Both companies unsurprisingly missed previous estimates for revenue and earnings.
So what’s going on in the 3D printing market? As you might recall, MakerBot’s misfortune was attributed to overly optimistic estimates about growth opportunities and that is basically what seems to be going on across the market. Growth can definitely be seen, but 3D printers aren’t catching on at the rated that was expected, while the existing market is becoming saturated. 3D Systems in particular also happens to suffer from production delays and reports of mismanagement. Jensen further added that demand is also suffering from price increases and competition from low-end 3D printers. Perhaps the time has come for 3D printing businesses to stop reckless expansion?
Posted in 3D Printing Company
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Joris..agreed. I'm in the standard CNC machine shop industry and many of us are looking hard at 3D printing as an addition to our other lines. The explosion of entry level FDM machines has allowed many of us to purchase one or two and begin training on them. Until this point you really had a hard time selling them to an established shop. Why pay $100k for that when I can get two CNC routers or two CNC machining centers? Up until late 2013 the cheapest 'professional' machine was in excess of $10k and had high monthly fees. No something to purchase on a whim with no understanding....enter 2014 and now we have a couple of them that are now $5k for the purchase with no monthly fees. Now we have a chance to start buying these along with our standard equipment. Now we are starting to look for individuals that are trained on them. We are just now starting to enter a time when the larger number of smaller machine shops (>$15million) are putting them on-line. Like you said...if they came in and asked "Are you going to spend $150k or more on 3D printing this year?" I would have said no...but I already have $25k installed (and growing) that they never asked about. Too many of these purchasing questions are geared toward a sing MAJOR purchase.
Joris Peels wrote at 4/24/2015 9:51:36 AM:
Piper Jaffray's 3D printing surveys have an unsound methodology and far too small a sampling size. They've done this before and asked service bureaus "Will you be buying a 3D printer this quarter" and then concluded that the market was going to be 40% smaller based on this alone. This completely doesn't factor in other businesses, medical, prototyping, aviation etc. It does not capture manufacturing and design businesses buying 3D printers. It is not like a service bureau is going to buy a printer every few months anyway. They purchase 100k and up machines when needed and may use them for a decade or longer. This would be like calling 62 New York cab drivers and asking them if they're going to get a new car this quarter and then concluding based on their answers that the global car market will collapse. I've been warning for years against hype and optimism and have tried to give people a realistic view of the market and 3D printing's capabilities. But, as a decision making tool the Piper Jaffray surveys are useless. Certain players are not doing well. Certain players have over promised and under delivered. Certain players have consistently made poorly performing 3D printers and are paying for this now. Others on the other hand have very strong year on year growth. As for the correction of the stock prices they rose to overly optimistic multiples based on an assumption that they would outperform the rest of the market. These stocks were the only way retail investors could get exposure to the 3D printing hype and as such were over inflated. What we are seeing now is that these companies are actually underperforming the rest of the 3D printing market in terms of growth.
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