Faballoo appears relaxed about this news of the merger of two 3D Printing industry giants, stating that "We had been wondering what might happen to Objet after 3D Systems' recent acquisition of ZCorp, which put the industry on notice that major consolidation was underway. Objet was a big target, with its interesting technology and large size. Was 3D Systems was interested in acquiring Objet? With their recent pattern of acquisitions, probably. However, in this case Stratasys prevailed and now is the largest 3D printing manufacturer in the world today."
We are not so sure.
Industry consolidation is usually a signal that individual companies are not making it in the marketplace. Companies set out to combine forces to stave off the inevitable. They use cross-selling of each other's products, to each other's customers, in order to generate new revenues that they were failing to create alone. 3D Systems have acquired ZCorp, and now Stratasys has merged with Objet. What's next? Stratasys merging with 3D Systems! If ZCorp and Objet were great printers, why could they not have survived on their own. ZCorp and Objet are great printers, so why these acquisitions?
To those who new to the world of 3D Printing it looks and smells like a hot new industry, especially with all of the activity at the hobbyist and consumer end of the market, with companies like MakerBot and Shapeways. Yet additive manufacturing, in its various guises, has been around for twenty years or more. Perhaps the technology is mature. Perhaps it was time for consolidation? Maybe 3D Printer innovation was coming to the end of the line. Surely not?
Or perhaps there is something more interesting going on? Is the 3D Printer/Printing industry 'servitizing'?
Servitization is defined by Wikipedia as the conversion of product businesses into services businesses.
For example, GE Power Systems used to sell generators, now it leases power. This is a step beyond just adding maintenance services to the generator business. It's a whole new business model. GE has been taken down this road because of the commoditization of its products and component supply chain, and also because of the escalating needs and expectations of their customers. Perhaps 3D Printers are also coming under the pressure of commoditization and the increasing requirements and expectations of customer? Maybe it is only possible to make money in 3D Printing services? If so, that makes for an interesting analysis.
2D Printing did not follow this path. HP's printer unit did not have to get into the Print Services business in order to survive as a printer manufacturer. Indeed, the reverse was true. When 2D Printers were unreliable and expensive, bureau services ruled the roost. When Printers become cheaper, fewer consumers and businesses used services, they just went out and bought a printer of their own. Perhaps that is what is not happening with 3D Printers, hence the acquisition of ZCorp and Objet. Perhaps only the 3D Printing service companies were buying enough printers to keep ZCorp and Objet as viable long term business? If 'servitization' is happening to 3D Printing at the current, then this could be an indicator that either:
- The market is too narrowly defined and the predicted explosive growth of 3D Printing by business and consumers maybe being hyped, and/or
- 3D Printers are simply too complex to use by themselves, and businesses are instead looking for 3D Print Services
So with this consolidation taking place, as evidenced by the rash of recent acquisitions and mergers, are we at the end of one 3D Printing cycle, and the start of another, or is the industry already facing a struggle between products and services? What do you think is happening?