3D Systems Makes Big Move into the Service Bureau Business

3D Systems, the company that virtually created the rapid prototyping industry in the 1980s, announced a dramatic shift in business strategy today.

The company will now emphasize production of parts for overnight delivery, partly as a result of the year-old slump in orders for rapid prototyping machinery. Its new business is called 3Dproparts, which 3D Systems described as "the world's largest rapid prototyping and manufacturing parts service."

In a conference call, CEO Abe Reichental told Design News that year-to-date orders for SLA equipment are down about 25 percent compared to the same period last year. "We've been climbing out of that ditch very slowly," he said.

The business for parts, filled by companies called service providers, is the biggest revenue opportunity area in the business, he said.

To jump-start entry into the service business, 3D announced the acquisition of Acu-Cast Technologies, a service provider based in Lawrenceburg, TN. In addition to tooling and urethane casting departments, Acu-Cast has several rapid prototyping assets:

·       Six 3D Systems iPro stereolithography centers,

·       Two 3D Systems 5000 stereolithography machines,

·       One  3D Systems 3500 stereolithography  machine,

·       Six  3D Systems 250/50 Stereolithography solid-state systems, and

·       One 3D Systems ThermoJet Solid Object Printer.

What Acu-Cast doesn't have is equipment from competing producers of rapid prototyping equipment, such as the fused deposition modelers sold by Stratasys that makes parts from thermoplastics. Reichental told Design News that 3D Systems "will look very closely" at the acquisition of competing technologies in order to become a full capabilities service provider.

One problem could be the potential that service bureau customers of 3D Systems would view them as a competitor in the crowded market to sell parts. Even some large plastics processors have announced plans to sell RP parts over the Internet.

Reichental said customers were briefed on the company's plans as the acquisition process was under way. He said "they get it" and reacted positively. He offered the potential for other service bureaus, particularly small ones, to join a sales network with 3D Systems.

Even R&D will be affected. "We will definitely adjust our R&D goals," said Reichental. Emphasis will shift to technology that supports its service bureau business, such as more materials and more processes.

"We are also asking ourselves what kind of large-volume production capacity can we develop for our use in house so we can develop a level of differentiation for our customers," Reichental said. The comment refers to a growing trend to use technologies originally developed for rapid prototyping for low-volume production requirements. The primary advantage is the elimination of tooling costs.

Reichental briefed investors on the news yesterday morning, and the company's stock nudged slightly higher afterward and then dropped. 3D systems stock has traded in a very wide range in the last 12 months, from a low of $3.76 per share in March to a high of $14.57 a year ago. Stock was trading around $9.15 late in the session. 3D Systems narrowed its net loss in the first six months of 2009, compared to the same period in 2008.