Rather than duking it out as competitors, two of the front runners in the 3D printer market -- 3D Systems Corp. and Z Corp -- have decided to get hitched, making a bet that their combined forces will deliver the scale necessary for propelling 3D printing to the next level.
In the latest of what 3D Systems officials call a hard-to-believe 23 acquisitions in a scant two years, the firm has signed a definitive agreement to acquire Z Corp, which has a line of personal and professional 3D printers, and Vidar Systems, a provider of medical film scanners used for digitizing film for radiology, oncology, dental, and other medical applications.
Z Corp's Zprinter line fills in the midrange price point and addresses the need for full color printing
as part of 3D Systems' expanded lineup.
The $137 million cash acquisition, from a Swedish private-equity firm called Context Group, appears to be the largest to date in the 3D printer space and would essentially do two things for 3D Systems. It would fill in gaps in the midrange part of 3D Systems' product line in terms of both price and performance, and it would double its reseller coverage on a global basis.
On a conference call with financial analysts and reporters, 3D Systems president and CEO Abe Reichental said the deal paves the way for the addition of products that are highly complementary to 3D Systems' line.
"We feel it's the right time to take this step," Reichental said. "It helps us address new vertical opportunities. It extends our reach into architecture and MCAD applications, and Z Corp's print speed advantages and color capabilities will help complete the required building blocks for our consumer 3D printer ecosystem."
At nearly $300 million after the acquisition, his company wouldn't necessarily be a powerhouse by some industry standards. But this is a big deal for the 3D printer segment, where there are only a handful of primary players, none of which is any bigger than around $200 million. The idea of combining forces to create some scale is the real impetus behind the acquisition, which Z Corp president John Kawola told us has been percolating since early this summer.
Nice story, Beth. You note that 3D Systems is on a buying spree. Are we seeing widespread consolidation in this market, or is this unique to 3D Systems? Also, where does this leave competition in this market?
Rob: There aren't a whole lot of major players in this segment. The bigs one are Stratasys, Objet, 3D Systems, EOS, and Z Corp, that I know of, and that's straddling both the high-end rapid prototyping sector of the market and the lower end office systems.
I don't think we can say that it's reached a level of consolidation, but 3D Systems, in particular, has been on a buying spree, snapping up niche technologies and smaller vendors. This deal is a pretty big one in this space and from what the players and pundits say, it's all about the company trying to create some scale to grow to the next level. Very interesting, to say the least!
Wow, that's big news in this market. Thanks, Beth, for a very clear analysis. It will be interesting to see what happens in the higher end of the industry I've been writing about (to be covered in a December feature), i.e., the engineering-oriented, low-volume manufacturing area. Similar forces may be at work, and certainly there are similar drivers in terms of size and resources.
What happens when 3D printing becomes commoditized? Aren't we almost at that point already, in which case consolidating around that technology per se wouldn't seem to be a sustainable strategy. Rather, one would have to broaden (or maybe deepen)?
I don't think we're at the commodization stage yet. I think there is tons of interest and the technologies are really coming together, but to take it to the next step, these companies need more R&D dollars, better reseller channels, and stronger alliances with software vendors like the CAD guys. That's what this particular acquisition is all about. To your point, Alex, the acquisition expands their market sectors, grows their reseller channels, and broadens their product line with new capabilities, particularly around color.
23 acquisitions in 2 years? Boy oh boy, those early adopters who saw their technical support consumed in this manner must have been rather nervous. To have your careful research be bought out, and the model you pick dropped in product-line consolidation would be disappointing to say the least.
A company may be trying to grow itself to the next level, but that rate is bound to alienate customers.
@TJ: I totally agree that consolidation at this rate can be alarming, especially to companies having coughed up big bucks for printers. But most of those acquisitions weren't on the scale of this most recent Z Corp purchase. They were much smaller--many more about picking up key technologies rather than adding new models to a printer line. And truthfully, to date, there has been little overlap between any of the product lines of all the acquired companies.
That said, you never know what changes an acquisition can bring, so I guess only time will tell.
Aside from more R&D dollars, better reseller channels, and stronger alliances with software vendors, I suspect the consolidations can also give vendors access to what's become a very wide range of available materials for the somewhat less wide range of available processes. So acquiring key technologies--manufacturing processes and materials--seems like it would also be a main driver.
With that many acquistions, I would guess some of the deals were made to grab marketshare and new customers. In those cases, the deal could be a big gain for the customer that now has a more robust entity as their 3D printer vendor.
Sadly, it is typically BAD for the customer when a company makes a lot of acquisitions. This is more even more true if they are mainly aimed at grabbing customers from the acquired companies, vs. aquiring better technology. The reason is that the company becomes more of a monopoly, increases prices, and there is less competition and less diversity in the marketplace.
Yes Kevin, and sometimes its a mixed bag. The Feds fought AT&T's attempt to buy T-Mobile because it would reduce the number of carriers in the mobile phone market. But it looked like AT&T was buying airwave frequencies rather than marketshare. The Feds didn't see it that way. So, in a rare move they blocked the acquisition.
While 3D systems inc. essentially invented the SLA, and has been the pioneer in the rapid prototyping arena, I did not realize Z-corp was a major player.I would have put Objet as a solid number 2, even postured to overtake 3D system due to their superior resolution alone. Those 2, (3D & Objet) are by far the best I’ve used. Thinking back, I don’t think I’ve EVER used a Z-corp printer.It sure will be interesting to see if the new merger places them solidly in the market in front of Objet for good.
In addition to the materials and other resources and improved reach, something to consider here is the different types of business that these companies pursue. Low-end desktop printers are one thing, and engineering prototypes are another, especially the fit and form but not function type of model. But high-end laser sintering for small volumes in aircraft and automotive use is quite another and draws different customers.
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