The 3D Printing Industry’s
Coming Turf War

June 26, 2013 | Kyle Chayka

Brooklyn’s MakerBot is not the largest 3D printing company in the world, but its efforts to transform a relatively niche, industrial technology into a genuine mainstream revolution — in which regular people can design and print physical objects as easily as they now print photos — have made it the most visible avatar of the industry. MakerBot seems to be on the verge of a breakthrough. In a pivotal moment for 3D printing, MakerBot recently announced that it will be acquired by the Minnesota and Israel-based Stratasys, a manufacturer of professional-grade 3D printers and the second-largest company in the 3D printing industry.

The acquisition comes at a time when the 3D printing industry is being increasingly consolidated into two aggressive companies, each one buying up dozens of smaller businesses in an effort to control as much of the commercial printing landscape as possible before the technology goes completely mainstream. Like Apple and Microsoft warring over home computing, Stratasys and South Carolina’s 3D Systems are fighting it out to sell you your first desktop 3D printer.

3D printing, also called additive manufacturing, turns digital files into physical objects by building them up layer-by-layer. (Imagine a cucumber sliced into paper-thin slivers by a mandolin and then put back together.) Similar to inkjet printers, most 3D printers use nozzles that extrude material onto a flat surface, but their printerheads move vertically as well as horizontally, shifting up to the next layer after the first is completed. The technology has been used to create complex machine parts and speed up industrial prototyping, but home users are now adopting 3D printing to create everything from customized action figures to intricate jewelry and designer furniture. 3D printing gives everyday consumers the power of manufacturing.

Founded in 2009 by Adam Mayer, Zachary Smith, and Bre Pettis, MakerBot became the go-to brand for home printing by producing a series of accessible, relatively affordable desktop 3D printers like the Replicator, which cost just $1,400. Its Replicator 2 ($2,199; soon to be sold on Amazon) built on the success of the first machine with a larger printing area and higher resolution. The company wants to show average consumers, the same people who buy smartphones and tablets, that they have a use for yet another new device in their lives.

The economic argument for getting a printer is that it becomes possible to make, rather than buy, your own household accessories and replacement parts. Printing is also creative — it’s fun to customize the material world. Pettis previously worked as an art teacher and an assistant in the London Jim Henson Creature Shop. In his signature chunky, black-frame glasses and dramatically curled graying hair, he is something like the Steve Jobs of 3D printing, bringing a miraculous creative technology to the masses. It “allows people to make things that didn’t exist before they thought of them,” the soft-spoken founder explained to a gathered crowd of journalists in a press conference announcing the acquisition. “I felt the potential energy of these machines going into the world.”

Where MakerBot emphasizes its hip, creative spirit, Stratasys and 3D Systems are all about business. The former was founded in 1989 by Scott Crump. In May 2011, it acquired Solidscape, a printer manufacturer, for $38 million. Then, in December 2012, the company merged with Objet, a manufacturer of a range of 3D printers from lower-end desktop models to professional laboratory setups, resulting in a single company valued at $3 billion. Stratasys hit $98.2 million in revenue for the first quarter of 2013 with a prediction of $430 million by the end of the year, occupying 3.4 percent of the commercial 3D printing industry, according to a 2013 IBISWorld report.

3D Systems, which was founded in 1986 by Charles Hill, the inventor of 3D printing, has become the industry’s great white shark. Starting in 2009 it embarked on an aggressive campaign of acquisitions and picked up 16 companies in 2011 alone, including Alibre, a printing software designer, Formero, an Asian print-on-demand service, and Huntsman Corporation’s line of stereolithography machines. It currently occupies 15.2 percent of the industry. To compete in the consumer market, 3D Systems also launched the Cube, a desktop printer that sells at a base level of $1,299 and is now stocked at Staples, the first mainstream retail outlet to sell printers.

Such is the coming war over 3D printing. Stratasys and 3D Systems are competing to create a vertically integrated 3D-printing marketplace that sells everything from digital printing software to industrial prototyping services, design files, home printers, and printing supplies. As they start to butt heads, the two companies will segregate their turf, eliminate cross-compatibility, and increase digital rights management restrictions on files, which are currently scarce in 3D printing. Eventually, a home printing user will have no choice but to buy equipment, materials, and files from the same company. Now that MakerBot is out of the running, only two options remain.

Choosing a side was likely a good business decision for MakerBot. By joining Stratasys, it gets access to better business infrastructure, more designers, and patent resources. MakerBot sold 11,000 printers since September 2012, but 2013 desktop printer sales worldwide are estimated to reach 70,000. Meeting that demand will require larger facilities and more employees, which Stratasys is poised to provide. MakerBot will also stay independent as a brand, and therein lays its principal value to Stratasys. With the acquisition, the company will jump into the consumer space with an established brand, providing a much better head start than if Stratasys decided to develop and market its own consumer-grade printer.

As the first company to make 3D printing look fun, can MakerBot stay cool even after it’s absorbed? Stratasys will have to foster that independent spirit if it wants the venture to thrive and truly dominate the desktop printing business. But for now, the company has won a prominent battle, if not the 3D printing war.