3D Systems (DDD), a maker of 3D printers that cost as much as $950,000 each, is rolling out cheaper products and services that could let consumers print out plastic Barbie dolls and bike parts at home.
For more than 20 years, 3D Systems and rival Stratasys (SSYS) have sold printers that layer materials to create real-life objects—everything from vases to machine components. The devices have been used by manufacturers such as Apple (AAPL) and Nokia (NOK) to build prototypes of products or to make parts. While a few hobbyists have splurged on the technology, only now is 3D printing becoming cheap enough to appeal to consumers.
The move may open up a bigger market for the printer manufacturers while transforming the way some consumer products are delivered. Rather than having to buy replacement parts at a store or getting them through the mail, users could simply print them out. Toys and other small objects would be created the same way.
“If we can democratize access to the toolbox, our user base will increase,” 3D Systems Chief Executive Officer Abraham Reichental says. “This technology is going to end up in your kids’ bedrooms and on the factory floor.”
3D Systems, the largest maker of 3D printers by revenue, will show off a new consumer model at the Consumer Electronics Show in Las Vegas this week. Sometime in the first half of the year, the Rock Hill (S.C.)-based company plans to start selling a printer costing about $1,000, Reichental says. That’s $300 below the cost of its current cheapest model.
The company will also introduce a website that lets consumers download and modify designs on computers and on Microsoft (MSFT) Kinect gaming devices. If users don’t have printers, a service will let them order custom products for as little as a few dollars, Reichental says. Eden Prairie (Minn.)-based Stratasys, meanwhile, is considering making a low-cost printer for kids.
The move could help the companies reinvigorate sales. The industry’s growth is expected to decelerate this year from its pace in 2010 and 2011, says Brian Drab, an analyst at William Blair & Co. in Chicago. Shares in 3D Systems and Stratasys declined in value last year.
“You have difficult comparisons with the prior year—and economic uncertainties,” Drab says.
The consumer push also may help bolster profit margins, even as the price of printers drops. If more people buy the devices, sales of materials and services will grow. Margins on those materials, such as plastics, can be almost 80 percent—much higher than what companies make on the hardware, says Andrea James, an analyst with Dougherty & Co. in Minneapolis.
The printers create items by taking computer-generated designs and using a nozzle to replicate them, layer by layer, often with molten plastic or powder. Total 3D printing sales are expected to reach $3 billion by 2016, up from $1.4 billion in 2011, according to Los Angeles-based research firm IBISWorld. The market could end up being larger if new applications such as toys take off.
“If they do it right, toys might be a big success,” says Terry Wohlers, founder of consulting firm Wohlers Associates in Fort Collins, Colo. “It could be the last toy you ever buy your child. It’s a multibillion-dollar market.”
Stratasys is contemplating making an inexpensive toy that would let kids manufacture objects of their own design, said Jon Cobb, a vice-president at the company. About 40 percent of Stratasys’s sales currently come from schools and colleges, which use the gear to teach science.
The market for 3D printer toys alone could be worth $10 billion a year—many times more than the existing 3D printing market, Wohlers said. In coming years, the industry could attract toymakers such as Hasbro (HAS) and Mattel (MAT), as well as Amazon.com (AMZN), Google (GOOG), or Apple, he says.
Existing 3D printer makers could become their rivals or partners. Stratasys already makes 3D printers for Hewlett-Packard (HPQ), which resells them under its own brand.
“It wouldn’t surprise me at all if one of the big players would want to jump in,” Reichental says. “Our best defense is to become an 800-pound gorilla before they eat us.”
To get its printers into more hands, Stratasys is expanding its leasing program, Cobb says. U.S. customers can already lease a printer for as little as $280 a month, he says.
3D Systems’s latest price cuts follow years of declining costs. From 2010 to 2011, the average price of its printers dropped by half, to about $25,000, Reichental says. In 2010, the company acquired Bits From Bytes, a maker of affordable printers, which accelerated the trend.
3D Systems has spent more than $10 million on acquisitions in recent years, and it’s stepped up research and development to prepare for the consumer push, Reichental says. The company also consolidated its personal and professional printer units this month.
“The next five years will be really transformative,” he says. “We are nearing a tipping point.”