The first attempts at 3D printing were credited to Dr. Hideo Kodama, of the Nagoya Municipal Industrial Research Institute, for the development of the rapid-protoyping technique, but it wasn’t until Scott Crump mixed wax and plastic in his kitchen back in 1989, inventing fused deposition modeling (“FDM”), that the 3D printing revolution really began.

The dream of FDM was that people like you or I could own the real-world version of a Star Trek replicator. And by conceivably pressing a button and printing off most of whatever we needed instead having to purchase it, 3D printing would forever change the face of retail.

Additive manufacturing was also set to revolutionize research and design. Then eventually through improvements in technology and materials, 3D printing could be incorporated into the factory assembly line, eliminating waste from traditional tool and die-based methods of component production.

The nascent industry’s potential was nearly limitless as advances in materials science allowed for the future possibility of printing with a multitude of materials, including biological matter, so you could construct anything from screws to skin grafts.

In the end, 3D printing was expected to enable a new generation of “Makers” to construct their world independently and maintain it without outside assistance – it was supposed to free us from our consumerist chains while fast-tracking innovation.

Course, 3D printers at that point were huge, exorbitantly expensive and had limited scope, so it wasn’t until 2002 when Stratasys (SSYS:NASDAQ), the company Crump co-founded with his wife, Lisa, marketed the first 3D printer for under $30,000 that the fire really began to build for the space.

The reality of a printer in every home seemed at least probable, but due to patents and prices, there weren’t a lot of players and not a lot of retail customers.

However, when key elements of IP regarding FDM became public domain in 2009, start-ups came out of the woodwork with cheaper, smaller prosumer printers, each promising to become the “Apple” of the sector.

Makerbot was one of these companies and when it burst through the gates, it seemed the scrappy underdog was poised to take over the prosumer/consumer desktop 3D printing market.

So, it wasn’t surprising that in 2013, Stratasys snapped up Makerbot in a US$403 million-dollar stock deal.

By 2015, there were more than 278,000 desktop 3D printers (under $5000) sold around the globe and a growing number of online Maker hubs where ordinary people offered prototyping services at rock bottom prices.

It felt as though the age of democratic manufacture had arrived and Makerbot would be the one to lead the masses into a new millennium.

Unfortunately, Makerbot and its CEO suffered from delusions of grandeur, the inability to scale and lack of transparency which led the company to faceplant in a similar fashion to Organigram, except Makerbot wasn’t poisoning its customers with hydrogen cyanide through gross negligence, it was just shipping a completely defective product line, undercutting its resellers and walking away from the Open Source Hardware Movement.

It ended up axing 20% of its workforce and closing all three of its retail outlets in April 2015. Then the 3D printing bubble burst in 2016 and the whole industry took a major hit.

How bad is it? Five of the dominant players in the 3D printing sector, Stratasys, 3D Systems (DDD:NYSE), ExOne, Voxeljet, SLM Solutions, AutoDesk, all operate in the red.

It wasn’t Makerbot’s complete meltdown and the various disreputable start-ups that stalled the sector, it was our failure to understand 3D printing and what it would take for us as a culture to bring it into the home.

To properly use a 3D printer at any level, you need to understand at least a little engineering and computer assisted design (“CAD”). I don’t know about you, but I don’t have any science degrees and my understanding of CAD is rudimentary.

I know I am not alone on this, many of us wouldn’t be able to print anything that didn’t already have an existing design on sites like Thingiverse, Pinshape, Tinkercad, Yeggi, Fabster, GrabCAD, 3DVIA, ShapeDo, 3D Hacker, Sproutform and 3D Content Central.

Therefore, 3D printing will never take hold at the retail level until we have the knowledge to use it freestyle and that will take a generation of children growing up using the device to discover the true extent of its capabilities and applications.

Companies like Vancouver-based Tinkerine Studios (TTD.V) with its Tinkerine U program are teaching future customers by bringing 3D printing to classrooms and curriculum for kids the world over.

Even Makerbot, before it flew too close to the sun, moved to create a considerable presence in high schools and universities when it opened its first Makerbot Innovation Centre at SUNY New Paltz in New York in February 2014.

Last year Makerbot held its first annual Makerbot Innovation Centre Summit at its Brooklyn headquarters where leaders from 11 of its Innovation Centres met to discuss best practices and current challenges regarding the implementation of the Innovation Centres within their respective curriculums. 

Right now, outside of hobbyists and a handful of prosumers, the personal 3D printing market remains an educational curiosity, but this necessary approach may begin to pay off in as little as five years if technological advances can level the playing field somewhat between low-cost personal 3D printers and their five-figure counterparts used by professional prototyping firms.

So even though TIME magazine listed Makerbot’s Replicator 3D printer as one of the 50 most influential technological products of all time, you’re not likely to see one on your kitchen counter for a while yet.

So where does this leave you as an investor? Is 3D printing worth your time?

In a word, yes. It’s just a matter understanding the market and matching it to your investment needs.

Stratasys and 3D Systems are moving away from consumers to focus on other industry verticals such as automotive, aerospace, medical and dental. This segment of the sector is slowly coming online as evidenced by Airbus’ recent contract with Stratasys. Then you have Ford’s announcement that it was using a Stratasys 3D printer in its Dearborn, Michigan research center to study ways in which to implement a production scale 3D printing system in its assembly line.

Of course, this is going to take time so big companies like 3D Systems and Stratasys are going to run a hefty deficit until production scale 3D printing becomes a reality.

Despite the relative safety of investing in “blue chip” size companies and the inevitability of direct additive manufacturing, I wouldn’t discount the personal 3D printing market.

I think the returns will be much higher in the consumer segment and this niche will be won over by the little start-ups that could.

It’s really early in the race, but I knew I came across a candidate in Tinkerine Studios. Why?

Well, for one thing, Tinkerine is turning a profit. That’s right, a profit.

In fact, the company announced that it had a record net income of $243,755 in Q3 2016 compared to a net loss of $138,589 in the matching 2015 quarter. Not bad for a company founded in 2012.

I interviewed Tinkerine’s Co-founder and CEO, Eugene Suyu, a few years back. He was an ardent advocate for the space and the education it would take for the market to thrive.

Suyu got the idea for Tinkerine after toying with personal 3D printers while still in university which he felt were sub-standard. He decided to build a printer he would happily use himself. The result evolved into the company’s flagship, DittoPro 3D printer.

As Suyu toured me around the facility, I felt like I was talking to the next Steve Jobs. He spoke about the long-term outlook of the industry and how 3D printing would alter our perfection oriented work ethic with the concept of on-going innovation.

He knew as well as I that eventually hardware would be surpassed by services and accessories, and as such, Tinkerine has diversified it offerings to include all three.

We discussed Tinkerine U, its progress and programs, and I knew he wasn’t just flapping his lips trying to keep the lights on.

Did I mention Tinkerine is turning a profit and 3D systems isn’t?

Yes, there is risk here, it’s a small company, for God’s sake, but a small company will be more likely to successfully adapt as the space continues to evolve.

In the end, if you’re patient and realistic, the 3D printing space is still full of opportunity. It just depends on your risk level, due diligence and serendipity.

 

 

–Gaalen Engen

http://twitter.com/gaalenengen

 

FULL DISCLOSURE: None of the companies mentioned in the article are EQUITY.GURU clients and even though the author has a certain affinity for Tinkerine Studios, he has no connection to it, he just liked their story.

Written By:

Gaalen Engen

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