3D Systems

Part
01
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Part
01

3D Systems: Business Units

Company Overview

Core Businesses

Healthcare Services

Materials

3D Printers

Software

Part
02
of six
Part
02

3D Systems: Growth

Based on revenue and new product development in recent years, healthcare-related applications and software are the primary business units that are driving the 3D Systems' overall growth.

Business Overview

  • The business model of 3D Systems involves the sales of products, materials, and services.
  • The products category includes 3D printers, 3D scanners, software, healthcare simulators and digitizers, and haptic devices.
  • The materials category includes different materials that are used with their proprietary 3D printers and acquired conventional dental materials.
  • The services category includes "warranty and maintenance on 3D printers and simulators, software maintenance, on-demand manufacturing solutions, and healthcare services."

Primary Business Units

Healthcare

  • 3D System's healthcare revenue includes "sales of products, materials, and services for healthcare-related applications, including simulation, training, planning, 3D printing of anatomical models, surgical guides and instruments, and medical and dental devices."
  • According to the 2018 annual report of 3D Systems, revenue generation from this unit made up 32.8% of the company's consolidated revenue.
  • Revenue from this unit rose by 19.5%, from $188.7 million in 2017 to $225.5 million in 2018.
  • The company hinted that the growth in this unit is down to commercialized new 3D printers and the higher demand from healthcare customers across all geographical regions.
  • In 2018, 3D Systems launched new products for dental labs such as NextDent 5100, FabPro 1000, and DMP Factory 500, and commenced shipping products such as DMP Flex 350, and ProX SLS 6100.

Software

  • The software business unit includes sales and serving of haptics and scanners.
  • In 2018, revenue generation from this business unit contributed 14.0% of the company's total revenue.
  • Revenue from this unit rose by 5%, from $91.7 million in 2017 to $96.3 million in 2018.
  • The rise in this unit was attributed to rising demand in "healthcare, on-demand manufacturing, and software services."
  • In 2018, 3D System launched several "next-generation additive manufacturing solutions, a range of materials and new software."

Research Strategy

To determine the primary business units that are driving 3D Systems' overall company growth, your research team searched through the annual report of the company to identify key business units that vital to the company's performance. While the company does not pinpoint which section of their business that they are spending more money to develop, the report shows that they are focused on developing new products to boost the business segment that returns the most revenue. This can be seen from the report under the "Recent Developments" section. Furthermore, the report noted that 3D System did not complete any acquisition in 2018.
Part
03
of six
Part
03

3D Systems Competitors, Part 1

Rows 1 to 6 of the attached spreadsheet feature the requested details of 3D System's competitors, Stratasys and Proto Labs in columns C and D, respectively. Each competitor is examined based on its revenue, employee count, solutions provided, and the verticals served, in comparison to 3D Systems.

Stratasys

Proto Labs

Research Methodology

To identify the competitors, your research team used business intelligence tools like Crunchbase, Craft.co, Owler, and industry and market research reports. We then checked the companies' websites to uncover information on the verticals they serve and the solutions and products they offer to ensure they correspond to those provided by 3D Systems. Therefore, the two competitors analyzed in the attached spreadsheet, i.e., Stratasys and Proto Labs compete directly with 3D Systems in various verticals and industries, like aerospace, automotive, healthcare, etc. Moreover, the competitors' employee count and annual revenues fall in the same range as 3D Systems.
Part
04
of six
Part
04

3D Systems Competitors, Part 2

Renishaw and Materialise are two more direct competitors to 3D Systems identified based on the comparability of their market capitalization, offerings, and the industries they serve. Details on these two companies are available below, as well as in columns E and F of the attached spreadsheet.

Renishaw

  • Renishaw offers exceptional precision, control, and reliability through the design, development, and delivery of solutions and systems. As a world leader in 3D metal printing, it designs and manufactures industrial machines that use metal powder to print parts. It operates in similar industries as 3D Systems, equally offering rapid prototyping, dental products, and software solutions, among others.
  • Renishaw's market capitalization is $3.78 billion (£2.93 billion), compared to 3D Systems' market capitalization of $1.53 billion.
  • Renishaw operates in the same industries as 3D Systems such as the aerospace, automotive, manufacturing, medical & healthcare industries.
  • Renishaw positions itself as "one of the world's leading engineering and scientific technology companies, with expertise in precision measurement and healthcare." It also considers itself a world leader in the field of metal 3D printing.

Materialise

  • To empower customers to go from idea to serial production, it offers co-creation, design & engineering, rapid prototyping, and additive manufacturing, using technologies such as stereolithography, laser sintering, fused deposition modeling (FDM), metal 3D printing, vacuum casting, and TetraShell. Similar to 3D Systems, Materialise offers software solutions and 3D printing services.
  • Compared to 3D Systems' market capitalization, which stands at $1.53 billion, Materialise has a market capitalization of $1 billion.
  • Materialise serves the same industries as 3D Systems such as the aerospace, automotive, healthcare, and manufacturing industries.
  • Materialise positions itself as pioneering "innovators you can count on," with "the largest group of software developers in the industry" and one of the world's largest 3D printing facilities.
Part
05
of six
Part
05

3D Systems: Business Goals

Some current and future business goals of 3D Systems include adapting to changing technology and customer needs, cyber-security, and attracting and retaining key employees and management personnel.

Adapting to Changing Technology and Customer Needs.

  • The company has hinted that its industry is rapidly evolving in terms of technology, user and customer requirements and preferences, new standards and practices, and the introduction of new products made using new technologies.
  • The company stated that through their ongoing research and development programs, they can "enhance and improve the functionality and features of their products, services, and technologies" to maintain technological leadership.
  • 3D Systems noted that they are "pursuing a strategy focused on offering a comprehensive ecosystem that provides solutions aimed at healthcare, dental, aerospace, automotive and durable goods verticals to address professional and industrial applications."
  • This goal is driven by a change in 3D printing through prototyping to a new trend, which involves using additive manufacturing for production from prototyping.
  • In light of this, the company is focused on "innovation and new products to drive expansion into 3D production through improving durability, reliability, repeatability, and total cost of operations of 3D printing solutions."

Cyber-Security

  • 3D Systems reported in 2018 that the company's information technology infrastructure had experienced cyber-security threats.
  • These threats come in the form of unauthorized attempts to access the company's sensitive information.
  • As such, the company went through cyber-security assessment analyses which identified steps to enhance their cyber-security safeguards.
  • They have also implemented additional security measures, cyber breach insurance, and cybersecurity awareness training across the company to ensure that they detect and respond to any cyber-attack.
  • Going forward, the company plans to "expend significant additional resources to modify their cybersecurity protective measures, to investigate and remediate vulnerabilities or other exposures or to make required notifications" to ensure that they avoid financial losses that may arise from litigation, cyber, or other security threats.

Attracting and Retaining Key Employees and Management Personnel

  • 3D Systems understand that the success of the company is dependent on the continued service and performance of key management personnel and employees.
  • They hinted that competition exists in the 3D printing industry for "senior management and other key personnel (including scientific, technical and sales personnel)."
  • They also understand that some of their competitors have more resources and experience. As such, 3D Systems offers "competitive compensation packages to attract and retain key personnel and engage in regular succession planning for these positions."

Research Strategy

To identify some current and future business goals of 3D Systems, your research team commenced by searching through the press release section on the company's website. While the company frequently update this section, an extensive search down to 2018 did not identify clear statements by the company on its current or future business goals. However, we found general business goals from statements made by the CEO which hinted that the company "remains focused on cost reductions, cash generation, and profitability in the near-term and driving long-term growth with the opportunities they have in their product portfolio and target markets." No further insight was added to this statement.

Next, we searched through the annual report of the company for any insight into the current and future business goals of the company which may have been communicated to the company's investors. While we found a couple of business goals from this report, they were all current goals that are expected to continue with no definitive timeline to when they look to accomplish them.

We also searched through media outlets for interviews and expert presentations on the company to gain further insight into the goals of 3D Systems. However, we could only gather publications related to innovations and the business strategy of the company. Due to the limited availability of distinct goals of the company in terms of current and future, we have articulated three goals from the 2018 annual report of the company which is centered on the current and future goals of the company.
Part
06
of six
Part
06

3D Printing Industry SWOT

The global 3D printing industry is expected to grow significantly over the next few years, but this overall growth might become hampered due to a limitation of product size, absence of standard process control, and high cost of materials. However, improvements in 3D printing technology and a more efficient manufacturing process are creating economies of scale, which will promote growth in the market.

Strengths

  • The global 3D printing industry is currently experiencing strong growth and is projected to continue growing significantly through 2025. This growth is due to reasons such as the reduction of errors and improved quality, the ability to build customized products, a decrease in manufacturing cost and time, accessibility by an increasing number of people, sustainability, and rising demand in manufacturing and supply chain management.
  • 3D printing has an advantage over traditional subtractive production methods as it is less wasteful, in that it uses the necessary amount of material for constructing parts, and is relatively more energy-efficient. Also, the materials are mostly recyclable and reusable. These attributes make it more sustainable, as it decreases the impact of business activities on the environment.
  • Its suitability for prototyping helps in avoiding the risk of producing faulty final products with associated costs, because of the high conformity of the 3D printed prototype to the final product.
  • Moreover, although professional metal 3D printers can range between $50,000 and $1 million, 3D printers have generally become more popular with cheaper options that cost below $300.

Weaknesses

  • While the global 3D printing industry is expected to grow significantly over the next few years, this overall growth might become hampered as a result of a limitation of product size, absence of standard process control, and high cost of materials.
  • Although some 3D printers like DMLS and SLM are capable of producing strong parts, generally, the weakness of products manufactured using 3D printing limits its use in critical applications. Due to the layer by layer methodology 3D printing uses, products can be 10-50% weaker and more fragile in some directions relative to bulk materials.
  • The advantages of 3D printing lie in low-volume manufacturing. Unlike in 3D printing, where the production price per unit decreases minimally, the production price drops significantly as volume increases using traditional manufacturing processes. Because 3D printing is not as cost-effective, it is more suited for small batch runs.
  • Post-printing processing involving sanding or painting is usually required to ensure that the product is ready for use. So, although the 3D printing process saves time, the time required for post-printing processing still needs to be factored in. Besides this, there might also be a need to create support parts, especially when there is an overhang or underhang on the object.

Opportunities

  • Opportunities are being created in the 3D printing industry due to improvements in the technology, which, along with a more efficient manufacturing process, is creating economies of scale, which will promote growth in the market.
  • For instance, in the medical industry, 3D printing is in demand for the "manufacturing of personalized medical implants and prostheses." Also, the aerospace industry's need to mass-produce without incurring the high costs associated with specified designs is expected to foster more growth in the market this year.
  • The possibility of alternating or simultaneously printing plastic, ceramic, and metal with the same machine using 3D-figo's Fused Feedstock Depositioning process could open up new markets for the industry. If it becomes commercially available, ceramic production will become faster and more convenient.

Threats

  • As 3D printing is evolving from its use in rapid prototyping to large scale industrial manufacturing, concerns are beginning to arise in government circles regarding potential abuse of intellectual property and product liability, as well as the health and physical safety of workers. It is, therefore, necessary for the industry to work with governments to develop a safe and suitable regulatory framework that protects growth in the industry as well as other stakeholders.
  • Whether 3D printers are proprietary or open-source, because they are computer-controlled, they have attributes that make them vulnerable to cyberattacks. The addition of networking makes them IoT devices, which further exposes their flaws. As 3D printing moves towards adoption in mainstream manufacturing, this issue represents a threat, which the industry needs to address beforehand.
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