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3d System and 3d Printing Essay

As a radical innovation, 3D printing has been introduced to market over 30 years since 1980s. This technology revolution doesn’t only change the process of molding; it also adapts its industry to go green by reducing wasting materials. In the contrast, object is produced by traditional technology (subtractive process) generates surplus cut material. In the early period of development, it was applied in hobbyist uses and industry uses such as design visualization, prototyping, architecture, education, and healthcare. In 2000s, along with mass launches of portable 3D printers from several companies, 3D printer has stepped on consumer product market; also, printed objects have been transformed from components or prototypes to finished goods. The personal 3D printer is incremental innovation of 3D printing. Basically, it was developed from industry 3D printer by design, size, and accessibility. Cube® as 3D Systems’ first personal 3D printer is part of company’s strategy which is to accelerate 3D printer penetration. Five growth strategies

* Expand on-demand-parts services
* Accelerate 3D printer penetration
* Grow healthcare revenue
* Consumer and retail
* Create Seamless digital scan, design and print platform 3D Systems acquired Rapidform which is a leading global provider of 3D scan-to CAD and inspection software tools, located in Seoul, South Korea in 9 October 2012. 3D Systems is going to achieve its fifth growth initiative: to create a seamless, digital scan, design and print platform for the benefit of its customers. 3D Systems would broaden their range of capabilities with complementary products and technology, and extend its coverage and breadth globally with a significant foothold in South Korea and Japan.

Technological Opportunities and Innovation

The company has been playing as a leading provider in 3D printing business for over 25 years. It mainly focuses on business purposes e.g. making a rapid prototyping and manufacturing part. The research and development team of the company work closely with marketing department and foresee an opportunity gap in the current market. The team has an idea to entering into “home personal 3D printing” market by launching a new product line called Cube® which allows people to print real object in three dimensions. Concurrent with introducing Cubify.com as a marketplace and meeting place where artists, designers, children and makers can sell their 3D designs and anyone can

Cube® in Product Life Cycle

According to Product Life Cycle strategy, 3D Systems and its Cube® have been successfully proving the Introduction stage and are ongoing with Growth stage. The attention has been captured by hyping up the publicity and put the personal home 3D printing into recognition. All sources of public media e.g. Magazine, Newspaper, YouTube, News, Trade Event are widely presenting the debut of company innovation of home personal 3D printer and has been awarded as the winner of “Popular Mechanics Breakthrough Award 2012”.

3D Systems Focusing Strategies

In order to move along from Introduction period to Growth, the company has put its focus into 4 main company strategies which one of them is “Accelerate 3D printer penetration”. It is emphasis on expanding company distribution channel through reseller and subsidiary around the world which currently the company only offers click-and-mortar store.

Cube® in Adoption Curve and its Development Culture

Since the personal home 3D printer is new to market, with its intuitive experience offering to consumer, it is not difficult for Innovators group of people to adopt the printing technology. Therefore, with its product features—Simplicity of Plug and Play, WiFi printing support, and more pattern available to download on cubify.com, it would not be an obscurity for Early Adopters to adopt the system as well.

Furthermore, Cube® 3D printer is currently likely positioned on the upper right side of the 3D Systems’ Development Culture model where it is considered to be such a completely new and breakthrough product of the year. The company will constantly improve the printer itself as seen in the company annual report under research and development expenses increased by $5.7 million, or 58.1%, to $15.4 million in the first nine months of 2012 from $9.7 million in the first nine months of 2011

3D Systems Development Culture

Cube® and its complementary product

The selling point of the Cube® 3D printer is not only the machine itself but the company also offer a cloud service community—Cubify.com. ————————————————-
Cubify turns mobile device, PC or tablet into a powerful mobile digital canvas to unleash creativity and bring ideas to life in 3D. On Cubify.com, user can find coloring book, cloud gaming and share creativity in 3D experience. The site also offers intuitive 3D Apps, rich 3D printable content libraries of games, puzzles, and any other collections for creation, purchase, share, or even sell for money. Additionally, the website also provides online printing service and has the printed object ship it right to customer later by air mail. Therefore, this service has driven the company to hold competitive advantage over competitors. People are increasing the awareness of cloud service where everything can be done over the air. The company can create the value of its product by offering a place where community begins which increasing in customer lock-in strategy and generate more revenue to company in long run.

What company strategies beyond launch Cube®:
Be fast mover

The world’s first personal 3D printer was launched by Stratasys in 2009. At the same time, 3D systems also launched its first personal 3D printer to become one of fast movers to better understand the barriers to broad utilization. As technology world, time is everything. 3D systems entered the market early means to quickly build large installed based as many as its industry section, and keep its leading position in 3D printing technology.

They are now working on a multi-front strategy to democratize access and accelerate the adoption of 3D printing for the student, the hobbyist and ultimately, the consumer. The real keys are utility and affordability. Cube is part of its plan.

Razor-blade strategy

The launch of Cube reflects company’s penetration strategy that attempts to make customers to lock in with its products. The price of Cube is affordable, in addition to its high quality of product and service such as friendly-use application, various materials and colors, platform named Cubify.com where users can download and upload sources. Printer won’t be only product customer will purchase. Once printer is purchased, customer needs to keep purchasing other complementary products such as materials, also service such as applications. They will continuously make profit for company; even the revenue of materials and service is greater than the revenue of machine.

R&D

As a technology company, innovation is critical, and one of the key drives of innovation is research and development. 3D systems’ expense in R&D is increasing gradually to ensure its leadership through technology and business innovation.

Table: 1. 3Dsystems-2012 Financial Statement

Protect innovation

Only developing and introducing new technology and product that will meet the customers need is not sufficient to be successful. To gain profit and increase market share, the company need to protect the product and service and development and manufacturing phase copying by competitors and new entrants. 3D Systems consider their technology platforms and materials as proprietary and try to protect them through copyrights, patents, trademarks and trade secrets. 3D Systems has worked steadily over the years to develop the market, protect its position with a portfolio of hundreds of patents, and to improve its machinery, software and materials. This has resulted in improvements in accuracy, surface finish and material properties that have been instrumental in expanding the rapid prototyping market as a whole.

At December 31, 2011, 3D Systems held 725 patents and 257 pending patent applications worldwide, including applications covering inventions contained in our recently introduced printers. 3D Systems has also entered into licensing or cross-licensing arrangements with various companies in the United States and in other countries that enable those companies to utilize the technologies in their products or that enable 3D Systems to use their technologies in the products. Under certain of these licenses, they are entitled to receive, or obligated to pay, royalties for the sale of licensed products in the U.S. or in other countries. 3D Systems gain the competitive advantages from these patents and licenses and their success depends largely on the marketing, business development and applications know-how and on their ongoing research and development efforts.

Although 3D Systems protect their intellectual property rights, the secrecy of their digital content, confidential information, trade secrets and unlicensed copying through a variety of techniques, the success of 3D Systems will motivate the competitors to copy what they are doing. When the competitors come with up with the technology and product with the same customer need, it will be harmful to their business. The loss of trade secret protection could make it easier for third parties to compete with their products by copying previously confidential features, which could adversely affect 3D Systems revenue and operating margins.

Strategic acquisition

3D Systems has made and will continue to make strategic acquisitions in future also. 3D has acquired a number of technologies and competitor companies over the years. It purchased Keltool® technology from 3M several years ago to address high volume injection mold-making applications. In rapid succession in 2001, it acquired OptoForm SARL (France), RPC Ltd. OptoForm’s technology was aimed at additive manufacturing applications and RPC was acquired to help the company replace its long-term relationship with resin supplier Vantico.

3D Systems completed twelve acquisitions in 2011 and the Z Corp and Vidar acquisitions in 2012. 3D Systems consolidated its entire personal and professional 3D printer businesses into a single unit. This acquisition integrates Z Corp and Vidar products and services with 3D Systems’ extensive portfolio, uniquely positioning 3D Systems for accelerated growth in the dynamic, rapidly expanding 3D content-to-print space. The transaction completes 3D Systems’ range of product capabilities, fills price gaps with complementary products and technology and doubles its reseller coverage globally.

Z Corporation

Z Corp provides 3D technologies used to create new products and services more effectively than any other ways, compressing the design cycle, generating new concepts, communicating clearly, fostering collaboration, and reducing errors. Z Corp solutions span the entire 3D CAD/BIM design process from concept through design verification. Z Corp is committed to making their solutions the fastest, easiest, most accessible and most valuable.

Vidar Systems Corporation

Vidar Systems is a leading provider of optical imaging technology specializing in medical and dental imaging markets. Built upon a solid foundation of innovation and an unwavering dedication to quality, the company is the worldwide leader and number one manufacturer of medical film digitizers. “This is a historic, game-changing event for our customers and stockholders. Today we gained complementary full color and high speed printing technology, increased our marketplace presence significantly in verticals beyond product development and direct manufacturing, assembled the largest and most-well prepared reseller channel in 3D printing, and catalyzed our healthcare solutions business,” said Abe Reichental, President and CEO of 3D Systems.

“Concurrent with the completion of this transaction today, we have taken immediate, decisive steps to unleash the combined revenue growth potential and deliver the value creation inherent in this acquisition for the benefit of customers and shareholders alike.” 3D Systems plan to evaluate acquisition opportunities in the future in an effort to expand the business and enhance stockholder value. “Acquisitions involve certain risks and uncertainties including: * Difficulty in integrating newly acquired businesses and operations in an efficient and cost-effective manner, which may also impact our ability to realize the potential benefits associated with the acquisition;

* The risk that significant unanticipated costs or other problems associated with integration may be encountered; * The challenges in achieving strategic objectives, cost savings and other anticipated benefits; * The risk that our marketplaces do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in the marketplaces that we serve; * The risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying party; * The inability to maintain a relationship with key customers, vendors and other business partners of the acquired business.

Acquisition for the development of Cube

* 3D Systems acquired Bit from Bytes (UK) which is one of the more successful of start-up companies producing open-source equipment in 2010. Both companies achieved from this acquisition. BFB has got the patent and technical issues as well as means to accelerate the pace of its development. It also provided 3D Systems with a window on very low price and easier to enter in cost sensitive fields such as education. In 2011, 3D followed up that acquisition and purchased BotMill, an even smaller US company producing RepRap derivative and the purchase of widen their offerings for those customers looking for machine at the lowest cost. At the start of the 2012, 3D introduced a third major initiative in the low cost, the Cube 3D printer – presented as a key component in a new web-based consumer community the company has dubbed Cubify™. It remains to be seen how 3D Systems will integrate these efforts, or whether the entities will maintain their individual identities.

What benefits and risks of 3D systems in the future?
Enjoy benefits

3D systems make mass targets by providing wide range of product portfolio in perspective of price and performance. In the meantime, its 7 print engines are technical standard in 3D printing industries. It means it can capture the majority of customers. Cube is a good trial to penetrate 3D printer to personal use. In addition, effective adoption of emerged new technology and booming market would urge 3D systems to gain large market share and profits while building its leadership. The powerful materials and services can diversify the revenue generation of the company; they build its competitiveness among market.

Potential risks:

Global economic, political and social conditions might increase costs, harm the ability of company to do business, change the market trend. Cube is still not dominant design yet; the competitors can easily take over its market position by launching higher performance machine with lower price. The company may incur substantial costs enforcing or acquiring intellectual property rights and defending against third party claims as a result of litigation or other proceedings. In some case, it may not be able to protect them from unauthorized copying, use or disclosure. In rapid changing technology world, it will be always possible that radically new technology emerges and destroy current one. If so, the company and its product will face huge difficulty.

Recommendations:

To gain greater market share with higher profit, we suggest 3D systems to improve in the following aspects:

1. Price

3D Systems could further reduce price of 3D printers to penetrate into market. If do so, company can build large installed base. Over time, when company gains sufficient user, it could start to reduce price of materials to follow penetration plan. On the other hand, it’s to ease users’ concern, and lift company’s reputation.

2. Product development

3D Systems should bring more advanced products with higher specifications to fulfill diversity of printing requirements. Printing product size, types of materials and level of printing details are main specifications customers care. Therefore product developments in general are to make bigger product size, more types of materials, and higher level of details.

3. Service

The complexity of use and lack of 3D creations are key barriers of purchase. In order to ease use experience, we suggest 3D systems to develop a new application itself or gain it from acquisition. The application is complementary product which can convert 2D images into 3D creations. Of course, company might face copyright problems. In this case, it can communicate with a group of giant companies to sign a contract to gain information such as size, material, and color of their products. Certainly, the copyright problems will be solved. This service is not free to customers; they need to pay to download. Those giant companies will also gain big percentage of fee from download.

——————————————–
[ 1 ]. 3DSystems2012 – NYSE Investor Presentation
[ 2 ]. http://finance.yahoo.com/news/3d-systems-cube-r-wins-135242928.html [ 3 ]. 3DSystems2012 – Form10-Q
[ 4 ]. http://cubify.com/cube/index.aspx
[ 5 ]. 3DSystems2012 – Form10-Q
[ 6 ]. 3DSystems2012 – NYSE Investor Presentation
[ 7 ]. http://cubify.com
[ 8 ]. http://www.thisweekbangalore.com/issue141/news10-Statasys.html [ 9 ]. http://investor.3dsystems.com/content/financial-reports, http://www.3dsystems.com/personal-3d-printers/ [ 10 ]. http://investor.3dsystems.com/content/financial-reports [ 11 ]. 3Dsystems-2012-form-10-Q.pdf

[ 12 ]. 3D system 2011 Annual report on Form 10-K
[ 13 ]. 3D system 2011 Annual report on Form 10-K
[ 14 ]. 3D system 2011 Annual report on Form 10-K
16 http://investor.3dsystems.com/content/financial-reports
[ 15 ]. http://investor.3dsystems.com/content/financial-reports


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