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3D Printing- Designing Dollar Dreams

Move over Apple, Samsung, Tesla and whichever else gee whiz company that comes instantly to your mind when you think about the tech sector.

Move over Apple, Samsung, Tesla and whichever else gee whiz company that comes instantly to your mind when you think about the tech sector.

The world of CAD/CAM which allows the above mentioned names to fashion one blockbuster product after another has been irrevocably transformed in 2013 by the rapid proliferation of 3D printing and 2014 can only get better.

Not just for the companies involved but also for potential investors.

The Transformers

This isn't some heady new year's cheer talking but cold, hard numbers. The 3D printing industry took 20 years to reach $1 billion in revenues. Guess how long it took to double? Five years. Skeptics--and there were many--said it was easy to grow on a low base. In 2015, if the growth trajectory continues, 3D printing will double again to a $4billion size.

While time will tell, which side would you put your money on? The smart money seems to be on companies like 3D Systems and Stratasys, both in the vanguard of American companies that have taken the market by storm.

3D Systems, the Rock Hill, South Carolina-based manufacturer of not just high-end 3D printers but also print materials and custom parts required on-demand, is a darling of the stock markets. Its stocks have zoomed 155% in the last 12 months and delivered a scorching 845% rise in the last two years.

Stratasys has more exotic origins. A US-Israeli company with headquarters in Minnesota and Rehovot (Israel) the company's built up an impressive portfolio of over 500 patents and in 2013 acquired MakerBot--a pioneer in desktop 3D printing--for a cool $600 million. It's no slouch on the stock market either--stocks have gone up 60% this year, and 324% in the last two.

Moreover, things are about to get even better. Currently 3D printing has been confined to prototyping as customers gain comfort and the technology matures. However analysts believe that 2014 could be an inflection point for the industry once customers start using 3D printers for mainstream production.

While the hardware manufacturers hog the limelight, the 3D printing industry would not be where it is today without their allies, the designers of CAD/CAM software which give their machines the design smarts to create epic creations.

Companies like desktop CAD/CAM veteran Autodesk and industrial specialist DassaultSystemes have been laughing all the way to the bank as well, riding the 3D printing wave. Autodesk stock rose 40% in the last 12 months, and 63% in the last two years. Dassault stock only rose 10% in the last year but across two years showed an impressive 55% rise.

The More the Merrier

The gold rush in 3D printing and allied CAD/CAM services has attracted a host of players. Once known for its paper printers, HP has taken the plunge into 3D printing and plans to launch its own product by the second quarter of the year. In the past, it has made tentative moves by partnering with specialist 3D printing firms including Stratasys, but HP now feels that the market opportunity is so huge that it needs to ramp up its act. Whether it can succeed or end up embarrassing itself as Kodak did with digital cameras will become clearer with time.

Nor is this just a US or Western phenomenon. Thousands of miles away an Indian company called IndiaCADworks is leveraging the country's traditional strength in outsourcing services to claim its piece of the ever expanding 3D printing pie. With clients ranging from automakers in the US to a Canadian architectural company, IndiaCADworks operates delivery centers in Peru, Philippines, and Kenya as it gears up to make a killing off the global boom in 3D printing.

Investors looking at emerging markets like India and China will be looking at such firms with interest as well, apart from the established players listed on major stock exchanges in the West.

Diligence before Dollars

When investing though it's a good idea to not be viewing things through rose-tinted glasses, whether produced by a 3D printer or not.

For the industry to keep rocketing along the inflection from prototyping to manufacturing must occur across several industries. That is easier said than done. For a start, 3D printers can handle only a limited range of materials compared to conventional manufacturing. The size of parts that can be produced in even the largest of 3D printers is quite small in comparison to what's required in heavy industrial applications.

While the neighborhood arts and crafts designer can turn into a manufacturer overnight, ramping up production is just the first step to an entrepreneur scaling up his or her business. Marketing, sales, and distribution challenges don't disappear because of 3D printing.

2014 may well be the year when we find out that whether 3D printing's success is less of an accident and more of design.