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Issue: Volume 36 Issue 2: (Jan/Feb 2013)

Consolidation in the Digital-Reality Industry


Kathleen Maher

Quietly, and over the past 10 years or so, the companies involved in providing machines, software, and services to the additive manufacturing industry have been staking out territory and making alliances. The market has evolved to what we have now: a battle between two major competitors—Stratasys and 3D Systems—with a large satellite ecosystem around them.

The term “additive manufacture” is a broad term that encompasses industrial manufacture, right down to the hobbyist yearning for a 3D printer in the garage. And as the industry progresses, it seems likely we’ll have all possibilities. Jon Peddie Research has classified the field as “digital reality,” a much broader arena that includes metrology (measurement tools, scanners), 3D design, additive manufacture, photogrammetry, point cloud software, and augmented reality—in essence, the realm where the real and the digital interconnect.

Lately, the field has burst forth from garages, service bureaus, and industrial backrooms and has become front-page news. Even right-wing political commentator Glenn Beck has seen fit to weigh in and pronounce 3D printing as the wave of the future and the salvation of America. (It’s up to you to decide if this is good news or bad news for the field.)

The latest in the list of acquisitions, at least at the moment of this writing, was announced just as the glitter was subsiding after New Year’s Eve. 3D Systems, one of the more acquisitive of the competitors, has announced plans to acquire point cloud software company Geomagic. At the close of the deal, Geomagic CEO Ping Fu will join the company as a vice president and chief strategy officer.

Fu is a high-profile figure in the geeky world of point clouds and 3D printing. The announcement of this deal follows the publication of her memoir Bend, Not Break, which describes her life in China during the Cultural Revolution to the present as the CEO of Geomagic and an advisor to President Obama as a member of the National Advisory Council on Innovation and Entrepreneurship (NACIE). In a conversation grabbed between stops on her book tour and interviews with journalists, Fu says maybe the timing could have been better, “but really, nothing ever happens at the perfect time.”

The news of the acquisition is not a huge surprise for those watching the industry. 3D Systems has been especially aggressive about acquiring all the pieces in the digitalreality pipeline, and Geomagic is a prize piece of the puzzle. In fact, Geomagic has long insisted that it was not interested in acquisition, and as a result of the ongoing buyouts in the additive manufacture field, Geomagic enjoyed a strategic advantage as an independent supplier. At the time of the recent announcement, Geomagic had strategic relationships with almost every company in the wider field of digital reality. Based in South Carolina, 3D Systems is a neighbor of Geomagic, which calls North Carolina home, and both companies have danced with each other as collaborators and sometimes as competitors.

This motorcycle was created using Stratasys’s Fused Deposition Modeling (FDM) process, which results in very durable models. It was a big crowd pleaser at Autodesk University in 2008.

Earlier in the year, 3D Systems acquired a competitor of Geomagic’s, Rapidform of Korea. Both Rapidform and Geomagic are pushing the development of tools for translating point cloud information into CAD formats that can be edited and used to further a design, create a new design, produce a detailed photorealistic render, and, of course, bring the image into the real world via digital reality.

A major difference between Rapidform and Geomagic is that Rapidform has an integrated CAD product based on Siemens’ Parasolids engine. Instead, Geomagic has concentrated on being compatible with the leading CAD products out there. For situations where customers need a CAD option, Geomagic has collaborated with 3D direct modeling company SpaceClaim to create Spark, a scan-to- CAD solution using Geomagic’s point cloud technology. Geomagic has also acquired Sensable, which offers sculpting tools that provide haptic feedback, giving the user the feeling of actually sculpting forms.

The Larger Picture

The vision, however, is bigger than any piece of the puzzle. The acquisitions that have been going on throughout the industry represent the efforts of companies in 3D design and engineering to find their best opportunities in what is shaping up to be a huge industry.

On the hardware side, the major competitors in the 3D print field include 3D Systems, Stratasys, and EOS. All three companies are staking out their preferred areas of expertise and influence. At this stage of the game, there’s still plenty of room for the competitors to grow. Stratasys has been concentrating on machines and materials, EOS is an expert in metal materials and structures, and 3D Systems is looking at the business from the point of view of content-to-print. All three companies, however, have to keep an eye on the entire pipeline, and all three companies are competing mightily with one another.

In these early stages of the deal between Geomagic and 3D Systems, Fu has the luxury of looking at the big picture, and she still has a slightly removed view. She is excited about the potential of 3D printing and her role in the industry, and she isn’t thinking so much about the competitive side as much as the collaborative side. When the technologist talks about the fast-growing Bavarian printer company EOS, for example, she says the firm has the ability to build geometric structures within metal shapes—“they can create entirely new materials”—and, as a result, are enabling manufacturers to build cars that are lighter and more fuel-efficient and use materials that are as light as carbon fiber but less expensive. Impressively, EOS made approximately $124 million in 2011.

Fu also expresses admiration for Stratasys’ work in materials. Stratasys has a prize in its recently acquired Objet Geometries, a 3D printing company based in Israel. Objet’s unique technology enables printers to use multiple materials in the same print. Together, Stratasys and Objet can provide a broad range of print technologies and materials. Stratasys CEO Scott Crump says the companies can now offer their customers the right process and the right materials for any job.

With the announcement of the merger between Stratasys and Objet, Stratasys contends that the combined companies made $277 million 2011. 3D Systems reported $138.94 million in 2011. Like 3D Systems, Stratasys now has a broad product range of printers from low-cost to highend. In particular, 3D Systems has more offerings on the low end, while Stratasys has more on the high end.

Family History

Stratasys was founded in 1989. It was a family operation then, and it still sometimes seems like a small company with big machines. CEO Scott Crump is the founder, and he’s very visible at conferences and trade shows. Crump and his team invented Stratasys’ core technology—Fused Deposition Modeling. With the Objet merger, Stratasys has become a larger company, and it has acquired Object’s Polyjet technology that enables different materials to be combined on the same model.

Objet’s David Reis has come on board as CEO, while Crump is moving to chairman. At the Annual Needham & Company Growth Stock Conference in January, in a presentation around 3D print opportunities, Crump stated, “We take ideas into reality.” The company maintains that its strategy will be to build on its strengths in 3D design/MCAD, jewelry design, and healthcare, says Crump—areas where the company holds a strong leadership position. The firm also has a business making parts on demand for other companies. Stratasys maintains big banks of machines, enabling it to turn out hundreds of parts and ship them in short cycles. So, for the near future, Stratasys is looking at expanding its traditional business.

3D Systems, meanwhile, was founded earlier in 1986 by Charles Hull, who invented one of the base technologies of the industry: stereolithography. The company holds significant patents in the field of additive manufacture. After Abe Reichental came on as CEO in 2003, Hull became the chief technology officer and executive VP.

After spending a long time in the middle between the companies offering capture technologies and those selling design and build, Fu sees a broad landscape where innovation can happen. She says 3D Systems’ Reichental has focused on content as the fuel to grow the industry. “I think I can learn a lot from him,” she says.

Additionally, 3D Systems and Sensable have a long history of collaboration. The teams put together low-cost 3D printing packages, including the Cubify printers from 3D Systems and Geomagic’s Sensable sculpting tools, for use in grade schools.

“It’s like digital Play-Doh,” says Fu, “and the students are learning science, mechanics, and force feedback.” This is one of the areas that interests Fu when she begins at 3D Systems. She refers to applications like this one going into schools as “STEAM”—the STEM disciplines (Science, Technology, Engineering, and Mathematics) with the addition of an A for Art. Fu also sees the next generation of education using art along with STEM classes as a way to encourage more creative scientists and more innovative artists.

Everything Changes

But, isn’t content a vulnerable area? Isn’t content the area where the crowd comes in? In one sense, yes, says Fu. She believes the software business is looking at an inflection point that will utterly change the industry, and she compares it to the Internet revolution that transformed the publishing industry. “Software will become free,” she says with certainty.

As far as she’s concerned, the crowd can come right on in because what the industry needs now is content. According to Fu, an object that is printed is really software code made real. It’s not the code that matters; it’s the creativity that goes into creating it and the use it is designed for. 3D printing is manufacture for goods needed on-demand and one at a time, or at most, just a few at a time. The result is what counts, not necessarily all the steps in the middle that went into creating it. “If you have good content,” says Fu, “you’re never vulnerable.”

“If you look at what’s happening in software now, Google, Amazon, Facebook, and Apple, to a certain extent, they don’t sell software, it’s free. Theey sell something else. Autodesk clearly sees this coming,” Fu says. “Theey’re offering their technology in this field for free.” Autodesk has also been forging alliances and acquiring companies on the content side of digital reality. At the recent Needham conference, the Stratasys presenters also identified content as a significant piece of the puzzle. Talking about the enthusiasm of the Maker community for 3D printing, Crump said, “in order for Maker applications to be successful, first there needs to be content.”

Crump compares the consumer side of the industry today to the very early days of Apple. “We all thought there was a place for the computer in the home,” but it wasn’t so easy to figure out exactly how to do that until applications like desktop printing emerged, he says.

Theis idea of content is expanding rapidly. As Fu says, “everything is 3D,” and she’s right. Digital reality is already blending information captured into digital form (via scanners, cameras, and measuring devices) with real-world information, and it is being used by plants to visualize and incorporate real-world conditions of pipe mazes into the digital plan of the factory.

Or consider Siemens’ recent acquisition of LMS, a German engineering company with measurement tools for design, enabling car manufacturers to capture information about a vehicle’s performance and incorporate it into the design. And additive manufacture helps close the loop, bringing the idea out of the digital and into the corporeal.

At the same time as 3D Systems was announcing the planned Geomagic deal, Autodesk announced an initiative to create front-end CAD tools for Organovo, a company that could have been invented by science-fiction novelist Philip K. Dick. Organovo plans to use 3D printing technology to build tissue on structures and print human parts, including blood vessels, skin, and, someday, even organs. Content is everything, even us.

Yes, additive manufacture has been hot stuff for a while now, but it’s not just hype. With every acquisition, with every alliance, and with better integration with adjacent technologies, it’s coming closer to fulfilling its promise. In the future, the real will co-exist with the digital.

Kathleen Maher is a contributing editor to CGW, a senior analyst at Jon Peddie Research, a Tiburon, California-based consultancy specializing in graphics and multimedia, and editor in chief of JPR’s “TechWatch.” She can be reached at Kathleen@jonpeddie.com.

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