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Someone Needs to Buy MakerBot Already, Stratasys, Ltd. (SSYS)?

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While additive manufacturing has existed for decades in one form or another, until recently, its scope was largely restricted to prototyping and commercial use. Now, however, thanks to advancements in the technology, 3D printing is finally beginning its steady march into our homes, with two key players controlling around 40% of the consumer market.

Stratasys, Ltd. (NASDAQ:SSYS)A familiar name
The first company — and likely the most recognizable given its publicly traded status — is 3D Systems Corporation (NYSE:DDD) , which unveiled its Cube home 3D printers early last year. In the company’s most recent earnings call, however, management warned investors not to expect sales from the consumer segment to significantly contribute to the company’s overall revenue anytime soon. In the meantime, 3D Systems is happy to ride a wave of rapidly increased adoption with the rest of its products after witnessing year-over-year revenue growth of 57%, to a record $90.5 million during its most recent quarter.

An up-and-comer
The second key player in the consumer 3D printing market is privately held MakerBot, founded in 2009, and responsible for the popular Replicator series printers.  Interestingly, MakerBot was also the recipient of $10 million in venture capital funding in 2011 and, though the bulk of the money came from Foundry Group, Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos’ private firm, Bezos Expeditions, was among its list of financiers.

Though MakerBot is notoriously tight-lipped about revenue, according to the consulting firm Wohlers Associates, the company sold around 5,000 units in 2011 — an increase of 250% from 2,000 printers in 2010 — and with prices at the time ranging from $1,100 to $2000 per unit, we can estimate MakerBot’s 2011 revenue at just under $8 million by averaging the two extremes. While that may look small at first glance, it still represents an impressive 250% increase over the previous year. Further still, just a few months ago, a MakerBot spokeswoman stated sales for the company’s new line of Replicator 2 printers have “totally exceeded” expectations, signaling even better days ahead for the young start-up.

May the best company win
Given the recent acquisition binge in the 3D printing industry, I’m amazed that a larger company like 3D Systems hasn’t stepped forward to swallow MakerBot before it becomes an even bigger threat. Still, 3D Systems’ management has previously asserted that each of its acquisitions serves a specific purpose, whether to absorb a revenue-generating business, or to simply build R&D know-how, with no immediate sales benefit.  In addition, like MakerBot with its Replicator 2 printers, 3D Systems’ management has also recently voiced excitement for the segment, as its Cube printer unit sales have consistently exceeded expectations. With this in mind, maybe 3D Systems simply has no interest in buying MakerBot’s potentially redundant technology, and would instead prefer to compete the good-old fashioned way.

On that note, 3D Systems’ traditionally industrial-centric competitor Stratasys, Ltd. (NASDAQ:SSYS) could also benefit by acquiring MakerBot. Unfortunately, given the relative youth of the consumer 3D printing market, Stratasys has remained reluctant to enter the space.

To its credit, while I admit Stratasys currently seems to be doing just fine, the company likely still has its hands full working out the details of last years’ whale of a merger with Israel-based Objet. Perhaps, unsurprisingly then, the words “consumer” and “home” were used a grand total of zero times during Stratasys’ most recent earnings conference call.

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