Stratasys MakerBot

It’s a BIG Deal — Stratasys & Makerbot

By June 20, 2013. 3D Printing, Consumers, Featured, Industry Insights, Makers, News

So, after the initial leak following an investor meeting a couple of weeks ago, which was followed by numerous rumours and rather a lot of speculation (ours included), the news comes through that yes indeed, Stratasys and Makerbot ARE joining forces. Both companies have released the information, with a live press conference slated for tomorrow morning (EST) at Makerbot’s HQ. I’d love nothing more than to hop on a plane and be there, believe me, but the notice is a tad short and life (well mine anyway) is not conducive to such a trip.

The corporate PR denotes “a definitive merger agreement whereby privately held MakerBot has agreed to merge with a subsidiary of Stratasys in a stock-for-stock transaction. MakerBot, founded in 2009, helped develop the desktop 3D printing market and has built the largest installed base of 3D printers in the category by making 3D printers highly accessible. The company has sold more than 22,000 3D printers since 2009. In the last nine months, the MakerBot Replicator 2 Desktop 3D Printer accounted for 11,000 of those sales.”

As Mike commented in his speculation article, Stratasys has made it known recently — from the top down (Elan, David Reis and Andy Middleton have all gone on the record) — that they see prosumer/consumer 3D printers in their future strategy — and what better way to do it than with the current undisputed market leader. The bonus is that there is a real synergy between the Stratasys FDM tech (with lots of IP/patents) and the Makerbot extrusion process born of RepRap technology. There will be changes and improvements afoot. The press release states: “Upon completion of the merger, Stratasys and MakerBot will jointly develop and implement strategies for building on their complementary strengths, intellectual property and technical know-how, and other unique assets and capabilities. The opportunities could include accelerating MakerBot’s reach by leveraging Stratasys’ global infrastructure; cross-promotion of products into the installed base of the combined companies; and leveraging Stratasys’ extensive know-how in Fused Deposition Modeling (FDM) to benefit MakerBot’s product line.”

Probably shouldn’t project speculation into a news post, but hey, going to anyway. (What a rebel!) I predict the Rep3 by the end of the year, likely with some sort of heated chamber and support material capability. And then, my friends, this thing could seriously go wild!! The 11,000 unit sales of the Rep2 that the PR is quoting since its launch will seem paltry in comparison. The result will probably mean cannibalizing Mojo up to a point, but that system never really hit the mark — because it never quite knew who it was targeting — and I don’t believe it will be that negative an effect.

So, back to the corporate speak and the party line is that: “the combination of these two industry leaders is expected to drive faster adoption of 3D printing for multiple applications and industries ….. Upon completion of the transaction, MakerBot will operate as a separate subsidiary of Stratasys, maintaining its own identity, products and go-to-market strategy.”

Well the first bit is a given, had to be said I suppose. The second is a good move IMO. What makes Makerbot so strong and so valuable is its combination of a great brand, second only to a fantastic community. With this deal, Makerbot (with Stratasys power) has a unique opportunity to manufacture a product worthy of both in its new New York factory, which could well need some further expansion work and scale up in the next 12 months. Plus, it is probably a very good idea to keep Makerbot out of the Stratasys / Objet convergence, which is still ongoing.

I would love to know what Adrian Bowyer thinks of this deal – as a Makerbot shareholder, he was likely privy to the deal a while ago. But it is about as far from his original vision of RepRap as one can get.

This is certainly huge news for the 3D printing industry. It only broke an hour or so ago, so how it plays out in full is yet to unfold.

Exciting!

For anyone interested in the facts and figures of the deal, the details from the press release are below — but they’re not as exciting!!

Transaction Details

Under the terms of the merger agreement, Stratasys will initially issue approximately 4.76 million shares in exchange for 100% of the outstanding capital stock of MakerBot. The proposed merger has an initial value of $403 million based on Stratasys’ closing stock price of $84.60 as of June 19, 2013. MakerBot stakeholders also qualify for performance-based earn-outs that provide for the issue of up to an additional 2.38 million shares through the end of 2014. The proposed earn-out payments have an initial value of up to $201 million based on the Stratasys closing stock price as of June 19, 2013. Those payments, if earned, will be made in Stratasys shares or cash (in an amount reflecting the value of the Stratasys shares that would have otherwise been issued at the relevant earn out determination date), or a combination thereof, at Stratasys’ discretion. The merger is expected to accelerate Stratasys’ growth rate and be slightly dilutive to Non-GAAP earnings per share in 2013, and accretive to Stratasys’ Non-GAAP earnings per share by the end of 2014.

  • Pamela Waterman

    There was buzz about this at the RAPID show last week, so it’s cool to know this is really happening. Good move, I agree, to let MakerBot maintain an separate identity. So, do we expect new materials soon? And maybe a direct challenge to 3D System’s Cube.

  • Jeremy Pullin

    I don’t think that Adrian Bowyer will be too surprised or dissapointed. He must of known that this sort of thing would happen.
    The most interesting thing for me will be what happens when the ‘share everything’ open source makerbot community are thrown into the corporate world of a company like statasys where service contracts cost more than a replicator 2.
    I guess that Bre has now officially sold his ‘king of open source’ crown. I don’t think that should come as a great shock to anyone either. When a competitor in a beauty pageant lifts their dress to show off their meat and two veg it would only be the most gullible members of the audience who would gasp in shock while the rest of the people would have noticed the stubble and trucker’s voice ages before.

  • econolyst

    Thanks goodness – we might now get a low-end / entry level machine that actually prints parts without them warping, distorting, being covered in support structure that cannot be removed, and uses software that allows you to generate intelligent support, that are water soluble. I am sure the hackers and open-source crowd will start shouting, but i would argue that MakerBot left them behind 12-months ago in their clear transition to the Prosumer world..

    what will be interesting (as Rach says) is the Replicator III – at the moment there is little to differentiate anything at the low-end. Once, you add the potential for thermal control, intelligent and soluble support – you have market differentiation. I suspect this will be something the new alliance will want to protect vigorously.

    In terms of Mojo, well it was never going to fly at that price point – what is probably more concerning for the new alliance will be short to medium term sales of Replicator II machines. Would you buy one now, knowing it might be out-of date within 9-months?

    • Kevin Quigley

      The interesting issue here is not what happens to Mojo, but what happens to U Print and Dimension ranges. If Makerbot offer a printer with a build area the size of the R2, closed, temperature controlled build chamber, with soluble supports, proper drivers, and using ABS, why would you then spend £12k on the U Print?

      The issue for Stratasys is how they differentiate their Makerbot products from their Design range products. They will have issues of printer cost, material cost, material range, ancillary systems cost (you would not spend £1.5k on a washing system). The reality is many Makerbot Replicator buyers are companies who want to get a system in house that assists with the design process…not to make end use parts for around the house…but rather prototypes. This is exactly the same market as U Print and Dimension.

      Personally, I can see a situation where Stratasys pull the plug on U Print and Mojo, and phase in Makerbot products at a lower cost as replacements. £12k, with £1.5k annual maintenance contracts and £240/kg materials is a big ask for many small design and engineering businesses. £5k, £500 and £50/kg is in the category of no brainer purchase.

      • Nightfalcon

        Agreed, I think Stratasys is going to consolidate their activities soon in the “Low Cost”
        / Pro Market. uprint / Mojo / Makerbot. I could image they put all
        activities into your new “Makerbot Subsidiary”. But I also believe that
        the main driver behind the deal is to get rid of one of the major
        players which offers the same technology for much lower costs. So it might well happen that they focus this Low Cost business rather on consumers than on small business design pros.

    • Kevin Quigley

      In answer to the question about the R2, I have to say, probably not. But then for a design company, you can justify £1500 on just a few projects compared to buying in parts provided the design projects are the right “shape” for the R2.

      A few years back we did a series of projects on FMCG with plastic closures. We designed something like 20 iterations of the closures. This is exactly the scenario I mean. With its 0.1mm layering, the R2 would have been perfect for fit and function tests rather than the scores of Viper SLA parts we ended up having made.

      If such a project came up again I would buy the R2 immediately ( well, order one for the 6 week delivery period). As a business machine you buy to fulfill a need. As a consumer you buy to fulfill a desire. In that respect, no, I would not buy the R2.

  • econolyst

    Something just occurred to me about 3D Systems in all of this. Last year 3D Systems did not include Cube / Cubify in their earning as they said it did not contribute any significant value. However, we just learned that Makerbot sold $15M of units in 2012 and are projected to top $75M in 2013. That kind of suggests that 3DS must really be a bit-part player in the consumer/prosumer 3DP space – or surely they would have included some revenue last year and be shouting from the roof tops for this year. But i don’t hear any shouting.

    • Rachel Park

      Very interesting point – but personally, I think it comes down to the fact that the entry level machines are just NOT consumer ready yet, despite the marketing and the branding. They are way to frustrating for anyone with little to no knowledge of the tech. Makerbot has always courted the makers, and this is a huge market these days. I have no clear visibility on breakdown, but I would guess that the Makerbot figures include a very small percentage of real “consumers”. 3DS on the other hand has always positioned the Cube as a consumer machine — they did it way too early. The two prime markets for this level of machine are the makers and education/schools — consumers will follow, in time.

  • Do you think Objet technology will enter the desktop printing picture soon? People seem to forget that Stratasys also own Objet now, and with that a whole host of different materials and processes (fine detail plastic, rubbery material, clear material). PolyJet has its own issues, and desktop-ifying it won’t be an easy task of course, but it could be a significant advantage of MakerBot/Stratasys if they figure it out.

    • Rachel Park

      I do think Objet technology will come to the desktop – but not soon. If you check out David Reis’ executive interview – he did hint at this in his final answer (http://3dprintingindustry.com/2013/01/30/executive-interview-series-david-reis/). And while I do think his ‘within 10 years’ vision is conservative, it definitely won’t be in the next couple of years either! Also – when I interviewed him we talked about a lot more than I was allowed to publish. There are exciting things happening in Objet/Connex R&D.

  • econolyst

    Rachel, i agree – consumer machines are not consumer ready – BUT 3DS has owned BFB for 3-years, and as we all know, the Cube X is just a BFB3000 with a new coat. So why so few unit or lack of material revenue? If they have really been focusing on the consumer and not the prosumer – WHY. There is no evidence to suggest there even is a consumer market. All the evidence points to the maker / hacker market slowing down and the sales growth accelerating in the Prosumer space – by prosumer, i mean a professional person who act as an individual consumer – they buy a machine using their credit card then claim it back from work.

    Nancy – personally, i think it will be a little while until we see photo-polymer jetting getting into the consumer domain (if at all). The Bill-of materials for an Objet machine (print heads, UV source, pumps, chassis, carriage, control systems, drivers) is orders of magnitude more than an FDM RepRap clone. I would expect to see a low-cost Z-Corp type solution first, as this has a much lower BOM and could be sold with much lower cost consumables.

  • S Taylor

    Just now on Twitter: ‘Morning keynote at #3DPrintConf with @Stratasys CIO Scott Crump and @makerbot CEO Bre Pettis http://ow.ly/i/2zCVC