As a younger man, I would seethe and rage against the abuse of economic terminology. In particular disregard for Clayton Christenson’s theory of disruption. Watching this theory wrenched from the textbook and paraded through countless tech talks by futurists muddling disruption with innovation or describing incremental market shifts indeed tormented my soul.
As an older man, I embrace the evolution of language. No cap. Well, maybe some cap. Language is important, and for a tech industry, arguably, precision is critical. It’s giving standardization, for example.
Is consolidation the new disruption? And is the 3D printing industry consolidating?
Let’s take a look! As always, I welcome feedback – get in touch with your views.
What is consolidation?
3D printing technology is not monolithic, and while a shorthand umbrella term can be helpful to quickly refer to a group of manufacturing technologies, nuance and detail is lacking. Likewise, consolidation can mean different things to different people. Helpful models to understand consolidation include the consolidation curve and Herfindahl-Hirschman Index.
One quick and handy, yet not particularly scientific metric, is trade show exhibitors. The latest press release from trade show organizers Mesago reports that 820 exhibitors have signed up for the 2024 edition of Formnext.
Some names are part of a larger group, and some are enterprises that supply services or peripheral equipment. Nonetheless, as a quick sense check as to whether the industry is consolidating, the immediate answer might be no; the 3D printing industry is not consolidating.
Is that a big number?
In isolation numbers have limits. Comparatives turn data into information. Continuing our example above we can see that final exhibitor figures for Formnext 2023 were 859, and pre-show figures from September 2023 were 771 (Sept ‘24: 820). Without digging into the specifics, this quick check suggests that the 3D printing industry is not consolidating.
Let’s go a little deeper.
The consolidation curve is a valuable model that recognizes consolidation moves through four phases. At one end of the spectrum are mature industries characterized by monopolies, strategic alliances, and limited opportunities for further consolidation. Notably, there are more opportunities for Christenson-style disruption in these monopolistic industries, given the potential for complacency among incumbents, overlooked niches and underserved markets, and the large or rigid structures that resist change. At the other end of the spectrum are emergent industries with numerous small companies, low entry barriers, and high innovation levels.
Stages of the consolidation curve
Stage 1: Emergence
In the emergent stage, many companies operate in the industry with low barriers to entry and high levels of innovation.
Stage 2: Scale
At this stage, companies in the industry can be expected to demonstrate rapid growth, enterprises begin to scale, and initial mergers and acquisition activity will be seen.
Stage 3: Focus
At stage three in the consolidation curve, the market begins to mature, and there is significant consolidation. The market will likely contain a few dominant players.
Stage 4: Balance and Alliance
In this stage, the industry is fully mature. There are few opportunities for further consolidation, companies may engage in behaviour that is detrimental to the consumer for example the formation of cartels or strategic alliances.
Where is the 3D printing industry on the consolidation curve?
The consolidation ratio (CR₄) is the sum of the market share of the four largest firms in the industry. With this ratio, the stage of consolidation in the 3D printing industry can be assessed against the following chart:
| Consolidation Phase | CR₄ | |
| Stage 1 | Emergence | <20% |
| Stage 2 | Scale | 20% to 40% |
| Stage 3 | Focus | 40% to 70% |
| Stage 4 | Balance & Alliance | >70% |
Public financial results go some way to providing market share in the form of revenue or turnover. For non-public companies and companies that do not break out revenue from 3D printing separately, it is necessary to estimate whether to include companies that offer 3D printing services as their primary revenue stream or as a substantial part of their business in another factor to consider.
The denominator in this calculation, the market’s total size, must also be calculated. Data on the total size of the 3D printing industry is plentiful. Understanding the numbers that go into the market size is important. Several reliable sources have been chosen to represent the market value, plus an additional figure. This additional figure acknowledges that considering the desktop 3D printing segment is now essential.
The desktop segment is not only sizeable, with the top five companies approaching $1 billion in combined revenue, but impactful and increasingly competes with the traditional companies for business. For example, many print farms may now run “entry-level” FDM or resin systems from lower-cost suppliers. Additionally, companies such as Prusa Research now supply systems such as the Prusa Pro HT90, a sub €10k 3D printer that runs Ultem and PEKK-CF.
Using high ($20 billion), mid ($15 billion), and low ($10 billion) total market values and the most recent full-year revenue figures for the top companies to calculate the consolidation ratio gives the following results.
| Scenario | Consolidation Ratio – CR₄ |
| Market Share (low) | 19.16% |
| Market Share (mid) | 12.77% |
| Market Share (high) | 9.58% |
This table shows a consolidation ratio of between 9.6% to 19.2%, depending on the market size used. The results of the three market sizes modeled show that the 3D printing industry is still in the emergent phase and on the verge of scaling. This is supported by the Herfindahl-Hirschman Index (HHI) calculation – but that’s another article!
Much recent talk of consolidation has been prompted by Nano Dimension’s acquisition spree. In addition to plans to buy Desktop Metal, the company also has an offer on Markforged. Therefore, recalculation using an estimate based on the most recent full-year figures is useful.
| Company | Revenue FY’2023 | Market Share (mid) |
| Desktop Metal | 190 | 1.27% |
| Markforged | 94 | 0.63% |
| Nano Dimension | 56 | 0.37% |
| Combined | 340 | 2.27% |
The table shows combined revenue, post-merger of $340 million. Is this likely? No. Firstly, these are historical figures, and secondly, the merger will presumably create value through cost savings or leveraging the expanded entity to increase sales. The results show that a merged Nano Dimension, Desktop Metal, and Markforged would have a 2.27% market share. This moves Nano Dimension up the market share ranking table but does not materially change the earlier consolidation calculation.
In summary, the calculation of the consolidation ratio suggests that the 3D printing industry is not consolidated.
Why is it important to know whether the 3D printing industry is consolidated?
A false narrative in the tech industry can be constructed through a combination of misinformation, selective reporting, misrepresentation of facts, and manipulation of public perception through social media, media outlets, or company communications. These narratives often emerge for various reasons, such as protecting a company’s image, swaying public opinion, deflecting attention from failures, or creating competitive advantages. These are not good.
Relating this to industry consolidation, there are at least five negative outcomes to misinterpreting the consolidation stage.
First, there is an impact on consumer choice and prices. If consumers are led to believe that fewer companies will dominate the market, they may feel resigned to higher prices or fewer choices. This could lead to a self-fulfilling prophecy where smaller firms lose customers, fearing they won’t survive in the face of industry consolidation.
Second, distortion of market perception and valuations. Claiming that an industry is consolidating can lead to inflated valuations or increased investment in certain companies perceived as future leaders in the field. Investors may assume that smaller companies will be acquired at a premium or that larger companies will become dominant, driving their stock prices up. This speculation can cause a bubble where companies are overvalued, which may eventually burst when reality sets in.
Third, this can create competitive disadvantages for smaller Firms. If consolidation is perceived as inevitable, smaller firms may struggle to secure investment or partnerships, as potential investors or partners could believe that the only path forward is acquisition. This perception can reduce a smaller company’s ability to compete independently, forcing them to seek acquisition prematurely.
Fourth, regulatory and legal implications. If regulators believe an industry is consolidating, they may take preemptive steps to block mergers or impose stricter oversight. False claims can prompt premature regulatory actions, especially in sectors like technology, telecommunications, or pharmaceuticals, where market concentration is a serious concern. Conversely, companies might use consolidation rumors to gain regulatory approval for mergers by arguing that the trend is already in motion and inevitable.
Last but not least, there is a danger of reduced innovation. The perception of consolidation can stifle innovation, as companies that expect to be acquired or that believe the industry is shrinking into fewer players may slow down long-term investments in research and development. If smaller firms focus on making themselves more attractive for acquisition rather than competing through innovation, the overall pace of technological advancement could suffer.
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Who are the most disruptive companies in the 3D printing industry? Let us know. Nominations are open for the 2023 3D Printing Industry Awards.
What does the future of 3D printing hold?
What near-term 3D printing trends have been highlighted by industry experts?
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Featured image shows Nikon SLM Solutions at Formnext 2023. Photo by Michael Petch.
