Stratasys
Stratasys sold the first fused deposition modeling (FDM) system in 1991 and went public in 1995. It had $124.5 million in revenue in 2008, a 15% increase over 2007. This was better than the 8% growth shown for 2007, but considerably slower than the 26% the company achieved in 2006 and in previous years, in which it nearly tripled its revenue in the period from 2000 to 2006. Stratasys produced $13.6 million in profit in 2008, a decrease of 5% compared to 2007. The company reported a small profit for the first nine months of 2009 on a 22% revenue decline. Economically-stressed customers have quickly migrated to its lowest-cost entry-level system, the uPrintTM, which exhibits lower margins and also curtailed their purchases of materials which are highly profitable for Stratasys.
The company sold 2,184 machines in 2008 compared with the 2,169 it sold the year before. Stratasys claims to have shipped 43% of all systems worldwide for 2008. It is the unit sales leader of the industry by a wide margin and it has the largest installed base with well over 11,000 machines shipped. However, unit shipments have dropped by 7.5% for the first half of 2009 compared to 2008.
Stratasys' machines are mostly small, office-friendly and quiet. The company also provides larger equipment, more suitable to a laboratory or factory environment, aimed at producing sizable objects. The systems extrude a narrow bead of plastic much like a hot glue gun. They are capable of making small, strong parts quickly, using an increasingly wide range of materials (ABS, polycarbonate, polyphenylsulfone, polyester and several others). Finishes and accuracy have been greatly improved over the years.
In 2002 the company shook up the industry by introducing a 3D printer at $30,000, about half the price of the nearest competitor. This introduction led to a 70% increase in unit sales for 2002 while only slightly increasing revenue. Stratasys subsequently reduced the price of this machine further to $24,900 at the beginning of 2004, while simultaneously introducing a machine at about $35,000 which could automatically remove support materials like the company's more expensive equipment.
The company continued to push prices downward aggressively in response to competition. In January, 2006 it announced an entry-level system at $18,900 and a price of $24,900 for a machine with automatic support removal. While some equipment had been available for years in Asia for as little as $10,000, this marked the first time the $20,000 barrier had been broken in the US market, and was quickly followed by aggressive pricing moves from 3D Systems as discussed above. In January 2009, Stratasys responded to slowing sales in low-priced machines by aggressively pushing prices down once again. The uPrintTM offers soluble supports and a price of $14,900.
It will be interesting to see if unit growth for 2009 recovers or even exceeds Stratasys' previous performance which has been as high as 38% on an annual basis. In the past, each time the company has introduced a machine which significantly lowered the barrier to entry for customers, it has shown that the demand curve is very steep with sharply-rising unit sales. The uPrintTM is facing a substantially-altered economic landscape, however.
Stratasys' low-end systems are handled by a subsidiary under the Dimension name and sold through approximately 250 third party distributors.
At the end of 2003 Stratasys began marketing Objet Geometries (Israel) EdenTM jetted-photopolymer systems in the US market. Although sales of the line grew quickly and reached $16 million in 2006, Stratasys discontinued the alliance at the start of 2007 because margins were insufficient. It still offers the technology in its RedEye On Demand parts business, however.
In addition to the Objet alliance, in January, 2006 the company announced a marketing agreement with Arcam AB (Sweden) to sell its Electron Beam Melting (EBM)-based equipment in the US. While this enabled Stratasys for the first time to address markets for metal parts, the company abruptly withdrew from the agreement in January, 2008. Stratasys said that the growth of its proprietary FDM technology relative to the relatively low revenue generated by EBM meant that it must concentrate efforts in that arena.
Offering Arcam's product line gave Stratasys the long-term ability to offer solutions for a much wider range of additive fabrication applications. This move signified an important change in strategic direction for the company which has since concentrated on machines for low-volume production at the high-end and pushing prices down for 3D printer applications. In early 2009, the company furthered the strategy by introducing the FORTUS™ brand for its high-end systems and initiating sales through a select group of resellers.
Through a combination of technical development and shrewd business moves, Stratasys has succeeded with a technology that many saw as very limited when first introduced. Users have apparently seen it differently. They like the simplicity and reliability, quiet operation and office-friendliness of the machines which can now produce working parts in numerous durable thermoplastics. They especially like the price. The company says that as many as one third of its machines are finding their way into academic settings such as high schools and colleges. These developments bode well for future growth and increasing sales of materials.
It will be interesting to see if materials sales can remain as profitable in the future, however. Stratasys charges a very high premium on a per pound basis. The materials are not as proprietary as those used with other technologies, and have begun to attract knock-off manufacturers. In addition, the company may have to fend off other challenges as its basic patents begin to run out. Several start-ups are already offering hobbyist kits for machines that use very similar technology.
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