Are There Other Ways to Take Advantage of the 3D Printing Market?
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I recently wrote about companies that could be of interest to investors looking to cash in on a potential 3D printing boom. Some might think it's too risky to invest in the companies directly; if the boom fizzles, then the companies might not take off like anticipated. If you look around, there are other options that might seem like good ways to indirectly invest in the future of 3D printing. While some could be good buys, others may receive little if any boost from a 3D printing boom.
Staples stands to benefit from the distribution deal it has in place with 3D Systems to sell its "Cube" 3D printers both in Staples stores and online at Staples.com. This marks the first time that 3D printers have been available in retail locations on this scale. If the printers prove successful with Staples' customers, then the company could enjoy a short-term benefit from its first-mover status, since its competitors won't have equivalent products on their shelves.
If RadioShack benefits from 3D printing, it won't be nearly as directly. The company sells Arduino microcontrollers and other project electronics in its stores; these same components are used to build homebrew 3D printers such as various "RepRap" and "RepStrap" models. While the components for these printers are available from a number of locations, RadioShack is conveniently located and has undergone a significant marketing push in the last year to let consumers know that Arduino components are available in its stores.
General Electric (NYSE: GE) is very interested in the future of 3D printing. Of particular interest to the company is the applications that 3D printing could have on the development of jet engines and similar aeronautics parts. While GE is typically associated with household appliances and electronics, it is actually involved in a number of industries. On June 18, the GE Aviation segment of the company even announced more than $2.8 billion in new orders for engines and maintenance contracts.
GE purchased Morris Technologies last year, aiming to use the company's 3D printing technology to make engine construction more efficient, but it's unlikely that this will be the only 3D printing purchase that GE makes. Using 3D printing technology significantly reduces the waste involved in engine construction, and as 3D printing technology advances the company will want to use it to create stronger and more intricate parts.
To this end, GE recently launched the first in a series of 3D printing challenges which asks participants to reduce the weight of engine mounting components by 30% without sacrificing structural integrity. The next contest takes a similar approach to healthcare components, and future challenges will likely follow a similar approach to other industries that GE has a presence in.
On the software side of things, Autodesk (NASDAQ: ADSK) may also seem like it should be of interest to investors; after all, the company produces software such as 3ds Max and Maya, which is used to create 3D models which can in turn be used by 3D printers. The effect of a 3D printing boom on Autodesk will likely be minimal, however. Models created by Autodesk software may need additional conversion to formats that each printer's driver can use, and consumer-level users may not be able to afford the software at all.
There are cheaper alternatives to Autodesk's software available, including the open-source Blender modeling software that users can download for free. Casual users and hobbyists will likely prefer using free or low-cost software for modeling instead of paying a premium for Autodesk's industry-level offerings. This is understandable; these users aren't a part of Autodesk's target audience. Its products aren't largely intended for consumer-level purchase, with individual software licenses typically costing up to $3,000 to $4,000 or more.
If you want to invest in a retail company to take advantage of the increasing popularity of 3D printing, Staples is the way to go. While RadioShack may see a slight increase in electronics sales from 3D printing hobbyists, it's unlikely that the profits from the components will compete with those from full 3D printers. Staples also has the advantage of allowing consumers to see the printers in-store and ready to use, eliminating the entry barriers put in place by hobby printer construction.
GE might be a better overall investment than Staples, however. It is a highly diverse company that could use 3D printing in a number of ways, and stands to profit significantly from the use of 3D printing in the construction of jet engines and other heavy equipment. There has even been some speculation that the company could acquire another 3D printing company in the future to reduce outsourcing costs and add additional revenue streams to its diversity.
As for Autodesk, it's not the company to go for if you want to benefit from 3D printing. Its products are popular in engineering, animation and game design, but the popularity of 3D printing isn't likely to fuel additional sales.
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John Casteele has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company, RadioShack, and Staples. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!