Microsoft Just Gave 3D Printing a Big Boost
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Shares of Stratasys (NASDAQ: SSYS) spiked on Wednesday after Microsoft (NASDAQ: MSFT) announced that Windows 8 will support 3D printing. The company’s upcoming revision to Windows 8 -- Windows 8.1 -- includes an API that allows app developers to support 3D printers from MakerBot.
Given that Stratasys just acquired MakerBot, that’s definitely bullish for the company’s prospects. But more generally, Microsoft’s support of 3D printing is a good sign for the emerging technology.
Stratasys’ acquisition of MakerBot
Last week, Stratasys acquired MakerBot in a stock-for-stock deal. TechCrunch wrote that the combined company would likely “dominate [the] 3D printing industry.”
Until adding MakerBot, Stratasys’ business was mostly confined to the industrial world. As the company notes in its most recent 10K filing, it’s primarily involved in selling 3D printers to businesses for the purpose of creating physical models.
This contrasts with MakerBot, whose business is aimed at the consumer. Its Replicator 2 is sold directly on the company’s website, and advertised as being a great tool for “engineers at heart.” It costs just $2200.
From hobbyist toy to mainstream appliance?
But although 3D printing has grown in popularity, it still largely remains a market of hobbyists. That’s where Microsoft could come in.
Right now, most people probably have no use for a 3D printer in their home. You might be inclined to purchase a Replicator 2 only if you're the type of person who has the time and skill to design things -- or if you happen to like some of the designs available on Thingverse.
But Windows support could change that. It’s hard to predict how the market will evolve, but app developers could create software for Windows 8 that simplifies the process of designing and sharing 3D models.
At any rate, it suggests that the guys in Redmond believe enough in 3D printing to spend time incorporating it into Windows.
Could it give Windows an advantage?
Support for 3D printing could actually prove to be an advantage for Microsoft down the line. At least for now, neither Apple nor Google has incorporated 3D printing into their respective operating systems.
Any developer interested in creating 3D printing software (and any users interested in that software) might be inclined to choose Windows over a rival operating system.
And of course, the importance of application availability is huge for any operating system. Sales of tablets running Windows RT have severely lagged sales of Apple’s iPad, despite the fact that Windows RT tablets arguably offer superior features (expandable memory, dual screen mode). Buyers of Apple’s iPad may be attracted to the larger selection of apps.
A 3D printing bubble?
Admittedly, 3D printing remains a speculative investment. William Blair analyst Brian Drab downgraded both Stratasys and the other major 3D printing stock, 3D Systems (NYSE: DDD), back in May.
An in appearance on Bloomberg, Drab attacked the 3D printing stocks on the grounds of “unrealistic expectations.” He blamed media hype for the rally both stocks have seen.
“They’re focusing on two ideas. The first is...that 3D printing is going to find its way into everybody’s home...that is sort of a ridiculous idea..There are niche markets for it in the home [but it’s not for everyone.]”
Drab could certainly be right. To be fair, the stocks are trading at relatively high valuations -- both 3D Systems and Stratasys have a forward PE of nearly 34.
However, Microsoft’s support is certainly a step in the right direction. At least for now, most homes have a Windows computer -- perhaps they could, one day, have a 3D printer as well.
Microsoft gives Stratasys a helping hand
Now that Microsoft has put 3D printing support out there, it’s up to the developers to take advantage of it. If they do, it could go a long way in helping devices like Stratasys’ Replicator 2 become a household item.
Microsoft’s support doesn’t guarantee widespread adoption -- far from it. But it at least makes it possible.
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Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems, Microsoft, and Stratasys and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. 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!