#digitalskeptic: There's a Shakeout Coming in 3-D Printers

NEW YORK ( TheStreet) -- Shai Schechter and his three buddies are the only hip kids I've met that really get hip 3-D printers.

"Most people go on Kickstarter and say, 'We are going to get rich making these printers,'" the SUNY Purchase College undergrad told me over the phone. "But now that I've made one, I can tell you, it is not that simple."

Schechter is not making up what it takes to really make a three-dimensional additive manufacturing device, similar to what giants such as Stratasys' ( SSYS) MakerBot, Germany's Voxeljet ( VJET) or Rock Hill, S.C.-based 3D Systems ( DDD) produce. The 21-year-old -- who, by the by, is not even an engineer at Purchase; his thing is graphic design -- is co-founder of Deltaprintr, a surprisingly high-functioning desktop 3-D printer that I have been learning about for the past month or so.

And this young man, with nothing more than the help his childhood buddies Andrey Kovalev, Yasick Nemenov and Eugene Sokolov, has turned a mere $3,000 upfront investment into a damn viable 3-D printing startup.

"We had a 10-year-old 3-D printer at school that basically cost $500 to print a model," he explained. "It was stupid."

Schechter began writing a proposal to get a new, lower-cost unit at Purchase. But when the Staten Island-native realized 3-D printers were not complex to make, he rounded up his geek posse to design a unit all their own.

"I was always tearing things apart and fixing them as a kid," he said. "It drove my mother crazy because the vacuum cleaner was always in pieces." This tinkerer spirit was more than enough for Schechter and his friends to create a prototype worthy of a $1,000 school grant. The group got a unit made -- a unit, he says, his whole class still uses.

"Once we made that first one, we knew we could make a better one," he said. And so Deltaprintr was born.

Schechter's innovation is a triangular, "delta geometry" that uses just 10 inches of precious desktop space, yet still runs on open-source software and prints at high resolution. And Schechter is sure he can build his little 3-D printing business.

"At least from what we see," he explained, "this market is going to get competitive very quickly."

Printing up a crowded 3-D market
What we old investors will find astonishing is how right young Misters Schechter, Kovalev, Nemenov and Sokolov are: Deltaprintr is part of a high pile of 3-D printer makers rendering up in this sector.

According to Hayden, Idaho-based sector analysis shop 3D Printer World, 3-D printer-maker fundraising is running at a frenzied pace. Cambridge, Mass.-based Formlabs, Palo Alto, Calif.-based Pirate3D and Springville, Utah-based Invent-A-Part raised more than a combined $4.3 million from social fundraising platform Kickstarter as of mid-2013.

And those are just three of dozens of such printer firms tracked by the firm.

This intense social fundraising has begat yet more 3-D printers. Stamford, Conn.-based Zeepro announced last week that its Zim printer raised more than $347,000 on Kickstarter. Brooklyn-based gMax raised in excess of $129,000.

All of these models -- which are mostly still in pre-order, by the way -- compete with a generation of already established, privately held 3-D companies. There's Brooklyn's own Solidoodle, which makes a darn impressive printer. I liked what I saw in units from New Jersey's 3DMonstr, Chanhassen, Minn.-based Afinia, Pasadena, Calif.-based Deezmaker and Alpharetta, Ga.-based Hyrel.

That market in turn sits inside some serious market capitalization for publicly traded 3-D printing enterprises: 3D Systems and Stratasys have a combined $10 billion in value by some models. And there is more to come: Voxeljet priced its recent IPO to raise north of $64.5 million for the company.

The fourth dimension of 3-D printing: Discounting
Call it youthful bravado -- or cold cunning -- but this mounting 3-D printer horde doesn't scare Schechter one bit. The young entrepreneur says he's got close to 1,700 potential customers signed up on his website and he expects he can sell north of 200 units from his initial crowdfunding round later this year.

He is betting that Deltaprintr will compete effectively by offering high quality at low prices. His unit will go for well below $500, or about half the cost of a similar model from MakerBot.

And if investors have the courage to look, such profit-margin-sucking discounting is rapidly finding a foothold in 3-D printers. Little Rock, Ark.-based QU-BD just raised more than $56,000 on Kickstarter for a 3-D printer that cost just $200. And a model from Hyrel offers legit industrial-grade 3-D additive manufacturing for less than $2,000.

Schecter's plan is to target the passionate student, say from ages 14 to 25. But Schechter is firm that competition will only increase.

"I believe next year a major patent will expire. And there will be an explosion of yet more printers on Kickstarter," he said. "What you learn studying all these printers is, there will be always something that pops up."

"We hope for the best, but prepare for the worst."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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