NEW YORK (TheStreet) -- 3D printers are riding a year-long wave of media hype and consumer awareness, but several important steps need to be taken before these devices can become a mainstream product.
The technology's first hurdle is for the printer to become more than a novelty item capable of attracting only early adopters. Unlike the first inkjet and laser printers, which immediately proved their usefulness by cranking out all manner of documents, the current crop of 3D printers are able to produce only small, plastic items like toys. While it is amazing to watch the process happen, the fear is that people will quickly tire of the technology.
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"There is a tremendous amount of media coverage giving consumers the idea that they should have one, but unfortunately for the consumer market there is no compelling reason to go out and buy one," said Pete Basiliere, research vice president at the tech research firm Gartner.
Gartner expects 217,350 3D printers to ship worldwide in 2015, up from 108,151 units in 2014, with around 2.3 million leaving factories by 2018. The majority of these will be sold to consumers, Basiliere said.
One reason consumers have been and will continue to buy the printers is what they are reading online. Stories about how biotech firms are using 3D printers to create replacement body parts -- as Autodesk (ADSK) is planning to do -- are frequent fodder for Web news sites and give the unaware the idea that the 3D printer for sale at Staples (SPLS) or Amazon (AMZN) will have somewhat similar capabilities.
In reality the 3D printer market is now at the same level of development as personal computers were in the late 1970s and early 1980s, Basiliere said. At that time people could go out and buy a build-your-own PC kit or purchase a complete model from one of the very few manufacturers that were in the business, but once the computer was up and running at home there was not much the average person could do with it.
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Manufacturers are doing their best to spur this development and make the printers a more valuable product. 3D printing pioneer Makerbot along with General Electric (GE) have kicked off a contest to see who can create the best 3D printed device for use inside a refrigerator. The contest is being conducted within Makerbot's Thingverse, an online forum where 3D designs can be shared.
"We have a very talented and creative Thingiverse community, and a challenge like this is just the sort of activity that can really showcase how 3D printing and Real Time Prototyping on a MakerBot Replicator 3D Printer can transform the traditional design process," said Jenny Lawton, acting CEO of Makerbot.
Makerbot's parent company Stratasys reported its third-quarter earnings earlier this month. In the Sept. 30 report, the company topped analyst expectations by posting quarterly revenue of $203.6 million, up 62%, from the same period last year. Analysts had expected revenue in the $195.5 million range. Despite the healthy quarter, the company adjusted earnings per share down to a range of $2.21 to $2.31, from its previous forecast of $2.25 to $2.35.
Stratasys rival 3D Systems also enjoyed a positive third quarter, with revenue rising 23% year over year to $166.9 million. This was slightly higher that the Street's expectation of $166.5 million. Unlike Stratasys, 3D did not change its financial forecast for the remainder of the year.
In addition to uplifting earning reports, another positive sign for the 3D industry is the recent addition of Hewlett-Packard (HPQ) to its ranks. Even though HP is focusing its initial 3D printing efforts on business applications, the company traditionally brings this technology to consumer-class products.
Again, none of this will happen quickly as HP is not expected to start shipping any products for two years and it would be several years further down the road before it would conceivably enter the consumer market.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates 3D SYSTEMS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate 3D SYSTEMS CORP (DDD) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
You can view the full analysis from the report here: DDD Ratings Report