Stratasys and Objet update…

There are plenty of questions still surrounding the merger of Objet and Stratasys, announced earlier this week. This morning I was able to speak with Erez Simha, COO & CFO at Objet about the situation and how it will affect things moving forward.

As can be expected from any company in this situation, details are difficult to come by — partly because of legal and ethical concerns but also because some of the answers just don’t exist yet.

I asked first for clarification on the reasons for the merger and was told simply that both organisations see a more stable future as one large company rather than two medium-sized company. No surprises there.

No mention was made made of 3D Systems and their appetite for growth by acquisition, but this merger does go someway to safeguarding the Stratasys and Objet entities and associated technologies.

The new company, taking the name Stratasys Ltd will have Scott Crump, the current CEO and Chairman of Stratasys Inc. as Chairman; Elchanan Jaglom, current Chairman of Objet will head up the Executive Board; and current Objet CEO David reis retaining this title within Stratasys Ltd.

Beyond this the structure of the company is not yet set in stone. Each of the companies can elect four members to the new board, with Stratasys also electing a fifth that must approved by Objet. There are opportunities for core departments within the company to be located in either Rehovot or Minneapolis, leaving David Reis and the management team with plenty of difficult decisions to make.

At this time it is hard to predict where the new company will head. I asked Erez whether the merged company — which would have significant buying power — would pursue the growth through acquisition model used to such good effect at 3D Stystems. Although not ruling anything out at this early stage Erez conceded that while growth would be sought organically and with existing properties, the new company would be cash-rich and would certainly be able to start acquiring, should it so decide.

Those of you who follow @theTCTMagazine on twitter will have seen recent discussions regarding to the acquisition of some metal-based AM into the Stratasys Ltd. It is widely believed that without some form off direct metals tech the merged company cannot fulfil its role as a comprehensive AM supplier. There are a number of names in the hat…

Objet are keen to point out that until the ink dries on the agreement the two companies are still very much independent and competing for business, where applicable. The complementary nature of the Polyjet and FDM technologies means that a purchasing decision would not historically have been between Objet and Stratasys, though with Objet’s recent materials development it is starting to rival FDM in some areas. This is one of the points that makes the merger such a good fit.

For everything else the answer was, quite predictably, that everything is under review with nothing set in stone at least until the merger is completed towards the end of the year.

From my point of view the relationship between Hewlett-Packard and the new Stratasys Ltd is of great interest — will the relationship be ended, or will we see an HP-branded Polyjet system in the future? Certainly the technology is sufficiently scalable to allow a ‘consumer’ version. In the initial announcement Objet CEO David Reis is reported as saying it was ‘too early’ to decide whether HP would be a future route to market for Polyjet technology.

From an industry point of view this merger, although important, is unlikely to create many waves. Both Objet and Stratasys are well-run, profitable companies with a strong presence in their chosen niches and can only be stronger together than apart. Is this the start of a duopoly in the industry? Not a chance. If anything this merger further heightens awareness of AM and 3D Printing and will surely speed up the rate of new entrants to the market.

Stratasys and Objet to Merge

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The rise and rise of 3D Systems over the last acquisition-fuelled couple of years has taught us one thing: once a company starts to acquire companies it has a positive effect on the ability of that company to continue buying. Once 3D had grown to a sufficient size it went after Z Corporation — surely inconceivable just 2 years ago.

Stratasys have always taken a different approach to their closest rivals, staying largely out of the limelight save for a couple of high-profile announcements. The first coming on the eve of my first day with the magazine when they announced a deal with Hewlett-Packard that led to the DesignJet 3D range of HP-branded, FDM-based systems.

The second was just over 12 months ago when Stratasys snapped up Solidscape for what now looks like chump change. Then it all went quiet again, with the Minneapolis-based company going about it’s business of converting it’s tried and tested FDM technology into both full-on production systems and 3D printers for the ‘masses’.

Together with Israel-based Objet, Stratasys must have been been looking over its shoulder at the growing size and strength of Rock Hill’s 3D printing giant, wondering when the call would come.

So, taking a safety in numbers approach the two companies decided to merge, creating a $1.4 billion behemoth of their own. With the merger comes a significant change in the AM and 3D printing landscape, but judging on Stratasys’ handling of the SolidScape takeover, we may not notice much beyond the rebranding of Objet as Stratasys in the near future.

Technology-wise the two companies are highly compatible. FDM is perhaps the most versatile of all the 3D printing technologies, forming both the backbone of the consumer 3D printing explosion (they’re nearly all a variant of the FDM theme), but equally of use for prototyping applications and full-scale production processes.

I recently saw a comment that alluded to the fact that investing in 3D printing companies was a waste of time, because eventually the consumer would be able to build their own version of the printer without the need for corporate help… This completely misses the mark. While it is true to say FDM and the ‘build-it-yourself’ revolution are closely linked, one look at a Fortus machine shows that AM and 3D printing aren’t just about makers.

It’s very easy to get caught in the hype about 3D printing technology, and it’s true that it’s an increasingly important aspect of AM as a whole. But where 3D Systems are obviously pushing hard at the consumer door, I would anticipate that Statasys/Objet will concentrate on filling all the niches from consumer to production with a suite of scalable, complementary technologies.

People still prototype with AM / 3DP. People still model with it, make tools with it, make parts with its help or directly on an AM / 3DP machine. And any company would have to shift a hell of a lot of sub $1k printers to make the same money as selling a few high-end production systems. It’s also hugely costly to promote sub $1k kit to consumers, where reaching a more targeted business community is much easier.

All Stratasys/Objet really need to add to confirm their standing as a cradle-to-grave supplier of additive tech is some metals capability. There are a handful of smaller, less established manufacturers of laser sintering/melting or electron beam melting of metals out there — and Stratasys would do well to choose both the best technology, but also the company with the least number of IP issues. Lawyers still make a lot of money in AM.