Table of Contents DISCLAIMER... 3 INTRODUCTION History of 3D Printing... 4 WHAT IS 3D PRINTING?... 5

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1 By Dan Murphy

2 PAGE 2 Table of Contents DISCLAIMER... 3 INTRODUCTION... 4 History of 3D Printing... 4 WHAT IS 3D PRINTING?... 5 Applications of 3D Printing... 6 Fashion... 6 Research D Printing Services... 6 Firearms... 6 Robots... 6 HOW IS IT DONE?... 7 The Process of 3D Printing D Printable Models... 7 Printing... 8 Finishing... 9 THE FUTURE OF 3D PRINTING The Buyer Beware Model The Research and Development Model COMPANIES IN THE INDUSTRY Where Is Growth Going? CONCLUSION... 18

3 PAGE 3 Disclaimer 2014 Joshua Tree Financial, Inc. All Rights Reserved. No part of this publication may be reproduced in any form or by any means, including scanning, photocopying, or otherwise without the prior written permission of the copyright holder. The Author has strived to be as accurate and complete as possible in the creation of this book, notwithstanding the fact that he does not warrant or represent at any time that the contents within the book are accurate due to the rapidly changing nature of the subject. While all attempts have been made to verify information provided in this publication, the Author assumes no responsibility for errors, omissions, or contrary interpretation of the subject matter herein.

4 PAGE 4 Introduction 3D Printing is a field which has become increasingly vast and expansive in recent times. It is used for prototyping and creating replacement parts. The technology has proven its versatility by printing medical implants and prostheses. There is no doubt that the advent of 3D printing has already had a major impact on the modern world and promises to affect the future greatly. With more and more people gaining awareness about the technology, access to machines that are capable of 3D printing has become public. 3D printers have become highly useful machines and are growing in popularity. History of 3D Printing The concept of 3D printing goes all the way back to 1984 when Charles Hull developed tools that were capable of printing physical three dimensional objects out of digital data. The technique was named Stereo lithography by Hull, and he was able to obtain a patent for the method later on in By the late 1980s, Stereo lithography systems had gained popularity and similar technologies were being introduced such as Selective Laser Sintering (SLS) and Fused Deposition Modeling (FDM). In 1993, another technology was patented. This was introduced by the Massachusetts Institute of Technology (MIT) and was called the 3 Dimensional Printing Technique. The technology had similarities with the inkjet technology which is still used for 2D printing. 3 years later, a variety of products were introduced including Stratasys from Stratasys, Z402 from Z Corporation and Actua 2100 from 3D Systems. Almost a decade later came the biggest breakthrough in the history of 3D printing technology. This was the launching of a product named Spectrum Z510. The year was 2005 and the product introduced was to be the very first HD Color 3D Printer.

5 PAGE 5 What Is 3D Printing? 3D Printing, also termed Additive Manufacturing, is a process in which 3D objects are developed based on digital models. The machines which are capable of carrying out 3D printing (3D printers) are capable of designing objects by putting a fine layer of powder down and fusing it together with the granules through each layer with the use of laser. Going all the way back to 1984, the technology has only recently gained advancements and has become effective in producing sophisticated objects. It is quite the opposite of the subtractive processes that traditionally relied on procedures that involve drilling or cutting in order to give an object its shape. A 3D printer is seemingly a futuristic machine. It shares a number of similarities with the replicators from Star Trek which were able to create objects out of thin air. Although the field of 3D printing might be well away from any major advancements, it is still quite advanced to surprise a majority. A 3D printer carries out the additive manufacturing process under compute control with exceptional precision. As days are passing by, the technology is gaining household attention and researchers and enthusiasts alike are utilizing 3D printing services or buying 3D printers, which has led to the decreasing prices of the two. Those who are capable of designing robots have the ease to deliver their designs to companies that are offering 3D printing solutions by making use of high quality commercial printers. Through this method, parts of a robot s body have become very economical to create. Thus, designers have been enabled to reduce their costs and save ample time. Conversely, those who can afford to buy 3D printers have the ease of printing whichever blueprint they find on the internet conveniently while sitting at home. Most essentially, 3D printing has played a vital role in making the development of open source platforms a lot easier. This revolutionary step has enabled those who can access 3D Printers to head onto the world-wide-web, find the blueprints of a robot design and download them. By doing so, they can print the design to successfully recreate the robot.

6 PAGE 6 Applications of 3D Printing As the technology has begun gathering household attention from all across the world including all sorts of fields, various applications of 3D Printing have been introduced. Some of the most common fields in which 3D printing has already established its foothold include the following: Fashion A number of fashion experts have integrated 3D printing technology into their experiments. As a result, various products such as dresses, shoes and bikinis have all been created so far using the technology. Research Further possible applications of the technology are being researched in which NASA is the leading way. Believably, in the future 3D printers will be creating scientific equipment of open source, manufacture Archaeological artifacts and replicates of ancient pieces, as well as reconstruct evidence from crime scenes which is damaged or broken. It is also believed that the technology will assist a number of fields, including the scientific study of pre-historic life by reconstructing fossils. 3D Printing Services Ever since 3D printing went public, a few companies have emerged on the scene, which are offering services in the technology. These companies provide 3D printed objects for those who create the designs and upload them on the company s website. Firearms In 2012, rather controversially, Defense Distributed, a group based in the United States, disclosed their plans which included designing a plastic gun that was downloadable and could be reproduced with the use of a 3D printer by practically anyone. Robots In late 2013, a group of researchers in France were successful in manufacturing a humanoid robot which was printed using 3D technology. The robot was named Poppy and was designed to assist researchers in studying bipedal walking and human-machine interaction. This was a revolutionizing step in the field of 3D printing as it spoke volumes regarding the useful applications of the technology.

7 PAGE 7 How Is It Done? 3D printing sounds like a futuristic technology to people who are new to the concept or are yet to see it. In truth, the technology is by no means complex or complicated. In fact, it is a simple evolution of spraying toner on paper. The only difference is that 3D printing takes the basic principles of spraying toner and revolutionizes them by putting down layers of materials and constructing variedly shaped, sized and functioned objects. The production of goods is being completely transformed all due to the expansive applications of this futuristic technology. With the passage of time, techniques of 3D printing will develop further and become well-capable of manufacturing a wider range of objects. This solution will be highly costeffective due to the fact that people will only need to purchase the raw materials and get the blueprints off of the Internet, the rest of the work will be done by the 3D printer. Once the technology reaches the masses, the cost of production will experience a significant drop. The Process of 3D Printing 3D Printable Models Models which can be printed three dimensionally require being illustrated first with the help of a 3D scanner or computer aided design package. The next process is the manual modeling, which shares similarities with the common plastic arts processes. Sculpting is the best example in this regard, because the manual modeling process requires similar aesthetics in terms of the preparation of geometric data for three dimensional computer graphics. On the other hand, 3D scanning, which is an alternative technique for developing 3D printable models, is a process in which a real object s analysis are performed and data is collected about the appearance, structure and shape of the object. Once this is done, digital and there dimensional models of the real object are built. Both techniques of manufacturing three dimensional printable models, whether they involve creation which is manual or automatic, are difficult for everyday customers. Due to this reason, the emergence of a number of 3D Printing Marketplace has taken place in the last few years. These include a few widely popular names such as Threeding, Shapeways and Thingiverse.

8 PAGE 8 Printing If a print needs to be performed, the machine has to analyze the design from the blueprint, which is typically an STL file. The STL files support 3D printability. The machine then puts down layers on top of each other. These layers can be from a wide variety of materials such as paper, powder, liquid or sheet material. Through this process, the model is built in from successive cross sections. The layers then become correspondent to the CAD model in which the virtual cross sections can also be found. They are further blended or fused automatically in order to make way for the final shape. The main advantage which the 3D printing technique adds is its ability to manufacture almost any kind of geometric feature or shape. Due to this trait, the technology has gained widespread attention because it is very much similar to the futuristic technology shown in the Star Wars movies which was capable of creating real life objects out of thin air. The resolution of the printer is used to describe the thickness of the layer as well as the X-Y resolution. These two factors are commonly expressed in micrometers or DPI (dots per inch). Typically, the thickness of the layer will measure up to around 250 DPI or 100 µm. However, some of the machines including ProJect series introduced by 3D systems and the Object Connex series have been known to produce print layers of 16 µm or 1,600 DPI which is a relatively thinner output. The resolution of laser printers can be compared to X-Y resolution, in which the particles (which are 3D dots) measure up to around 510 to 250 DPI or 50 to 100 µm in diameter. If contemporary methods are utilized, the time needed for manufacturing of a model can go well up from multiple hours to multiple days, as per the requirement of the method which is being used as well as the shape, size, and complexity of the proposed model.

9 PAGE 9 However, with the help of additive systems, typically, the time required for developing objects and models can be shortened to a great extent and several days of work can be reduced to just a few hours. Though, this is entirely dependent on the sort of machine which is being used to perform the task, the number of models as well as the size of the objects that need to be produced. Old school techniques such as injection molding have proven to be cost-effective as compared to other techniques in terms of developing polymer products on a mass level. However, additive manufacturing offers more flexible, less expensive and faster solutions if a relatively smaller quantity of parts is required to be produced. With only the help of a desktop size printer, 3D printer enables concept development teams and designers to manufacture concept models and parts with exceptional precision. Finishing Despite the fact that printer-produced resolution proves to be enough for a wide variety of applications, printing the desired object slightly oversized in standard resolution and afterwards taking off the material with the help of a subtractive process featuring higher-resolution delivers greater results. A few techniques of additive manufacturing can utilize several materials during the process in which parts are constructed. Apart from these, there are also techniques that are capable of printing a number of colors and varying combinations at the same time. Further, there are also some techniques that make use of supports during the building process. These supports can be dissolved or removed once the print is completed. They are only required to support features that overhang while construction is taking place.

10 PAGE 10 The Future of 3D Printing 3D printers are being extensively utilized for the purpose of manufacturing objects and models. However, up until now, the use of these techniques has only been restricted and limited to niche and specific manufacturing processes. One can t help but wonder what the future promises to look like for the 3D printing technology. Interestingly, a wide variety of attempts have been made to predict and assume the future of the technology and how it would affect the world, let alone the market. According to analysts and researchers alike, it has been forecasted that once 3D printing completely blends with manufacturing, the resultant may provide ground for two separate manufacturing models. These models will be namely, the Buyer Beware model and the R&D model. The Buyer Beware model will be a rather low-end solution, in which companies that offer manufacturing will target prompt iteration at regional development hubs, while the R&D model will be a high-end solution, which will benefit research organizations by helping them deliver creative ideas as well as social capital to regional manufacturers and small businesses alike. The two models are by themselves, not entirely new and they aren t dynamic revolutions of current manufacturing methods either. Despite this, with the help of 3D printers and e-commerce, a complexity has already been enabled when it comes to scale and product discrimination, which didn t seem to be a possibility not too long ago. And this will also prove to be the foundation of these two models. The Buyer Beware Model The whole concept behind this model will be to decentralize the network which exists between local hubs. The hubs will cater to specific regions and consist of 3D manufacturing firms which will develop prototype streams. With this, manufacturing organizations will be enabled to promptly test and create prototypes accordingly to consumer feedback. Yet again, this isn t anything new but still promises a lot.

11 PAGE 11 Focus groups are already conducted for products by consumer research groups. However, with the production of 3D printers on a mass level, these focus groups will likely increase in terms of scalability and rapidity. Another aspect that seems intriguing is the idea regarding decentralization of manufacturing hubs. It makes way for numerous other assumptions and makes analysts ponder over the level of customization which will be made possible due to 3D printing. Right now, major companies depend on a centralized manufacturing hub in order to establish product portfolios. These manufacturing hubs also work and deliver similar products as required by bigger regions (countries, for instance). However, the decentralized manufacturing hub model allows a relatively more granular level of the same products through custom blueprints. For instance, the customization of automobiles can be taken into consideration in this regard. This customization depends on geographies and their weather conditions due to the fact that cars need to be customized in order to suit diverse climates and weather conditions. According to analysts, it is asserted that thanks to the new process, the natural selection of products will be encouraged, even though there is a lacking of solid proof to back up these claims. Marketing muscle, regardless of the size of businesses and organizations involved, is an essential part in determining the decisions that people make when it comes to products. Although, with this kept in mind, the natural selection of products may seem impossible, but the set up of 3D printing firms will blend a unique combination of resources and expertise (human and financial) to allow large and established enterprises to enjoy an advantage in both. The Research and Development Model The Research and Development Model (R&D Model) proposes a manufacturing ecosystem. In this model, the more household issues such as poverty and climate change will be tackled by research and development organizations. They will give creative and productive ideas or come up with outputs due to their research, for regional manufacturers and small scale businesses, which will assist the widespread of such products with their 3D printing technologies. Analysts further add that with this assistance, regional manufacturers and small time businesses will gain social capital.

12 PAGE 12 This idea, unfortunately, comes off as completely opposite to the solutions proposed by the buyer beware model, in which consumer feedback will decide the amendments occurring in product prototypes. Further, the R&D model also relies heavily on the accessibility of small time businesses to independent and cost-effective production processes in which researches will be carried out, which is hardly ever a possibility as long as small time businesses are considered. Analysts further added that product cost and effectiveness will be displaced by social-value metrics as arbiters when consumers decide to choose products they would purchase. This proposal is a rather more idealistic concept, in which an ideal marketplace will allow all sorts of businesses, whether they are small or big, to gain access to beneficial ideas and production capabilities of equal proportions. Though, it is yet to be clarified that which sort of printers are being considered in this regard. Mainly, there are two types of printers: the expensive industrial printers, which can only be operated with the utilization of technical resources, or the comparatively inexpensive consumer 3D printers, which do not require technical resources. For instance, Voxeljet can be taken into consideration. The Germany-based 3D printer developer designs 3D printers which are capable of sand printing at expensive prices. These printers have bigger build areas and are widely popular among the automobile manufacturers. If this example is considered, it is rather too much to predict that small time businesses will be able to compete with household automakers such as Ford and Mercedes neck-to-neck in order to buy these products. The same example can be given for other industries which utilize these expensive 3D printers, including engineering or consumer products. Regardless of these predictions, one thought remains how will 3D printing affect the modern day industries? The answers may not be so obvious currently, but potential answers do exist.

13 PAGE 13 The modern day common printing technology remains restricted to smaller and more complicated odds and ends, for example, parts of machinery or small figurines. Industries requiring such products are low margin, primarily having extremely cheap foreign labor and have high economy-of-sale. While developing small supplies for housing, souvenir trinkets for tourists at roadside stores or Home Depot might be businesses of significant importance for some, but they are certainly not going to make way for a revolutionize in manufacturing. However, one possible exception exists in this case which is China. The country, thanks to its disproportionate share when it comes to small niche developers might gain advantage. Yet, the possibilities surrounding the 3D printing technology, in truth, depend on the future and the proceedings that occur in the years ahead. This will mainly depend on advances and if they ever provide easy creation of complicated parts that require extensive production. Organizations and manufacturers that take the larger shares in consumption of supplies and parts (for instance, automakers) might be the winners in this regard as their infrastructure and supply-chain expenses change. There have already been household 3D printing inroads in industries as diverse as healthcare, education, automotive and even aerospace. One can only imagine what the future promises to bring in the industry of 3D printing technology. Companies in the Industry The 3D printing industry might still be fragmented and quite small, yet there are an astonishing amount of companies that reside in it which trade publicly. Two of the biggest names in the industry are Stratasys and 3D Systems. The latter sports nearly a $6 billion market cap. Comparatively, the 2D printing giant HP, shares a $45 billion cap. Among the smaller companies are Voxeljet and ExOne, which have just recently established their foothold in the industry. While there may be other 3D printing plays in the market, these few names are the more well-known and bigger ones. The companies taking revolutionary steps in the field of 3D printing are further discussed below:

14 PAGE 14 3D Systems (NYSE: DDD) is a 3D printing company which was established in the early years of the technology. The 3D printing giant offers globally integrated solutions, with specializations in print materials, 3D printers, consumer and professional custom-parts as well as customization and 3D imaging software. It offers products which increase the efficiency of manufacturing processes, without needing tooling. The company develops concept models of products, functional and precision prototypes and production parts for direct digital manufacturing as well as master patterns for tooling. The company has its headquarters in Rock Hill, South Carolina. Stratasys Ltd (NASDAQ:SSYS) is a 3D printer manufacturer as well as producer of 3D systems which are used by rapid prototyping solutions and direct digital manufacturing processes as required by officebased facilities. The company was established in The products developed by the company assist engineers in modeling complex geometries of thermoplastic materials in a wide range. These materials typically include polycarbonate (PC) polyphenylsulfone (PPSF), ABS, and ULTEM The company creates in-office direct digital manufacturing and prototyping systems for industrial, electronic, recreational, aerospace, automotive, consumer product as well as medical OEMs. ExOne (NASDAQ: XONE) is a 3D printer and printed products provider which deals with industrial customers. The company s dealings are mainly dependent on selling and manufacturing 3D printing systems and printing products as per the requirements of customers with the use of in-house 3D printing machinery. ExOne provides print products and pre-production collaboration with the help of its Production Service Centers (PSCs) for customers. These centers have locations in Japan, German as well as the United States. The 3D printing systems are manufactured by the company in its facilities in Germany and the United States. Voxeljet AG (NYSE: VJET) is a three dimensional printer manufacturer and seller based in Germany. The company provides solutions for a wide variety of industrial companies ranging from aerospace, engineering, automotive and architecture to medicine, science, film, art and entertainment. The company has to provisions which do business separately. These divisions are namely, voxeljet SERVICES and voxeljet SYSTEMS.

15 PAGE 15 Autodesk Inc. (NASDAQ: ADSK) is a company dealing with design software and services. The company offers customers with business solutions through their technology services and products. It operates in four primary operating provisions. These are: Manufacturing (MFG), Platform Solutions and Emerging Business (PSEB), Media and Entertainment (M&E) and Architecture, Engineering and Construction (AEC). The company serves a wide range of industries and customers ranging from engineering and construction to digital media and entertainment. Among these enterprises, 3D Systems has established itself as the leading and most comprehensive company in the 3D printing industry by acquiring numerous other small time companies over the last few years. As a result, the revenue of the company has been brought up to over $400 million. Stratasys is not too far behind with its $4 billion market cap and around $300 million revenue, however, the company has suffered mixed earnings lately. Where Is Growth Going? All these companies may be showing exceptional stock performance, SSYS up 38%, DDP up 60%, VJET up 121% and XONE up 105%, they still provide surprisingly high P/E ratios along with questionable fundamentals. Two out of these five, SSYS and XONE, have been experiencing loss of money in recent times. DDD is an exception in this regard though, as the company has remained a standout performer so far thanks to positive EPS growth and earnings. Despite a few drawbacks, all of these companies share strong revenue growth. Apart from individual organizations, strong growth is also expected for the overall 3D printing technology industry. By 2011, the industry only had a mere $1.7 billion market but this number has gone up by a considerable amount, and is expected to keep rising and be more than triple of its 2011 market in the coming years. For lower-cost printers, a 75% of explosive growth is also expected in shipments in the next years, while for more expensive business printers are also poised for higher figures with the estimate of enterprise spending catapulting from $325 million last year to $536 million this year.

16 PAGE 16 From an investment point of view, there is one aspect to keep in mind while considering these early risers. A majority of first movers might know this quite well that the first ones out of the gate aren t always poised to win it all. The example of Lycos and Altavista is best in this regard, as compared the later rising Google, these names are too far behind despite going ahead early. With that in mind, the incredible growth that the industry has experienced in its entirety and the position of these early risers also makes them strong options for acquisitions from larger enterprises, once the bigger sharks finally realize that they ve missed out on the opportunity to take part in the industry but can still make ground by acquiring these companies. Despite all these scenarios, a strong future is in prospect for the 3D printing industry which is all the more exciting for investors. Furthermore, the industry has gained household attention thanks to the recent introduction of consumer printers. This has driven up stock prices and boosted them to considerable heights. For instance, 3D Systems has experienced a stock price rise of more than 120% in the last year. Stratasys shares aren t too far behind as they have catapulted by more than 98% whereas ExOne and Voxeljet have also received respectable boosts. Despite this, investors should remain aware of the fact that not all of the 3D printing enterprises can measure up equally. Taking a look at all of these stocks, there can be thoughts in one s mind that they all seem to come off as being linked intrinsically. They share a similar connection and show the same outputs altogether. For instance, when one stock rises up, the others do so as well. But when one takes a plunge, others do the same. However, upon mapping out the business models proposed by these companies, one may figure out that some of these competitors might have no such links with each other in terms of doing business. Plus, they also have varying dynamics of business and varying customer bases.

17 PAGE 17 For example, 3D Systems is the excelling consideration in the industry and boasts a robust portfolio. The company offers solutions for rapid prototyping, 3D printing as well as manufacturing. However, according to analysts, the company also has a few shortcomings. Despite the fact that the enterprise has made over 40 acquisitions in the last 3 years alone, it has still found it difficult to establish an area in which it could lead. Analysts call companies like 3D systems, the jacks-of-all-trades but masters of none due to the fact that these companies aren t leading the market in any of their areas of service. Analysts claim that as compared to 3D Systems, some of its smaller competitors are rather more dominant. A leading example in this regard is the private company EOS which is based in Germany. The company leads the metal printers market and easily exceeds the industrial sales and technology of 3D Systems. Besides these two, Voxeljet is another candidate in the industrial segment which has mastered technological advancements. The company is a potential threat to the businesses of both 3D Systems and EOS. Voxeljet might have a relatively dwindling stock but it still remains up 20% ever since being offered publicly. Voxeljet is dependent on the patent technology from MIT which will experience expiration within 3 years. This will result in making way for an increased competition from other candidates. The company s competitor ExOne, was downgraded to be held from buying by Canaccord Genuity. The price target for its stock was also lowered by the firm from $75 to $55 as it was claimed by the company that several revisions to the company s outlook seemed too concerning in terms of ExOne s organic growth. A number of firms not too long ago downgraded 3D systems, which resulted in the company s stock being closed at $75.85 during that time period. According to the Banks, the stock received further criticism and was mentioned to be underperforming. The price stock was inevitably lowered as a result, from $90 to $65.

18 PAGE 18 The move was explained by analysts as concerning for the company s overall rate of organic growth, among various other reasons. According to studied reports, the 3D System s stock was referred to as a bubble. This was due to the fact that the company was failing to sell a large number of its Cube printers to the consumers and it lacked the household technology which is necessary to challenge the other enterprises. Despite the 3D technology growing rapidly, the companies of the industry that currently exist in the stock market may suffer drops to single-digit sticks in a few years from now. In this regard, 3D systems may be the best example. However, with the industry set to experience formidable growth in the future, more companies with better performances are expected to join the scenario soon which may be better candidates for investors. Conclusion There might be unearned excitement as long as the 3D printing stocks are in the picture, investors can still hope for better opportunities in the long run. This is due to the fact that last year alone, 3D printing stocks went up 49% last year. And the number will expectedly rise by 75% by the end of the current year. While it is certainly an expectation that a bigger number of consumer printers will be shipped as compared to industrial ones, the revenue growth of the industry will still be boosted by the sales of high-end printers, which happen to be quite expensive machines, to larger enterprises. Analysts claim that only 8% of the possible applications have been discovered for 3D printing by the industry. There will be incredible growth, but not as soon as people are expecting. There will be more opportunities coming the industry s way and they will provide chances for more success. As a result, the 3D printing industry will outgrow itself and spread out. A couple of years ago, 3D printing was merely a $100 million market which included all the machines sales and materials. However, the industry promises to grow into a $15 billion market by By then, the clear winners might be a few latecomers, but companies such as Stratasys, EOS and Voxeljet with the strong technologies won t be too far behind. Regardless of all these insights, one thing is for certain. 3D printing will revolutionize the field of manufacturing.