

Stratasys Acquiring MakerBot - coloneltcb
http://techcrunch.com/2013/06/19/stratasys-acquiring-makerbot-combined-company-will-likely-dominate-3d-printing-industry/

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ChuckMcM
I think what Makerbot had, and others don't have, is a _product_ as opposed to
a hack. I love the RepRap, it's cooler than cool, but my Dad would never buy
one. The Replicator 2 is a refinement over four years of iterative offerings
which each informed on the next iteration. From the initial 'cupcake' (which I
help beta test the build instructions on) to the Replicator to the Replicator
II, each step along the way has explored materials vs handling vs control
schemes vs build flow. I'm sure a few have shown up at Stratsys' customers
where they give an engineer one to 'punch out' the basic concept they are
working on before sending it to the expensive machine. They have also made
good strides in reliability and repeatability.

In Q1 they had more revenue than all of 2012 according to some stories. So
Stratasys, the current leader in 3D printers had a choice, buy them or kill
them. It's pretty clear Makerbot wasn't going away.

Killing them would involve coming out with something to compete with them.
That would cost, conservatively, in a company like Stratsys, about $50M and 24
months. Maybe 12 if they did the 'crack team in an off site location without
interruptions and poaching.' Let's be optimistic and say there is a 50/50
chance of hitting a product that is competitive with the product that Makerbot
will announce in 2015. How big will Makerbot be? 2x, 4x, or 10x their current
size? If the competitive product fails what will it cost to acquire Makerbot?
$1B? $2B? Will it even be possible?

Looking at it from a pure engineering play it makes little sense, after all
Stratsys could use the RepRap stuff and make their own RepRap clone right? But
that only validates the market which invariably favors the market leader, in
this case Makerbot.

So if you think 3D printing is going to be 'the big thing' in manufacturing
going forward you're kind of stuck. Stratasys had to buy Makebot or risk
losing to them.

I got to live through a very similar situation at Sun. When it got big enough
DEC had a problem, do they buy the upcoming workstation vendor which was using
commodity Microprocessors or try to kill it? DEC chose poorly and paid for it
with their own existence which let Sun move into that spot until it died. I
remember reading a great article when Sun posted a $1B in annual revenue and
an analyst wrote "What would DEC do with a billion dollars?" Talking about the
lost revenue because DEC was avoiding open systems and commodity hardware like
the plague.

Trying to guess the future is hard, very hard, but I don't doubt for a moment
that Stratsys has always had the goal that if one of these hobbyist 3D
printing companies threatened to break out they would buy them before they
couldn't afford it. Makerbot triggered that particular outcome by building a
successful product.

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tmuir
What sort of IP does MakerBot have? Its a reprap (fully opensource) that needs
slightly-less-constant maintenance, and they've iterated on the extruder about
10 times. There's also some software.

If $400,000,000 (possibly $600,000,000) isn't a big enough budget to develop a
low end 3D printer, what are the development budgets of their industrial grade
printers?

~~~
aray
First off, it was $200M cash and $400 newly issued stock. They'll have to get
the shareholders to approve, but seeing as they're pretty well up in after-
hours, I don't think that will be a problem.

Also they had a $10M round just recently, so those investors are going to want
to cash out.

After that, theres rumors that their last year broke $70M in revenues (after
$10M in revenues the year before), and they're not really slowing down.

So, all things considered its a high price, but I dont think $200M cash isn't
too much to fork over.

The big question will be how they handle it. Will they start persuing all the
other (much smaller) 3D printing companies for infringement? Will they just
give makerbot more resources and freedom and tell them to keep doing their
thing? Will they make their (professional) CAD software compatible with
Makerbots printers and software, allowing a clean upgrade path between low-end
and high-end printers? We'll see, but apparently Stratasys has high hopes for
what they can do with it.

~~~
gaadd33
Isn't it a 200M earn out after 12 or 18 months and 400M in stock right away?
200M cash is likely more money than Stratasys has on hand right now given
their balance sheet.

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nthitz
Original MakerBot was a pretty good example of Open Source HW. Replicator 2
steered away from that. I wonder what will happen now?

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emilepetrone
Has anyone heard if they will take the tech back towards open or move in a
closed direction? I don't know much about Statasys but I'm guessing they are a
closed company and their machines aren't open sourced?

~~~
revelation
Statasys is the company that unilaterally suspended a leasing contract for one
of their more professional targeted printers after the leaser used it to print
lower receivers and other various gun parts.

I'm not too sure they are up to par with the freedoms open source is meant to
afford.

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seany
That's the first thing that came to mind for me too.

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dwild
Is there an expert here that can explain this valuation? They only sold 22k 3D
printer and they don't really innovate agains't open-source 3D printer.

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petercooper
Sorry, I'm no expert but it seems there's a huge future and a heck of a lot of
excitement around 3D printing. Supposedly they've sold 22,000 printers and a
deal for $403 million is the equivalent of $18k per unit sold. Given units
sell for about $2k, this seems to be a deal focusing heavily on the
technology, future and potential rather than the business fundamentals (but,
as always, a disclaimer.. I could be wrong ;-)).

~~~
rdouble
It must be for the brand, because Stratasys already has the technology to make
3D printers. It's also defensive, because it's an all stock deal, so the
acquired team has to stay at Stratasys for a while (and not be/work for the
competition) to make this worth their while.

edit: actually I forgot to do the math. if they sold $44M of stuff already,
10x that for an obviously growing business is a pretty typical exit

~~~
drone
Consider also, that Stratasys had no answer to their biggest competitor's
(3DSystems) consumer line that's been going gangbusters (Cubify).

I can imagine a world where $403M worth of stock is a good trade for a well-
known name, a product line with a large customer base, and profitable consumer
sub-unit to compete your biggest competitor, who has the same when you don't.

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gulfie
Staples is selling a 3d printer.

My guess is that Stratasys needs something on the low end, and quickly to
insure that they still exist in a few years.

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andrewmb
Wow. This is more than 2x my most optimistic estimates when I first heard the
rumors, but I was banking on a larger cash component. I'm in agreement with
other posters here who have suggested the purchase is for the brand name and I
want to add that control of Thingiverse is no small matter either.

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rakeshsharmak
I am no expert but I believe Stratasys paid for the brand and community.
MakerBot is the most well-known 3D printer out there but not the cheapest or
most well-designed (in the prosumer category). My guess is that the infusion
of cash will help MakerBot manufacture more printers at cheaper costs and,
thus, enable them to target additional market segments (beyond the prosumer
category, where they already face competition from Form1 labs).

~~~
makomk
Also, Bre Pettis has a lot of supporters who'll stand by him no matter how
self-serving his actions. For example, people supported him using his blog to
to publicly humiliate newbies to Open Hardware for not opening up their
derivatives of his designs sufficiently. The same people later insisted
there's nothing wrong with him closing off his derivatives of other's designs
and that anyone who complains about this is hostile and inflammatory, even
_comparing them to terrorists_ \- because of course, holding someone to the
same standard they hold others to is far less inflammatory than calling
someone a terrorist fundamentalist. I am sadly not kidding.

Edit: I wouldn't even be surprised if Stratasys managed to get away with
patent lawsuits against open 3D printer manufacturers with him on board.

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m0nastic
I just hope (selfishly) that this doesn't impact their release of the
Digitizer (which I'm currently super excited about).

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fudged71
Well this is exciting. I suppose we'll see a much larger lineup of affordable
desktop printers with better technology as well, in larger markets.

I've heard of a lot of problems with the replicators, yet they're still
incredibly popular, so hopefully we'll see all those issues ironed out.

Congrats to both companies!

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mixwhit
great, now printer materials will cost a fortune.

~~~
masonhensley
Why is that? Makerbots use the same material as Printrbots, RepRaps, etc... It
is available from multiple retailers.

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icewater
Who is buying the 11,000 3d printers?

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CodeCube
grats :)

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smaili
Sounds like an acqhire to me.

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msds
If an acqhire, it's not for the engineering team. As addressed above, it's
more likely for the brand recognition - given how finely tuned their
propaganda machine is, they may be worth it.

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gregpilling
It is certainly not for the engineering. I purchased a Makerbot and was
horrified at what passed for engineering in the design of their product. They
claim some absurd accuracy in the Z axis, when on my machine (Thing O matic)
the Z axis carrier would flex a 1/4 inch while printing. How can you have .00?
accuracy when the whole platform flexes .250?

~~~
msds
That is basically my experience with them as well. I've assembled or performed
significant maintenance on every printer model they've put out, except maybe
the replicator 1, and I've never been impressed. Their extruders are
especially nightmarish, even in comparison to the standard reprap setup.

I've also had the pleasure of looking at disassembled Stratasys machines, and
the design and workmanship are pretty impressive.

