Channel Partners Carving Out Services Niche In 3-D Printing Market

Fresh innovations in 3-D printing have created new business opportunities for solution providers. Vendors are investing a large amount of capital into the space and developing channel programs as quickly as possible in order to get out ahead of the curve and "ride the wave" of the booming industry.

"The 3-D printing market today is worth about $2.5 [billion] to $3.5 billion and is growing at a fantastic rate," said Mike Baur, CEO of distributor ScanSource, Greenville, S.C. "What we are trying to figure out is which markets are really going to need resellers and which ones are going to sell direct to the manufacturers. What we are learning is that the traditional manufacturing space, companies that are manufacturers that have to generate prototypes of their products, that's the sweet spot for 3-D printing. That's where 3-D printers can be purchased and deployed cost-effectively, and also is a very large market. We believe the more success we have at getting resellers to get into that market, the faster the market will grow."

Baur emphasized that can be an expensive investment for partners and it will take some time for the market to really take off, but he expects 3-D printing to be a healthy business for both ScanSource and its partners down the road.

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[Related Video: Why The Channel Needs To Jump On 3-D Printing]

Big-name printing vendors are eyeing the 3-D printing opportunity and preparing to launch new products that will bring them into the market, which research firm Canalys projects will hit worldwide revenue of $16.2 billion by 2016, up from $2.5 billion in 2013.

Companies such as Hewlett-Packard, Epson, Ricoh, Cannon and others have all invested in 3-D printing and are committed to entering the market by 2016. Solution providers expect these entrance of top-tier technology vendors into the market to fuel exponential growth in the space.

"It lends credibility to the industry with these brands entering the market and coming out with their own models," said Artie Moskowitz, senior account executive of Accucode, a solution provider based in Denver, Colo. "It will help the market grow tremendously, especially with HP. It kind of puts the whole stamp of approval saying, 'hey, this is the time.' I’m actually looking forward to it because once HP enters, there will be a whole lot more people looking at the market."

HP in October said it plans to enter the 3-D printing market in 2016 when it releases its Multi Jet Fusion 3-D printers. Ricoh in September said it is developing its own 3-D printer technology, which it intends to commercialize in fiscal 2016. Epson President Minoru Usui revealed in June in an interview with the Wall Street Journal that his company is working on developing 3-D printing technology for industrial use that could take up to five years to come to market. Canon and printer manufacturer 3-D Systems have been in a partnership since April, where Canon offers 3D Systems' complete line of 3-D printing products.

But it's not just the multi-billion dollar corporations that are pushing their chips in on the growing industry. Many solution providers are starting to stake their claim to the 3-D printing opportunity as well.

3-D Print Factory, a solution provider in Hancock, Md., that works with ScanSource, offers a wide range of personal, professional and production-grade 3-D printers but has also a strong niche for itself by providing printing and prototyping services itself, going so far as to open a "print studio" inside a local mall.

"We started investing in the technology in January of last year," said Jim Buchanan, vice president of operations and general manager of 3-D Print Factory. "When we started the company, we thought there was no way we'd be able to print enough to pay our rent. Then we started printing and had numerous requests for prototypes. Customers were getting parts in days instead of weeks. We found we were very popular with this service."

NEXT: Partners Going All-In For 3-D Printing

Buchannan says that between himself and his two business partners, they've gone all in on financing their new company.

"We literally have our life savings wrapped up in this, and that tells you our confidence in this business," he said. "We've put in about a half-million dollars between the three of us. With that, we are seeing a large number of people approaching us with business opportunities and it's not just for prototyping. We have people coming in with pictures, asking us to print models. We're printing everything from antique car parts, bicycle parts, replacements for antiques. The industry is just wide-open."

Partners say that in the last few years, 3-D printers have become more affordable and easier to use. In addition to that, 3-D scanning technology has caught up with 3-D printing, allowing users to scan any object to create a 3-D image document that can be sent to a 3-D printer and printed on a small or large scale. Industry executives expect the technology to continue in this direction as businesses continue to innovate, but warn that it's still a tough field to embark in.

"It is expensive to get into this industry," said Bruce Glenn, vice president of ScanSource's 3-D printing division. "It is a requirement to invest in one of these machines. You have to put resources to it. You can't get in the industry and be successful without putting in the resources. There is a high degree of value-add required all the way through. There is a lot of information to be understood. The technology has become more user-friendly, but it is still very complex. You have to invest in it, but the idea is to get in now, understand the industry and gain expertise, so when the market evolves, you can ride the wave."

Many 3-D printing businesses continue to profit from print-on-demand services more than the actual sale of these machines, with some saying the services make up 75 percent of the revenue. Businesses that are looking for inexpensive replacement parts are coming to 3-D printing service providers and are getting these parts from high-end printers without waiting the extended amount of time for shipping that they normally would. These machines are able to print customized parts with plastic, metal and other types of materials.

"It's not just about manufacturing. It's about providing a service for what people need," said Ron Robinson, president and CEO of 3D Printer Technology based in Atlanta, Ga. "Customers want their products now, and they just need a way to get it done."

3D Printer Techology currently derives 25 percent of its revenue from product sales and the rest from printing services, Robinson said.

Robinson's company was recently approached by Delta Airlines, who was looking for a company that could offer a cheaper solution for a replacement switches for its flight simulator units. In addition to printing the replacement part for half the cost on a monthly basis, 3D Printer Technology also made customized tablet mounts that attach to the back of seats in the cockpit for Delta's instructors to use for flight simulation sessions. The company has since been sponsored by the airline as the official vendor of Delta Airlines.

"Early on I decided that we need to make parts for people ourselves and do both the parts and creating the design, and now our business is taking off," Robinson said. "We are getting more business than we could have known."

Due to the high volume of orders, Robinson's company and a partner business called Blue Media are opening up a Kinkos-style over-the-counter 3-D print shop next month, where customers can come in with requests, email in designs, or call in an order, and the business will have the 3-D prints ready at a scheduled time. If all goes well, in 6-to-8 months, Robinson intends to start a franchise.

PUBLISHED FEB. 9, 2015