AMS Spring 2023

Buying the Death Star: Ultimaker Merges with MakerBot. Takes Stratasys Investment

6K SmarTech

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When I used to work at Ultimaker, Makerbot was the enemy. They were closed, corporate, didn’t care about customers and didn’t care about values and open hardware. We did everything to best them. They were storm troopers and we were Jedi. They were the dark side; we were the good guys. We strived to outperform, to make better value products, and to make things that worked on the office or factory floor as well as in your home. 

Now, the unthinkable has happened. Ultimaker has acquired Makerbot, with Stratasys (Nasdaq: SSYS) now an Ultimaker investor. I did not for the life of me see this one coming. It fundamentally reshapes our 3D printing landscape.

Ultimaker is to buy Makerbot, with Ultimaker investor NPM Capital owning 54.4% and Stratasys 45.6% of the new entity. NPM will also invest $15 million, while Stratasys will put in the Makerbot assets and another $47 million. Makerbot CEO Nadav Goshen and Jürgen von Hollen will be Co-CEO´s. Nadav is to manage operations and R&D, not something Makerbot has ever been good at, while Jurgen will manage the commercial side.

Dr. Yoav Zeif, CEO of Stratasys said,

¨By combining the strengths of MakerBot and Ultimaker, the new entity will have a broad technology offering, be sufficient in scale, well capitalized and have a focused leadership team to better compete in the highly attractive Desktop 3D printing sector. Today’s announcement is consistent with our strategy to focus on industrial and production scale polymer-based additive manufacturing solutions. This transaction is designed to benefit our shareholders by enabling them to own two leading companies with best-in-class technology and focused management teams that will be able to successfully deliver solutions to customers in two highly attractive but different areas of the 3D printing market.”

What Does This Mean for Ultimaker?

Hänssler's Ultimaker S5 3D printing ESD-protected parts. Image courtesy of Ultimaker.

Hänssler’s Ultimaker S5 3D printing ESD-protected parts. Image courtesy of Ultimaker.

Ultimaker is now number one on the desktop for corporate and enterprise customers. The Ultimaker S5s were already everyone’s target, but now Ultimaker and its movements will be more closely watched still.

To me, this move is not a smart one for Ultimaker. It could have gone for a SPAC-merge last year. Months back, it could potentially have received a much richer investment that would have given it more independence. It could have raised tens of millions more and expanded much faster if it wanted to. This seems like an opportunistic move that may net them some IP and Thingiverse, but doesn’t really give Ultimaker primacy over the whole market.

It does eliminate a competitor, however. In this case, it leaves a wide gap for the next available firm to follow. There is now a big gap in functionality, leadership, and trust between Ultimaker and the rest of the desktop FDM market.

It could be that Ultimaker now has a stronger IP position. Its overall software offering can now really be seen as industry leading with Cura and Thingiverse still popular. The bright spot for the community is that Thingiverse, gasping for air and nearly dead,  will be revived under Ultimaker. It should once again be a user-friendly great resource. I’m looking forward to that.

I hope that this doesn’t stunt Ultimaker´s growth and leave a gap between the S5 and the $20,000 and $30,000 lineup of Stratasys’s F-series printers. It would be a shame if Ultimaker didn’t go after this opportunity. If Ultimaker stayed in the $5,000 to $10,000 price point from now on and did not grow towards Fortus and other Stratasys systems, then this is a completely brilliant move by Stratasys.

I think that there were better partners out there for Ultimaker, if it needed to work with a large firm. For Ulimaker’s future, any of the other large firms would have made more sense. Ultimaker has gotten much more corporate and lost touch with its erstwhile vibrant community. I hope that this doesn’t accelerate this trend. But, can the company still maintain its independent spirit? Or will more people see the Dutch company now as the new evil, deciding to avoid Cura and Thingiverse altogether?

Can Ultimaker makes it software freely and equally available for the whole 3D printing industry to use? This would represent a lot of value to the firm and be good for the industry. However, it is much more likely, in my opinion, that we will see more companies making their own software.

What Does This Mean for Stratasys?

The MakerBot METHOD 3D printer. Image courtesy of MakerBot.

This is a great deal for Stratasys. It takes a languishing asset and turns it into a near-half-stake in the desktop fused deposition modeling (FDM) leader. However, I wonder what the strengths of MakerBot are exactly. I don’t think that MakerBot in and of itself will have much value. The Method X is a good printer, but not better than an S5 and doesn’t target a separate market. It’s nice to have another brand but this one is quite dead in the 3D printing world. Outside it, one may be able to perform a Kia-Hyundai strategy by turning MakerBot into the education brand. It could potentially do something more exciting by having MakerBot become a standalone software-less brand or make it more edgy somehow.

In my opinion, the valuation is skewed. I’d never take a deal that essentially values MakerBot at about $30 million less than Ultimaker. This is a gross underestimation of Ultimaker´s good will and value. Theoretically Stratasys channel should be valuable for Ultimaker, but Stratasys channel partners loathe MakerBot so this will be of little value.

Previously about Stratasys’s own Makerbot acquisition, I remarked that it would serve as a stopgap to prevent others from investing in other desktop 3D printing firms. In turn, this would give Stratasys time to focus on its lineup. Now, by handing off Makerbot and taking a stake in a company that would have killed it eventually, the company makes an astute move. Of course, Stratasys wrote off over $1 billion on the Makerbot acquisition. But they’ve got their stopgap and now know exactly what their closest competitor will be up to.

What Does This Mean for 3D Printing?

This really strengthens the position of Prusa Research. The company can now move full-steam ahead to make evermore Prusa XL systems to challenge Stratasys with production level 3D printers. For the rest of the market, the choices will be stark. Do we stay around the $1,200 price point with much larger sales volumes? Or do we race to the bottom in terms of price?

Another option would be to try and ape Ultimaker. Copying it would be hard, but the company seems likely to abandon the $1,200 space completely.  This leaves a lot of margin and future growth for Creality, Anet, Artillery and Flashforge.

If Ultimaker puts out an improved $1,000 Ultimaker 2 and keeps supporting it, then the firm could completely dominate the space. If it neglects to do this, then It will have real competition from the aforementioned Chinese firms down the road.

Ultimaker´s pace of innovation has slowed. The S5 was released back in 2018. It’s still a good system, showcasing the firms demanding lead over rivals. However, it will need to get into high gear should it wish to grow further and fend off competition.

I think that, for larger industrial firms, producing entry level systems is potentially an incredible stepping stone to building trust and getting customers to buy more expensive systems. I wonder if this will lead to more businesses buying desktop companies.

BCN3D is now a good take over target for someone willing to enter the market. This Spanish firm has the vision but not the distribution. It would be interesting to see if someone has the stones to buy Formlabs and Markforged. That combination would mean becoming the leader of the desktop to industrial segment and would best the Ultimaker-MakerBot combination.

Other than this I would expect some larger firms to now consider making their own higher quality desktop systems. If they don’t want to then perhaps AON3D, Roboze or miniFactory could let them get in at a higher price point.

All in all, this is a surprising move with a lot of implications. I don’t feel it is the right move for Ultimaker shareholders. For the market, it may mean the slowing of open source innovation, but should mean a better Thingiverse. For the competition, this will mean more head scratching to find their place in a more clearly delineated world. For Stratasys this seems like a very good move indeed.   

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