Why consolidation is necessary for Additive Manufacturing moving forward and how customers and suppliers will benefit from it

Matthias Schmidt-Lehr (Executive Partner, AMPOWER) will speak at Additive Manufacturing Strategies summit this Feb 4-6, 2025 in New York City.

For the first decade, Additive Manufacturing sold a vision of seemingly endless possibilities. The emerging industry attracted customers curious about its potential but often unaware of its limitations.

This era of dreaming and initial exploration is finally over. Today, most medium- to large-sized companies have built internal expertise in AM. Their teams understand the technology landscape and know where AM can add value to their business. As a result, customers have well-defined expectations based on their experience and are less likely to return to exploratory phases. Instead, they seek specific solutions tailored to their needs.

As a result, the Additive Manufacturing industry is transitioning into a new market phase, with consolidation emerging as a significant outcome. In this evolving landscape, strategy becomes more critical than ever for every market player.

Historically, Product Leadership was the natural strategy for AM suppliers. Companies focused on delivering constant innovation and machine improvements, often at high costs. The machines were designed for any possible application. Early customer favorites like EOS M290 or Stratasys Fortus series were extremely versatile from producing prototypes to tools and even qualified flying aircraft components. However, those types of machines where barely optimized for cost or specialized applications.

Today, two alternative strategies are reshaping the AM market:

1. Operational Excellence:
   Companies like Bambu Lab or Formlabs are pursuing an “IKEA” or “Walmart” model for AM. By providing a product that is designed to be produced in masses, optimizing cost at a low entry barrier and ease of use, these firms disrupt the market and attract a broad customer base. Their approach emphasizes efficiency and scalability, making high-end technology accessible to more customers. Their strategy is not so much the optimization of the product for a specific customer group or towards highest performance. Their core excellence is rather in their internal organizational structure, which enables them to produce the machines as cheap and as simple to use as possible.
2. Customer Intimacy:
   This strategy focuses on becoming the best solution partner for specific, profitable customer segments. Lessons from the dental market are now being applied across other industries. Success in this area requires deep customer understanding and a clear value proposition. For instance, defense clients seeking spare parts have vastly different needs than medical manufacturers developing implants. Companies like Carbon3D exemplify this approach, narrowing their focus to specific use cases and prioritizing customer success.

This is where consolidation is fast tracking the differentiation of the AM market. Consolidation, defined as “the process of combining multiple entities into a single, more effective or coherent whole,” is driving these strategic shifts in AM. The industry currently features a wide array of technologies and suppliers, catering to markets at varying levels of maturity and profitability. However, with venture capital investments declining, AM companies face increasing pressure to achieve profitability quickly or, at the very least, establish a robust growth strategy that aligns with current market trends. One potential approach is to adopt a “best-in-class” strategy by excelling in one key area while maintaining a strong position in the other two.

1. Product Leadership – Requires significant R&D budgets and company scale to sustain innovation.
2. Operational Excellence – Relies on size and efficiency to drive down costs and enable mass production.
3. Customer Intimacy – Allows smaller companies to thrive in profitable niches by specializing and providing tailored solutions.

For many, the path forward is impossible without consolidation. Smaller players must join forces to compete effectively in Product Leadership or Operational Excellence. In the end, this alignment will help create a clearer and more sustainable market structure.

Benefits of Consolidation

For Customers:

Initially, consolidation may create uncertainty, as customers evaluate whether to trust suppliers’ longevity. However, once the dust settles, they will enjoy several benefits:

• Improved Reliability: A healthier, more focused supply chain will emerge.
• Tailored Solutions: Customers seeking cost-effective equipment will find it, as will those requiring specialized applications.
• Enhanced Service: Larger, more stable suppliers will have the resources to address long-standing service issues.

For Suppliers:

• Profitability: Consolidation will drive efficiency, allowing AM companies to achieve profitability and attract investors back to the industry.
• Market Clarity: Weak players and underperforming technologies will exit, leaving a stronger, more credible market.
• Scalability: With a healthier environment, companies can focus on scalable applications and long-term growth.

The Future of a Consolidated AM Market

Over the next 5 years, consolidation will create a more robust and competitive AM industry. Customers will gain access to better products and services, while suppliers will benefit from increased profitability and market stability. Together, these changes will drive innovation and ensure that AM continues to transform industries worldwide.