3D Systems-Xerox Deal Is First of Its Kind Involving R&D Asset Sale

G00260920

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Summary

Xerox’s planned sale of certain "solid ink" research and development assets will help 3D Systems meet the growing demand for 3D printers. Xerox itself will also continue to provide technology for the 3D printing market.

News Analysis

Event

On 18 December 2013, 3D Systems announced a definitive agreement to acquire a portion of Xerox's solid ink product design, engineering and chemistry group and related assets for $32.5 million in cash. The companies expect the transaction to close before year-end 2013. As part of this agreement, 3D Systems said it would:

  • Add Xerox engineers and contractors specializing in product design and materials science to its global R&D team

  • License hundreds of relevant patents

  • Immediately begin to operate an R&D facility within the Xerox Wilsonville campus

Xerox retains the staff and development facilities that are involved with its solid ink ColorQube office printers and CiPress printing presses.

Analysis

This acquisition represents the first time a two-dimensional (2D) printer manufacturer has sold assets to a 3D printer manufacturer, rather than simply licensing them — though Xerox plans to continue with its 3D print technology R&D and its current 3D printer OEM partnerships. Although Xerox's loss of expert personnel might raise concerns about the future of its own solid-ink printers, the company has said that its resources are sufficient to support the ColorQube and CiPress product lines. Xerox will retain its solid-ink and 3D printing intellectual property (IP) while licensing that IP to 3D Systems. Xerox will also continue its 17-year history of providing printheads to 3D Systems for use in its ProJet product line. Xerox printheads are key components that enable the printers to produce castings for a wide range of detailed parts, including jewelry, medical implants, dental wax-ups and mechanical parts for a variety of industries. Gartner expects Xerox will remain a significant, if not well known, developer and provider of 3D printing technologies through its IP and the R&D undertaken by Xerox PARC.

Access to Xerox assets will accelerate 3D Systems’ printer and material development capabilities as well as enhance its ability to meet worldwide demand for 3D printers, which we have forecast will grow at a compound annual growth rate of 91.4% through 2017. 3D Systems will use the acquired group’s expertise in designing production lines that produce high numbers of quality printers, including inkjet 3D printers priced for the consumer and enterprise markets. Gartner expects 3D Systems to increase its R&D spending over the next few years and continue investing in print material engineering and chemistries. This focus will continue to drive 3D Systems' evolution into a “systems-centric” engineering environment offering, including:

  • A comprehensive and validated understanding of hardware, software, materials and processes

  • Rapid consumer and enterprise printer developments

  • The availability of a wider range of qualified 3D printable materials

  • Deeper product support

Recommendations

  • Do not let the accelerating rate of mergers and acquisitions within the 3D printing market dissuade you from investing in viable 3D printing technology and providers.

  • Ask 3D Systems how its newly acquired print, chemistry and product development capabilities can support your 3D printing initiatives.

  • Continue to evaluate Xerox’s solid ink technology for paper printing alongside competitors' offerings when you plan to purchase new printers and presses.

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© 2013 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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