BA 453 Business Strategy & Planning Spring 2014 1 .docx

BA 453: Business Strategy & Planning | Spring 2014 1
Case D: MakerBot
Your Mission
You have been hired by Bre Pettis, CEO of MakerBot, as the
newest member of their strategic
planning team. Meet Bre through this video:
http://www.engadget.com/2013/09/20/bre-pettis/
The recent acquisition of MakerBot by Stratasys has changed
everything compared to its
beginnings as an entrepreneurial start-up. Mr. Pettis would like
you to offer – or validate – the
strategic direction for his innovative 3D printing company
MakerBot. Who should the MakerBot
become? A manufacturer? A retailer? A technology facilitator?
Does our school program make
sense?
Mr. Pettis asks you to accomplish the following:
• Summarize your assessment of MakerBot’s current situation
by discussing the
opportunities and challenges of being on the cutting edge of this
technology.
• Integrate Porter’s Five Forces, the PESTL Analysis and other

applicable class
content into your executive brief to clearly communicate and
support your
findings.
• State and define a strategic direction that provides focus for
MakerBot.
• Describe the actions steps to implement your
recommendations.
Mr. Pettis encourages you to visit MakerBot’s website to learn
more about the organization and
its products at www.makerbot.com.
He expects you to use the template format for your executive
brief that is no more than 1,200
words.
In addition to handing hard copy in at the beginning of class
on the due date assigned, please submit it to associated Safe
Assignment link.
http://www.makerbot.com/

Case D: MakerBot
Its physical presence appears in the glass box from nothing. No
one was touching it and no other
tools were visible. It just slowly, gradually, and almost
magically appears.
View this video to see MakerBot’s latest product in action:
http://www.youtube.com/watch?v=AKTSdW7-H3Q
3D Printing
Additive manufacturing, also referred to as three-dimensional or
3D printing, is a process of
making a three-dimensional solid object of virtually any shape
from a digital model. 3D printing
is achieved using an additive process where successive layers of
material are laid down in
different shapes. 3D printing is also considered distinct from
traditional machining techniques,
which mostly rely on the “subtractive processes” of removing
material by methods such as
cutting or drilling. A 3D printer is a limited type of industrial
robot that is capable of carrying out
an additive process under computer control.
Additive manufacturing takes virtual blueprints from computer
aided design (CAD) or animation
modeling software and “slices” them into digital cross-sections
for the machine to successively
use as a guideline for printing. Depending on the machine used,
material or a binding material is
deposited on the build bed or platform until material/binder
layering is complete and the final 3D

model has been “printed.”
To perform a print, the machine reads the design from an. stl
file and lays down successive
layers of liquid, powder, paper or sheet material to build the
model from a series of cross
sections. These layers, which correspond to the virtual cross
sections from the CAD model, are
joined or automatically fused to create the final shape. The
primary advantage of this technique
is its ability to create almost any shape or geometric feature.
Construction of a model with contemporary methods can take
anywhere from several hours to
several days, depending on the method used and the size and
complexity of the model. Additive
systems can typically reduce this time to a few hours, although
it varies widely depending on the
type of machine used and the size and number of models being
produced simultaneously.
The Beginning
Several different 3D printing processes have been invented
since the late 1970s. The printers
were originally large, expensive, and highly limited in what
they could produce. It was not until
the 1980’s that the concept of 3D printing began to be taken
seriously. The man most often
credited with inventing the language of “modern” 3D printer is
Charles W. Hull who used the
term “stereolithography” in a 1984 patent. Hull defined
stereolithography as a “system for
generating three-dimensional objects by creating a cross-
sectional pattern of the object to be
formed.”

http://www.youtube.com/watch?v=AKTSdW7-H3Q
A second influential inventor was S. Scott Crump who
developed fused deposition modeling
(FDM) in the late 1980s. This process was later commercialized
in 1990 by the Stratasys
(SSYS). With the expiration of the patent on this technology,
there is now a large open-source
development community as well as commercial and DIY
variants, which utilize this type of 3D
printer. This is one factor that has led to significant price drops
in printers since this technology’s
creation.
In some printers, paper can be used as the build material,
resulting in a lower cost to print.
During the 1990s some companies marketed printers that cut
cross sections out of special
adhesive coated paper using a carbon dioxide laser, and then
laminated them together. In 2005,
Mcor Technologies Ltd. developed a different process using
ordinary sheets of office paper, a
Tungsten carbide blade to cut the shape, and selective
deposition of adhesive and pressure to
bond the prototype. By 2011, the printers became widely
available commercially as their price
dropped substantially. According to Wohlers Associates, the
market for 3D printers and services
was worth $2.2 billion worldwide in 2012, a 29% increase from
2011.

Industry Applications
The current use of 3D scanning technologies allows the
replication of real objects without the
use of molding techniques that in many cases can be more
expensive, more difficult, or too
invasive to be performed. For example, with precious or
delicate cultural heritage artifacts where
direct contact with the molding substances could harm the
original object’s surface. 3D printing
technology is used for both prototyping and distributed
manufacturing with applications in a
variety of industries including architecture, construction,
industrial design, automotive,
aerospace, military, engineering, civil engineering, dental and
medical industries, biotech
(human tissue replacement), fashion, footwear, jewelry,
eyewear, education, geographic
information systems, food, and many other fields. For example,
in commercial production Nike
is using 3D printing to prototype and manufacture the Vapor
Laser Talon football shoe for
players of American football, and New Balance is 3D
manufacturing custom-fit shoes for
athletes.
The Price Tag
The cost of 3D printers has decreased dramatically since 2010,
with machines that once cost
$20,000 now cost less than $1,000. The open-source
[email protected] project has developed printers
for general use with anything that can be squirted through a
nozzle, from chocolate to silicone
sealant and chemical reactants. Printers following the project’s

designs have been available from
suppliers in kits or in pre-assembled form since 2012 at prices
in the $2,000 range. The
Kickstarter funded Peachy Printer is designed to cost $100 and
several other new 3D printers are
aimed at the small, inexpensive market.
As the costs of 3D printers have come down they are becoming
more appealing financially to use
for self-manufacturing of personal products. In addition, 3D
printing products at home may
reduce the environmental impacts of manufacturing by reducing
material use and distribution
impacts.
Consumer Use
Much of the work to develop affordable 3D printers for home
and desktop use has been driven
by and targeted at do-it-yourself (DIY) enthusiasts and other
early adopter communities. RepRap
is one of the longest running projects in the desktop category.
The RepRap project aims to
produce a free and open-source software (FOSS) 3D printer,
whose full specifications are
released under the GNU General Public License, and which is
capable of replicating itself by
printing many of its own (plastic) parts to create more
machines. Research is under way to
enable the device to print circuit boards and metal parts.

RepRap
Because of the FOSS aims of RepRap, many related projects
have used their design for
inspiration, creating an ecosystem of related or derivative 3D
printers, most of which are also
open-source designs. The availability of these open-source
designs means that variants of 3D
printers are easy to invent. The quality and complexity of
printer designs, however, as well as the
quality of kit or finished products, varies greatly from project to
project. This rapid development
of open-source 3D printers is gaining interest in many spheres
as it enables hyper-customization
and the use of public domain designs to fabricate open-source
appropriate technology. This
technology can also assist initiatives in sustainable development
since technologies are easily
and economically made from resources available to local
communities.
The development and hyper-customization of the RepRap-based
3D printers has produced a new
category of printers suitable for small business and consumer
use. Manufacturers such as
Solidoodle, RoBo, and RepRapPro have introduced models and
kits priced at less than $1,000,
thousands less than they were in September 2012. Depending on
the application, the print
resolution and speed of manufacturing lies somewhere between
a personal printer and an
industrial printer. A list of printers with pricing and other
information is maintained. Most
recently delta robots have been utilized for 3D printing to
increase fabrication speed further.

The New World of 3D Applications
3D printing makes it as affordable to create single items as it is
to produce thousands and, thus,
undermines economies of scale. An additional use being
developed is building printing, or using
3D printing to build buildings. This could allow faster
construction for lower costs, and has been
investigated for construction of off-Earth habitats. For example,
the Sinterhab project is
researching a lunar base constructed by 3D printing using lunar
regolith as a base material.
Instead of adding a binding agent to the regolith, researchers are
experimenting with microwave
sintering to create solid blocks from the raw material.
3D printing may have as profound an impact on the world as the
coming of the factory did. It is
impossible to foresee the long-term impact of 3D printing. Most
feel that the technology is
coming, and it is likely to disrupt every field it touches.
Industry Growth
The 3-D printing industry is expected to reach $3.1 billion in
sales worldwide by the year 2016
and $5.2 billion in the year 2020. Industry investment suggests
3-D printing is evolving from a

prototyping tool to end and manufacturing platform. Even
though toys and gadgets dominate the
consumer 3-D printing landscape, academic researchers and
enterprises have been experimenting
with serious practical applications.
To illustrate how manufacturing technology could create
complex structures, such as that of a
violin, German technology and manufacturing firm EOS printed
a replica of a Stradivarius violin
shown in this YouTube video:
http://www.youtube.com/watch?v=bJA6J5girlo.
In 2011, time magazine included prominent
Dutch fashion designer Iris van Herpern’s 3-D
print dress in its list of 50 Best Inventions the
ready to wear dress was printed using a polymer
material. (Escapism dress)
Finally, 3-D printers increase they had been
exploited for darker criminal purists, they have
been used to make ATM card skimming devices
to capture data from bank card magnetic strips,
as well as keys to unlock police handcuffs. In
2011, and illegal firearms magazine (or storage
and feeding device) for an AR – 15 rifle was
shared on thing averse.com.
Taking Notice
China has committed almost $500 million
towards the establishment of 10 national 3-D
printing development institutes. In 2013,
Chinese scientists began printing ears, livers and
kidneys, with living tissue. Researchers in China
have been able to successfully print human

organs using specialized 3D bio printers that use
living cells instead of plastic. Researchers at Hangzhou Dianzi
University actually went as far as
inventing their own 3D printer for the complex task, dubbed the
“Regenovo” which is a “3D bio
printer.” Xu Mingen, Regenovo’s developer, said that it takes
the printer under an hour to
produce either a mini liver sample or a four to five inch ear
cartilage sample. Xu also predicted
that fully functional printed organs may be possible within the
next ten to twenty years. In the
same year, researchers at the University of Hasselt, in Belgium
had successfully printed a new
jawbone for an 83-year-old Belgian woman. The woman is now
able to chew, speak and breathe
normally again after a machine printed her a new jawbone.
http://www.youtube.com/watch?v=bJA6J5girlo
In Bahrain, large-scale 3D printing using a sandstone-like
material has been used to create
unique coral-shaped structures, which encourage coral polyps to
colonize and regenerate
damaged reefs. These structures have a much more natural
shape than other structures used to
create artificial reefs, and have a neutral pH which concrete
does not.
Some of the recent developments in 3D printing were revealed
at the November 2013 3D
Printshow in London. One part of the show focused on ways in

which 3D printing can advance
the medical field. The underlying theme of these advances was
that these printers can be used to
create parts that are printed with specifications to meet each
individual. This makes the process
safer and more efficient. One of these advances is the use of 3D
printers to produce casts that are
created to mimic the bones that they are supporting. These
custom-fitted casts are open, which
allow the wearer to scratch any itches and also wash the
damaged area. Being open also allows
for open ventilation. One of the best features is that they can be
recycled to create more casts.
It is no surprise that mainstream companies are jumping in as
well including the traditional
printing giant Hewlett-Packard.
But Really?
Despite some of these lofty predictions, not everyone believes
in the “long-term dreamland
scenario” of what 3D printers can do. The consumer 3D printing
dream is that people no longer
need to go to the store when they need something or even order
it online for delivery. Instead
they can just download a computer-aided design file and make
whatever they need in their home
3D printer. Many think that is not going to happen. However,
3D printing is recognized as a
disruptive technology that is changing the game for many
industries, as it simultaneously is
creating its own.
The Competitive Landscape in Three Dimensions

The 3D printing industry’s three top players are 3D Systems,
Stratasys and ExOne. As these
companies are revolutionizing mass manufacturing, they are
anticipating competition from the
traditional printing industry. For all the potential in the
industry, however, not all 3D printing
companies will see the same levels of success. 3D Systems is
one of the most influential. 3D
Systems has the largest product breadth, the most patents, the
greatest mix of high-margin
materials and software, and the highest operating margin, and
this product breadth puts the
company in good position for the near and long term.
Just behind 3D Systems is Stratasys. Second only to 3D Systems
when it comes to patents
pending, Stratasys has a dominant market share for the smaller
desktop 3D printers at price
points of $500 to $4,000 making this a viable purchase for
“creative consumers” using at-home
printers. Stratasys also has the most unit market share of the
group, with a 57% hold on the
market since its merger with a smaller 3D printing company.
The third 3D printing company rated as a buy is ExOne, which
focuses on a slightly different 3D
printing technique — one that involves sand for casting — and
can already boast Ford, BMW
and aerospace company Sikorsky as its customers.

Enter MakerBot
Under the radar of the larger top three 3D printer companies,
MakerBot Industries was born in
2009 and quickly became a leader in the personal 3-D printing
industry. MakerBot offered its
first product in the form of a kit. Enthusiasts could build their
own 3-D printers and enter the
world of personal manufacturing could do so for under $1000.
This price point was
groundbreaking. Much of the work of their customers is
displayed on Thingivers.com, a website
that boasts over 9,000 files that enables others can enjoy their
work and build on their creations.
MakerBot faced strong competition from startups much like
themselves who also targeted the
consumer market. However, MakerBot printer was based on
open-source design and, therefore,
faces with the threat of imitation by others.
The Open-Source Philosophy
MakerBot’s primary objective was to build an inexpensive
open-source 3-D printer. Instead of
taking the conventional path of crafting a business plan, the
founders Bre Pettis, Adam Mayer,
and Zach Smith, begin by demonstrating proof of concept. With
severe resource limitations, the
team fashion prototypes from readily available open-source
hardware and software in a sense
MakerBot’s founding venture team included the entire open-
source community, which was
committed to innovation and the excitement that comes from
making things transparent,

accessible, and modifiable. MakerBot’s first product, CNC
Cupcake, was a home based 3-D
printing kit for do-it-yourself enthusiast. This enabled
MakerBot to share its passion for what the
team called personal manufacturing, a non-existent industry at
the time.
MakerBot’s Vision
The founders agreed on a vision to launch and grow MakerBot
using only open-source
technology so that their first customers could understand, tinker
with, and improve their products
this allowed MakerBot owners to modify and share software
annotations and new hardware
innovations. Also consistent with an open-source mentality,
MakerBot’s 3-D printers use only
nonproprietary consumables to build objects. This allowed
MakerBot customers to buy printing
consumables from a wide range of plastic distributors, on like
with the lock in strategy most 3-D
printing companies pursued. Specifically, MakerBot printers
used industrial ABS plastic, the
same plastic used to make children’s Lego blocks. MakerBot
sold plastic spools and an array of
colors and these affordable materials could be sourced through
locations and distributors
worldwide.
The aim was not to make each customer a captive of the system,
but rather an innovator, with
potential to shape the newly forming personal manufacturing
industry. Within this unique
community, makers were motivated less my money than by a
sense of personal, judgment, group
creativity, and community. However, many makers evolve from

hobbyist to entrepreneurs. 3D
printing offers the unique benefit of allowing producers to
address uncertain demand by initially
targeting small markets and creating product as needed meeting
with success would validate
these markets and encourage them to take on larger scale
production methods with higher quality
products at a lower unit cost.
Vertically integrated making chains, a term coined by wired
magazine editor-in-chief Chris
Anderson, allows customers to design, print, share, and sell
their creations. The process is
simple. Customers either upload a digital model, or instead of
designing an object from scratch,
search through these websites from models to customize. Next,
they selected from a range
materials and after their customer receives a price quote, the
item is printed and shipped.
Crossing the Chasm: A Volatile Time
After series of mergers and acquisitions, only two major 3-D
printer leaders, 3-D systems and
Stratasys, targeted and served business professionals. These
families had two major revenue
streams: printing devices and consumables in industrial 3-D
printing, the ideal customer locked
in to a particular system and printed a bodily, guarantee healthy
stream of considerable revenues

to operating grow, an industrial 3-D printing business needs
relationships with industrial
designers and new product manufacturers as well as steep
investments in technology R&D and
intellectual property protection.
Hewlett-Packard Makes a Move
In 2010, Hewlett-Packard quietly entered the 3-D printing
industry. HP signed an agreement
with competitor Stratasys to manufacture a 3-D printer under
the HP name DesignJet. This 3-D
printer was marketed only in Europe with a price tag of about
$17,000. The machine targeted
engineering, R&D, and product development professionals, as
well as educators who taught
model making by prototyping. The HP printer exploited
proprietary hardware, software, and
consumables, which fit HP’s historic too deep range strategy.
However, in August 2012, Stratsys
announced it would discontinue its manufacturing and
distribution agree with HP at year end, a
proxy three years after the agreement have been signed. HP’s
future strategy for 3D printing is
uncertain.
MakerBot Takes Off
In September 2010, shortly after shipping over
2,000 Cupcake model printers, MakerBot
released its newest product called the Thing-O-
Matic. Compared to other models, the machine
had a higher print speed and greater reliability.
In early 2011, MakerBot’s technical and
marketing achievements through the interest of
these Bezos Expeditions, the personal

investment fund of Amazon CEO Jeff Bezos.
Bezos was drawn to this disruptive technology, a
committed $10 million to MakerBot. Additional
investment groups jumped in as well.
This capital infusion help MakerBot grow and, in November
2011, MakerBot shipped its 6,000th
unit. In January 2012, MakerBot announced its next printer, the
“Replicator.” This printer was
more powerful than previous models and capable of printing in
two colors simultaneously. It
enabled printing with multiple materials on an enlarged build a
platform to build larger objects
than before up to about the size of a loaf of bread.
MakerBot’s Replicator success comes from serving a diverse
audience of engineers, architects,
educators and even hobbyists. The product range is versatile,
with varying levels of complexity.
The product line, initially consisting of two desktop printers
and one scanner, has received
accolades from tech titans and awards such as Time Magazine’s
Best Inventions 2012, and
Popular Mechanics 2013 Breakthrough Award. MakerBot makes
it possible for anyone with a
computer and some creativity to create 3D art, ranging from the
wildly bizarre to the incredibly
functional. People can create everything from bracelets to
prosthetic hands with the technology.

MakerBot is Purchased
In 2013, Stratus’s acquired MakerBot, effectively merging two
organizations The $403 million
deal allows Stratasys to compete more in the consumer 3-D
printing space. MakerBot makes less
expensive systems for hobbyists, though they’re not exactly
cheap – the MakerBot Replicator 2
sells for $2,199. “MakerBot has impressive products, and we
believe that the company’s strategy
of making 3-D printing accessible and affordable will continue
to drive adoption,” said David
Reis, Stratasys CEO, in a prepared statement. The Brooklyn-
based MakerBot has sold more than
22,000 desktop 3-D printers since it was founded in 2009.
Stratasys, previously specializing in
professional-grade 3-D printers, said it will operate MakerBot
as a separate subsidiary. It allows
Pettis to have a tremendous amount of autonomy in providing
strategic direction and managing
the company.
MakerBot’s Retail Venue Approach
MakerBot now has a retail presence at the address of 72
Greenwich Avenue, New York. The
Greenwich location marks the third brick and mortar MakerBot
store with locations in New York
City and Boston. With the user-friendly and accessible
MakerBot products, 3D printing is now
accessible for every level of enthusiast. “To some people, 3D
printing is still science fiction. We
were the first company to take this technology to an accessible
level,” said Jennifer Howard,
director of public relations at MakerBot.

Products
The MakerBot Replicator 2 3D printer, now in its fifth
generation, essentially works as an inkjet
printer that works with plastic filament. It effectively brings a
digital model to life and is capable
of creating virtually any shape. From detailed architectural
models to colorful action figures and
even clothing, 3D printers can render nearly anything out of
plastic.
Users sketch out a 3D model on CAD design software and the
model is then printed with the
MakerBot device. This is not exactly user friendly software and
the process may require some
finesse, but a simpler, alternative method is available via
Thingiverse, an online hub created by
the MakerBot founders that houses a plethora of free 3D models
for people to simply download,
customize and print.
In March 2013, a scanner was also added to the product line.
Called the MakerBot Digitizer, it
allows users to scan physical objects to be digitized and printed
in 3D, essentially converting real
life objects into 3D models. This process, seemingly out of
science fiction, is completed with the
help of two lasers and a webcam. Within minutes, the Digitizer

can render a full, waterproof
model.
Compared with industrial printers, with prices falling in the
$25,000 spectrum, the MakerBot
printers, average price is about $2,000, making it far more cost
effective and accessible. The
scanner’s retail price has now fallen to $949, a significant drop
from its original price of $1,400.
“We’re really excited to have a product line that has something
for everyone, and at the same
time, we are very excited about the entire surrounding
ecosystem, with its applications and
software. It’s awesome to have a product we can take to the
consumer that is both easy to use
and reliable,” Mr. Pettis said.
Among the products introduced is the MakerBot Replicator Z18
($6,499), which is armed with
the revolutionary capability of creating 10 small objects
simultaneously. While the other printers
are limited to printing relatively small objects, this new
industrial-sized model easily prints large-
scale items and can even be used to make pieces of furniture.
The MakerBot Replicator ($2,899) and the Replicator Mini
Compact ($1,375) currently boasts
the lowest price tag to date and is hoped, therefore, to be the
most accessible to the broader
market.
All three products tout major upgrades from previous models,
with new features such as
mobile/desktop app and cloud access, Wi-Fi, Ethernet and USB
connectivity, in addition to
increased speed and effectiveness. While the Replicator is

available in stores and online next
month, the Mini and Replicator Z18 will be available for
purchase in the spring.
Education Presence
Despite all of this progress, many remain unconvinced of the
everyday utility of 3D printing.
MakerBot’s larger goal is to eliminate this disconnect and to
make 3D printing as affordable and
accessible as possible. While tech enthusiasts and design
professionals have been early and vocal
adopters of MakerBot, the company is seeking to win the hearts
of average consumers through a
focus on public schools.
Mr. Pettis said they can be extremely useful as education tools
for immersive learning. “They
can be used in shop class, for students to see the virtual things
they can create, and in art and
music education. It’s a natural fit for math and science; it
allows kids to actually see and feel
what’s going on, instead of just reading about it,” Mr. Pettis
said. “The goal is to get the printers
into the schools, along with curriculum that teachers can
immediately use. We’re confident that
they could really bolster education initiatives,” said Mr. Pettis.
In order to request a MakerBot Academy 3D printer, the process
is simple. Full-time public

school teachers create an application with DonorsChoose
detailing their reasons for the printer,
how they’ll plan on using it in their classroom and what impact
it’ll have on their students. The
requests are crowdfunded by the generosity of the community.
To date, more than 225
classrooms have been financed and more than 100,000 students
reached.
“There’s a lot more competition. I think that there has been a
healthy growth of companies, more
in the low end. So as we’ve grown up, and professionalized,
there’s continued to be a lot of
growth. We are an innovation company. As long as we’re
innovative and bringing these ideas
out into the world, that’s our goal, that’s what we’re doing, that
keeps us moving,” Mr. Pettis
said.
The Big 3D Picture
Bre Pettis want to have a clear, strategic direction for
MakerBot. He values the company’s
success and knows that the industry, that he played a role in
building, will become increasingly
competitive and potentially unforgiving. He is convinced that a
clear, intentional strategic
direction will add value to the company. He looks to you to
provide that strategic focus.
Sources: Buckley, Sean, “MakerBot’s Digitizer will go on sale
next week, promises 3D scanning to the
masses.” Engaget.com, August 14, 2013. Web access February
11, 2014,

http://www.engadget.com/2013/08/14/makerbots-digitizer-will-
go-on-sale-next-week/
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Greenwich-Post.com, January 20,
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post.com/22358/makerbot-a-robot-
that-makes-things/
Heater, Brian, “MakerBot Academy Aims to Bring ‘Industrial
Revolution’ to Classrooms.”
Engadget.com, November 12th, 2013. Web access February 11,
2014,
http://www.engadget.com/2013/11/12/makerbot-academy/
Heater, Brian, “Bre Pettis on the MakerBot Digitizer: We’re
Building an Ecosystem.”
Engadget.com, September, 20, 2013. Web access February 11,
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stratasys-merger/
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2014,
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street-says-3d-systems-leads-3d-
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http://money.cnn.com/2013/06/19/technology/makerbot-
stratasys-merger/
street-says-3d-systems-leads-3d-printing-movement-but-hp-
could-become-a-major-player/
street-says-3d-systems-leads-3d-printing-movement-but-hp-
could-become-a-major-player/
industry-will-reach-3-1-billion-worldwide-by-2016/
industry-will-reach-3-1-billion-worldwide-by-2016/Case D:
MakerBotYour MissionCase D: MakerBot

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