Earnings3D Systems announced today that it has completed its acquisition of Cimatron for $97 million. We all knew it was coming, after the deal was first confirmed back in November, but it’s still a bit of a shock to realize that there are just two large, pureplay CAM companies left. Delcam is now part of Autodesk, Vero/Planit Holdings was snapped up by Hexagon, OPEN MIND is part of Mensch und Maschine, Missler seems to be moving towards ERP/PLM — that really leaves Tebis and MasterCam/CNC Software trying to make a go of it as standalone CAM vendors.

First, 3D Systems. Cimatron brings 3D Systems complementary subtractive manufacturing technology to its base of additive processes. That’s the future of making things: using additive and subtractive technologies in tandem as needed, for certain types of materials and end uses. Cimatron also extends its parent company’s sales coverage and creates cross-selling opportunities. In all, 3D Systems says it expects the acquisition to generate cash and improve non-GAAP earnings for 2015.

Importantly, the press release had 3D Systems CEO Avi Reichental welcome “Danny Haran and his entire global team to 3DS as we complete the digital thread from design to digital fabrication.” Mr. Haran becomes 3D Systems’ EVP and CEO, Software.

What can we say about what this means for CAM software, in general? My take on it is three-fold, but I’m interested in your comments. First, CAM is often an undervalued part of product creation. Designers get the glory and the cool toys while manufacturing is the land of machines. The software to run those machines is often supplied by the machine’s maker and the CNC operator has to make do. Some forward-thinking companies involve the CNC programmer in the design process to make sure that what’s being designed can be fabricated, but that’s not the norm.

Second, there are literally millions of machine shops on the planet; it’s really hard for a software vendor to reach these buyers without a large channel or direct presence — and that’s expensive. Integrated companies like Autodesk, DS, Siemens, etc. have a huge advantage because they may be calling on the account for another reason and can add in a CAM discussion. Too, they have marketing budgets that let them create a presence, so even if machine shop isn’t also a CAD user, they’re likely to be aware of the vendor. Hard for a small company to do that.

Finally, CNC machines last a really, really long time. Many are used for 20 years here in the US, then sold on to another part of the world where they’re seen as relatively new — and it’s possible that the same software license is used throughout the machine’s entire life.

So we’ve got undervalued products, a hard-to-reach target audience and really sticky software — a tough combo for CAM companies trying to go it alone. That doesn’t, of course, mean that they can’t. Tebis, MasterCAM and others have solid products and serve their customers quite well. But I have to wonder: is there a ceiling to how big these companies can become (if that’s their ambition)? Will we see these last independent players snapped up, too?

Your turn. What do you think?