The Technology Revolutionizing Innovation in the 21st Century

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Not long ago, I was a product developer, an inventor, and would have thought of myself as an innovator. I worked at 3M in the laboratory coming up with ideas that would hopefully become products someday, and saw the front end of where ideas start to become reality.

We thought we were advanced from a technology standpoint when I started designing parts more than a decade ago. A design on my CAD machine could become a physical part overnight with the stereolithography machine housed a few buildings away. Parts were fragile and imprecise, but it's much easier selling an idea to management with a physical part than a drawing on the computer.

Over the years, the industry made advances as materials got better and tolerances improved, and our prototypes improved. But the advancements made by the 3-D printing industry and CAD software in the past few years has brought incredible capabilities out of large laboratories and manufacturers to the masses.

Bringing imagination to the masses
We've all heard the story of inventors who struck it rich on a product that they came up with at home or in their garage. In the engineering community, it's the legend we all hoped to one day be. But the challenges of being an inventor have always been hard to overcome. Software to turn your designs into 3-D models were expensive, prototypes cost a fortune, and when it was time for production, the cost of injection molds required a decent-sized fortune.

Today, the 3-D printing industry is turning that model on its head. An inventor can spend less than $2,000 to get started inventing the world's next great product from his or her home. Prototypes have become easier and less expensive, design iterations are cheaper, and you can even make small production runs if the material is right.

This revolution will be televised
We've seen markets like this turned on their head before. The printing market used to be out of reach to the average consumer until Apple and HP brought laser printing to the masses in the 1980s. The Internet took publishing to another level by making it electronic, and is turning industries like newspapers, magazines, and even printed books into relics.

3-D printing may be able to make a similar imprint on mass production, a manufacturing method developed in the early 20th century and a staple of big business. Mass production is extremely efficient, but the problem is that products are almost all the same. Sure, you can get a different amount of memory in your iPhone or a different color car, but to create an entirely different iPhone or an entirely different car costs a fortune.

3-D printing totally changes that notion for some products. Coffee cups, children's toys, jewelry, and a multitude of other products can be customized and tweaked to a consumers liking. And the technology is becoming easy enough to use that they can do all of this design and even make their parts at home.

The companies making it happen
There are different companies that make different kinds of 3-D printers for different applications. Two of the biggest are 3-D Systems (NYSE: DDD  ) and Stratasys (Nasdaq: SSYS  ) , which both make a variety of models. Depending on the application, customers can choose printers with various materials, colors, and tolerances. MakerBot and Formlabs are much smaller, but they're also entering this hot market for small-scale printers with an eye on non-industrial consumers.

The thing we also need to keep in mind is that to make a 3-D part you need a model. Autodesk (Nasdaq: ADSK  ) is one of the industry's most well-known companies and makes more consumer-friendly products than Pro Engineer or SolidWorks. Autodesk makes software that's compatible with all of these devices and clearly has its eye on this as a key market for the future.

Is it a good investment?
The big question here is whether it's a good investment to go chasing after 3-D printing or other companies that are making home invention easier.

3-D Systems has been a Motley Fool favorite for some time now, and the financial results are continuing to improve. The company has grown revenue at 30.5% over the past three years, and with Cubify, the company has opened a whole new set of markets.

But competition is fierce. Stratasys is focused on industrial customer and, like 3-D Systems, offers a number of different printers with varying sizes and materials. Then there are startups like MakerBot and Formlabs, who are offering small-scale printers for consumers.

If we go even further down the food chain there's Proto Labs (NYSE: PRLB  ) , who can offer similar turnaround times for small production runs. This isn't 3-D printing, but it's the next step between a printer and a full production run.

So who will win and can they make a profit?

I think the answer is that there's space for all of them. When I was designing parts there was never a single solution for every part. Sometimes tolerance mattered, sometimes materials mattered, and sometimes speed mattered. All of these technologies offer advantages and disadvantages, and that's why I think there's a place for each of them.

The one that has me excited in the printing space is 3-D Systems' Cubify. Bringing 3-D printing with a known material like ABS to the masses in an easy-to-use system is a game changer for professional designers, garage inventors, or even those who want to make cool toys with their kids. Cubify brings the cost and technology to the level where all of these are possible. The technology isn't perfect, but compared to where we were a decade ago, being able to have a 3-D printer on my desk is a huge improvement.

But for an investment, I would rather bet on software than a 3-D printing technology at this point. Autodesk is getting my thumbs-up today on My CAPS page because of its wide reach in this business and ability to adapt to any printing technology. The company is making apps for iPhones and iPads and reaches all the way up to high-end professional users in a variety of industries.

Foolish bottom line
The 3-D printing revolution won't take the world by storm overnight, but as this technology becomes more available to the masses I think you'll see an incredible amount of innovation coming from places you never expected.

If you want to know more about this revolution, take a peek at our free report that highlights keys to an industry that may upend manufacturing here and in China. Click here for free access.

Fool contributor Travis Hoium manages an account that owns shares of Apple. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Stratasys, Proto Labs, 3-D Systems, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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10/20/2016 4:00 PM
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