What if we've (mostly) got it all wrong about 3-D printing?
Last year's hottest trend was the growth of consumer-targeted 3-D printers. With a growing roster of companies -- Solidoodle, MakerBot, Portabee, Formlabs, RepRap, and 3D Systems (NYSE:DDD) are just a sample of the more well-known companies with consumer offerings -- competing in a barely tapped market (only 23,000 consumer 3-D printers were sold in 2011), the proverbial sky should be the limit. If even a fraction of today's smartphone buyers decide that printing protective cases and custom earbuds is worth the price of an entry-level 3-D printer, then the industry could take off like the computer industry did in the 1980s.
But what if this is the wrong assumption? Last week's 3-D printing industry projections from Gartner focus instead on the cost of business-class machines, which Gartner claims will cost less than $2,000 in just three years:
3-D printers are now priced so that any size business can invest in them and start experimenting with the myriad ways to monetize them. By 2016, enterprise-class 3-D printers will be available for under $2,000. Early adopters can experiment with 3-D printers with minimal risk of capital or time, possibly gaining an advantage in product design and time to market over their competition, as well as understanding the realistic material costs and time to build parts. Furthermore, enterprise uses for 3-D printers have expanded as capabilities of 3-D scanners and design tools have advanced, and as the commercial and open-source development of additional design software tools has made 3-D printing more practical. Gartner believes that the commercial market for 3-D print applications will continue expanding into architectural, engineering, geospatial and medical uses, as well as short-run manufacturing.
Why manufacturing won't die (yet)
To some investors, the spread of consumer 3-D printers is the logical next step in a new industrial revolution of similar or greater scope to that begun by steam engines three centuries ago. When everyone has a 3-D printer, there will be no real need for a sprawling global manufacturing infrastructure -- everything will come from the magic box in your house, set to work at a moment's notice on a new carburetor or cup-holder. This giddy oversimplification of two incredibly complex processes (good 3-D printing and the global manufacturing infrastructure) ignores a number of drawbacks to low-cost 3-D printing, several of which I've explored in great detail over the past year:
- There's no compelling need to print most things in the home.
- A 3-D printer needs many materials to compete with manufacturing.
- Most consumers lack the technical aptitude to use 3-D printers effectively.
- Illicit uses could undermine regulatory support and sales momentum.
This is a starting point for rationales against broad popular 3-D printing adoption. However, it wasn't until I found an article titled "The Achilles' Heel of 3-D Printing" by Peter Friedman earlier this month that the picture really started to crystallize. His conclusions:
- 3-D printing has a "complexity paradox."
- "Greater complexity = more + bigger voids = less ink = lower cost."
- With greater complexity comes slower operation.
- The complexity paradox and the slowness problem are counter to the advantages of manufacturing: "simplicity, quantity, and speed."
- "Conventional manufacturing automation is all about making very large numbers of simple things extremely quickly (and accurately)."
- Even the fastest 3-D printing process is likely to be several orders of magnitude slower than a comparable automated manufacturing process.
- To compete with manufacturing, 3-D printing has to be much faster.
- An environment that rewards 3-D printed manufacturing processes is likely to be one in which human beings consume fewer -- but more customized -- products.
You can print out a plastic cup. You could also go down to your local big-box store and buy a pack of six, or 600, in about as much time as it would take for any modern consumer 3-D printer to whip up a single shape. What's the advantage to printing that cup? In fact, if you look around you, I'd be surprised if you could point out a single thing that you could obtain faster and more effectively by crafting it with a 3-D printer than you could by simply going out to buy it.
A home user, in nearly every case, will probably want to see finished products from their 3-D printers to justify the purchase. Businesses, on the other hand, don't necessarily need to justify owning a 3-D printer in manufacturing terms. Many of them are likely to have legitimate design reasons for owning such a printer, and are also likely to have at least one team member with the expertise to make proper use of such a machine. Even occasional 3-D printer use can be justified in many offices when the price tag is below $2,000.
How manufacturing might die (eventually)
Enterprise-quality 3-D printers could become the growth driver that pushes the industry into its own PC era -- the age when mass adoption becomes not only affordable, but practical. It wasn't consumers who initially drove PC adoption in the early 80s, after all -- businesses and schools were big buyers of the first true desktop computers.
Consider that only 6,500 professional 3-D printers sold in 2011. Even if we assume that sales doubled in 2012, and each business bought only one professional 3-D printer, this new total leaves another 99.8% of business establishments in the U.S. as potential customers. 3D Systems and Stratasys (NASDAQ:SSYS) combined for a high-end revenue estimate of $930 million in the 2013 fiscal year -- a bit less than half of estimated total industry revenue. If just 2% of U.S. business establishments (there were about 7.6 million, not counting government workers or the self-employed, in 2008) bought a single hypothetical $2,000 professional 3-D printer, it'd generate $300 million in revenue from the sale of 152,000 printers. This doesn't account for international sales or for the sales of print materials and services -- or, for that matter, any sales to schools.
Notice any problems with these numbers? The two biggest 3-D printing companies already expect to make three times this much in 2013. For their growth to continue well past 2016, adoption of these lower-cost professional machines will have to accelerate or the high-end printers of 2016 will have to justify their exorbitant cost against a flood of inexpensive competition -- or both. Industrial-size 3-D printer company ExOne (NASDAQ:XONE) sold only 13 of its machines in 2012, and it could be hard-pressed to find buyers for its million-dollar printers if anyone can replicate their material diversity and massive print areas at a fraction of the price. Think back (if you can) to the demise of mainframe computers. PCs replaced the mainframe, and PC manufacturers grew to be worth many times the value of Wang Labs and its contemporaries by shipping dozens, then hundreds, then thousands of times the computers per year as any mainframe maker had ever sold before. But a PC also fulfilled a wider range of needs and wants in the marketplace than a low-cost 3-D printer might.
Here's how 3-D printing might finally reach its promise. Businesses across the country (and the world) begin to install low-cost machines -- first in the creative and the medical trades, and then industries with a less-obvious need for on-demand manufacturing. The software industry rises to meet the need for greater design customization at lower levels of technical expertise. The democratization of design -- already well under way thanks to the efforts of 3-D software maker Autodesk (NASDAQ:ADSK) and others -- makes it possible for the average user to tweak existing designs and modify things they might already have.
In the long run, most people won't need their own 3-D printer. On the other hand, millions might benefit from distributed on-demand manufacturing centers that deploy high-quality 3-D printers at scale to produce what people need, when they need it. In the future, these customized products may very well be delivered by unmanned drone, as I suggested in the article linked above. The widespread adoption of lower-cost professional 3-D printers by business (and quite possibly in schools as well) would be a great start, as it would give many people the expertise necessary to use complex 3-D software without the risk of first having to buy a costly machine to play with. This may seem unfathomable to the youth of today, but most people didn't encounter a computer in the 1980s until they went to school or work. This early exposure conditioned a generation to become the innovators and early adopters of the Internet generation. Will this decade's tinkerers be 3-D printing's Bill Gates of the 2020s? A better question may be: Will 3-D printing ever become big enough to create its own Bill Gates?
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