Enough already with prototypes
Investopedia’s Rakesh Sharma didn’t mince words: “Less than five years after it reached a crescendo, the 3D printing boom has turned into a bust.”
Sharma echoes the anger and angst felt by many investors who believed in the new technology only to now feel more than just a little let down.
Is 3D printing a bust? Or is this a typical Wall Street reaction to a high-tech stock that doesn’t meet guidance, that doesn’t continually demonstrate fast growth and high returns?
After all, IT set that standard of unrelenting boom, and 3D printing as well as robotics are caught up in matching IT’s prowess.
For sure, leaders like Stratasys and 3D Systems have tumbled from exalted heights of $120.36 and $80.13 in 2014 and 2013 respectively to $25.75 for Stratasys (52 week: $25.31 – $130.83); $12.28 3D Systems (52 week: $11.00 – $54.24)
Investors lost millions; can you blame them for feeling a little miffed?
Product by the gross is more like it
For sure, 3D printing is here to stay and will again rise and even eclipse its boom days, but a new reality has settled in and 3D printing is already realizing the consequences of ignoring it.
Gone — or almost so — are the halcyon days of being the Merlin of prototyping and basking in its glow. It’s now all about manufacturing.
CAD’ing and prototyping still remain breakthroughs that 3D printing brought to the table, and both will always be central to manufacturing.
However, making things that sell — preferably in mass quantities — is what it’s all about. Fabricating one-off curios has lost all of its luster. Manufacturers want their factories to stock shelves with products that wear price tags, and they want 3D printers to take on the job of making those products.
3D printers aren’t cheap, costing $200k and up. Where’s the ROI, other than savings in design time?
Success stories are few but fantastic
The $1 billion U.S. hearing aid industry converted 100 percent to 3D printed manufacturing in fewer than 500 days. Yes, 500 DAYS!
According to one industry CEO: not one company that stuck to traditional manufacturing methods has survived the conversion.
GE Aviation is another that switched from conventional manufacturing methods for fuel nozzles on some of its jet engines.
GE claims that it will 3D print 45,000 nozzles, bypassing 20 former casting processes in favor of one-pass additive manufacturing, which will cut the cost of manufacturing by 75 percent. And the new nozzles are of better quality and stronger.
How about something completely different, like Aprecia Pharmaceuticals’ Spritam for the treatment of epilepsy that just received FDA approval? A 3D-printed, dissolvable tablet that enables the delivery of high-dose medications in a rapidly disintegrating form, developed via its proprietary ZipDose 3D printing technology. It’s the first approved 3D-printed prescription medication.
These islands of 3D printing factories must grow more widespread and connect up to form a 3D industrial ecosystem, which Wall Street investors will go gaga over.
And there’s already been a decent start taking place: In 2014, sales of industrial-grade 3D printers in the U.S. were already one-third the volume of industrial automation and robotic sales. Some projections have that figure rising to 42 percent by 2020.
“At the time of the survey, 11 percent had already switched to volume production of 3D-printed parts or products,” he wrote. “According to Gartner analysts, a technology is ‘mainstream’ when it reaches an adoption level of 20 percent.”
The 9 percent solution
If accurate, there’s 9 percent remaining before hitting mainstream.
Until then, there’s a gauntlet of media abuse to endure, like Time‘s “Was 3D Printing Just a Passing Fad?”
Kevin Kelleher unenthusiastically wrote:
“Since early 2014, most of the stocks in the 3D printing industry have collapsed. Stratasys, 3D Systems, ExOne, and VoxelJet have lost between 71 percent and 80 percent of their market value in the past 17 months. The reasons why are nothing new to investors who have speculated too early in promising technologies: Profits can be hard to come by, and revenue can fall short of expectations.”
The grim scenario has been written and before, and worse.
The 3D printing industry deserves some blame as well, maybe all the blame.
The foray into consumer 3D printers might have been ill-timed, such as industry-leading Stratasys’ Makerbot which turned into a fiasco that Wall Street couldn?t forgive.
As Sharma put it: “Perhaps the most important reason for lack of [consumer] demand were the expenses associated with 3D printers. At average prices upwards of $1,000, 3D printers were a substantial investment. Printing material costs further inflated prices. Then, there were the problems with interface and usability.”
Ugh! A nightmare sure to make consumers flee.
Then too, wasted time and resources spent with consumers might well have been diverted to industrial prospects. A McKinsey survey found:
- 40 percent of the respondents [to the survey] were unfamiliar with additive-manufacturing technology “beyond press coverage.”
- An additional 12 percent indicated that they thought 3-D printing might be relevant but needed to learn more about it.
- Many also admitted that their companies were ill prepared to undertake a cross-organizational effort to identify the opportunities.
- Two-thirds said that their companies lacked a formal, systematic way to catalog and prioritize emerging technologies in general.
Why were potential industrial prospects, all C-suite executives — representing four out of every 10 in the survey – so uninformed about the technology, regardless of brand?
High-flying Stratasys and 3D Systems both had well-stocked marketing budgets enough to educate any prospective customer anywhere anytime.
The real unknown in 3D printing will be the arrival of the 600-lb. gorilla in late 2016: Hewlett-Packard’s Multi Jet Fusion 3D printing technology.
Hewlett-Packard claims that “Multi Jet Fusion is 10 times faster than today’s leading extrusion-based and selective laser sintering technologies, which will target industrial and professional markets.”
And even more intimidating, Motley Fool writes that Hewlett-Packard “has more than three times as much cash on its balance sheet than the 3D printing industry generated in worldwide revenue in 2014.”
That’s some very serious competition!
More to the point is that existing 3D printing companies currently in play should be working real hard on their brands prior to the gorilla’s arrival. Sadly, they haven’t been hot about those pursuits.
Terry Wohlers, president of Wohlers Associates, a leading 3D printing insights company, said quite bluntly: “HP is going to rewrite the rules of 3D printing.”
If Wohlers has his ear close to the rail as the industry’s most influential guru, then that’s not a happy prediction for any 3D company other than Hewlett-Packard.
Some are more sanguine for all 3D companies living happily ever after. ARK Investment’s 3D printing analyst, Tasha Keeney, sees room for everyone, especially within a U.S. multi-trillion-dollar economy, where 40 percent of the decision-makers know little about the technology’s potential prowess.
The revenue potential is quite heady. According to Wohlers Report 2015, in 2014, “The 3D printing industry generated $4.1 billion in worldwide revenue, and it is expected by grow by about 31 percent per year until 2020, eventually surpassing $21 billion in annual revenue.”
“By 2017, the first full year that HP’s 3D printer is expected to be available, the 3D printing industry is projected to generate revenue upward of $9 billion,” the report said.
There’s still magic in the air
Of course, opportunity springs eternal, especially in such a new industry as 3D printing.
D’Aveni enthusiastically reminds everyone: “Want to know how fast the 3D future is coming? Don’t look only at adoption rates among manufacturers. Look at the innovation rates of inventors.”
“In 2005, only 80 patents relating to additive manufacturing materials, software, and equipment were granted worldwide, not counting duplicates filed in multiple countries,” he said. “By 2013, that number had gone into orbit, with approximately 600 new non-duplicative patents issued around the globe.”
Soon there will be another patent added to the ever-growing crop, a mind-bending one from MIT known as the MultiFab. Check this out:
“A new printer, created by MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL), can print up to 10 materials into a single object — and incorporate other, finished parts directly into the design — all at a fraction of the cost of complex industrial 3D printers.”
Hence D’Aveni’s excitement over patents.
Then, of course, a 3D company can get Googled as Carbon3D pleasantly found out this week. Google Ventures is sliding over an investment of $100 million in the 3D printing startup.
Carbon3D’s Continuous Liquid Interface Production or CLIP system, “uses a tunable photochemical process instead of the traditional mechanical approach, which eliminates the shortcomings of conventional layer-by-layer 3D printing technology.”
See related: Carbon3D Gets $100M from Google Ventures
Nowhere on the Carbon3D website does it scream out about itself as a vaunted “prototype maker.”
Rather, the homepage boldly promises: the production of “commercial quality parts at game-changing speeds, creating a clear path to 3D manufacturing.”
Quality and speed. Maybe that’s why Ford Motor Co. is testing CLIP technology. That’s why Google forked over $100 million.
Bingo! 3D printing is now all about manufacturing. And that’s where it’ll stay.
Wall Street will soon be back.