Chicago Boyz

                 
 
 
What Are Chicago Boyz Readers Reading?
 

 
  •   Enter your email to be notified of new posts:
  •   Problem? Question?
  •   Contact Authors:

  • CB Twitter Feed
  • Blog Posts (RSS 2.0)
  • Blog Posts (Atom 0.3)
  • Incoming Links
  • Recent Comments

    • Loading...
  • Authors

  • Notable Discussions

  • Recent Posts

  • Blogroll

  • Categories

  • Archives

  • After the Gold Rush

    Posted by Grurray on January 4th, 2016 (All posts by )

    3D printing industry leader 3D Systems announced last week that it plans to stop making consumer 3D printers. They’re going to concentrate on supplying the industrial markets. It’s the culmination of a significant reversal from just a few years ago when the media hype was fueling a bubble among these additive manufacturing makers like 3D Systems and Stratasys. The trend now is moving away from supplying the much publicized hobbyists and enthusiasts and towards the more reliable demand of professional customers

    The company has indicated that the discontinued product line will account for < 2% of revenue, roughly $13M in sales, which is much less that the ~$45M in “Consumer” sales we had projected in our model. The primary difference is likely to be materials (which the company has indicated will still be supported), desktop printers, scanners and Gentle Giant studios.

    The revenue numbers are a big disappointment because the printers were supposed to follow the time tested and much beloved razor blade model with most of the sales coming from resin filament. The markup on the filament in most cases is a holy grail level 1000% – 2000%. The fact that 3D systems, the pioneer of additive manufacturing, couldn’t make this work is bad news for the industry as a whole.

    Stratasys, the other big competitor in the sector, isn’t doing much better. Last year after acquiring Makerbot, perhaps the current top brand in consumer 3D printers, they let go about 1/3 of the workforce (just after making the founders wealthy, of course). Now after seven years and several different updates and revisions, they’re still trying to make a product that works. The class action wolves are now circling, so it may be only a matter of time for their consumer business also.

    Meanwhile, dead tree printing stalwarts such as HP and Toshiba are poised to enter the 3D fray, but they will be making industrial 3D printers. The plan is to leverage their already considerable strengths in sales and distribution to medium and small businesses. Mostly they’re drawing on their experience in the consumer sector where they long ago learned that consumer hardware is a commodity business with little prospects for the big growth expected of startups.

    One business model for 3D printing that seems to be working isn’t selling the devices but making and selling the final product. Such is the case with Proto Labs.

    Proto Labs, on the other hand, enjoys far less competition because the manufacturing services industry is highly fragmented and often slow to turn around orders. This dynamic has allowed Proto Labs to establish itself as lowest cost and fastest provider that can take a product developer through the entire design and manufacturing process — from conceptual model or prototype using 3D printing, to a mid-volume manufacturing run exceeding 10,000 units using injection molding — all in a matter of weeks.

    Years ago, I used to do a lot of business with their rapid prototyping division, Fineline, before they bought them out. They were a nice little group of industry experts in the Research Triangle, and it was always super easy and inexpensive to get anything made and in your hands within a few days. There’s a wide moat, as they say, with this business because of capital requirements and technical skills, so I’m sure acquiring Fineline was a great value. This is a good example of the discipline of Proto Labs, unlike 3D Systems which gorged on any over-hyped acquisition it could find until it suffered its current debilitating indigestion.

    Another business model that seems to be flourishing along with supplying industrial customers is metal 3D printing. In fact, despite today’s overall market drop, 3D Systems stock was up double digits on an announcement it would aggressively pursue this market. Aside from appealing to deep pocketed industrial customers, metal printing may have certain other advantages over plastic which could win it over in the consumer market.

    Metal printing may have the fabled killer app that every innovation must possess to be successful and that has heretofore been so elusive for current 3D printers. Unfortunately, that killer app is firearms, and they are now fighting for their lives. 3D printed guns may save the desktop 3D printer, but first their advocates must save themselves against a State Department ban claiming the guns violate export controls on weapons.

    This case is an exceptionally complicated one that hinges on several legal rulings that honestly I don’t see being resolved until it is kicked up to the Supreme Court. Namely, are digital files considered free speech or are they considered objects, and are 3D printable guns covered under the Second Amendment? Several court cases have been working their way through the courts asking similar questions for different reasons, but as of yet there has been no precedent set–though on the other side of the world New South Wales, Australia has been working to ban 3D printable gun files.

    While everyone is waiting to hear how Obama plans to slap more regulations on gun sales, the additive manufacturing industry is waiting for the Supreme Court to finally potentially unleash their long awaited and much hyped consumer devices. So stay tuned. Defense Distributed is being represented by Josh Blackman, who as far as I can tell is one of the best experts out there on constitutional law. If he can get the case before SCOTUS he’s got a good chance in my estimation to win it, and with that salvage the consumer 3D printing business.

     

    13 Responses to “After the Gold Rush”

    1. dearieme Says:

      “are 3D printable guns covered under the Second Amendment?” Why would they not be?

    2. Michael Hiteshew Says:

      SpaceX 3D printing: https://youtu.be/yEQrmDoIRO8?t=10m2s

      We still do a lot of NC machining where I work. We have a 3D printer for plastics which is generally used for proof of concept prototypes to build up a complex assembly cheaply. Lots of people are watching this technology very closely, as you can imagine.

      One place I fully expect 3D printing to go is into circuit board substrates.

    3. Grurray Says:

      The immediate question is about the dissemination of the 3D data and whether it violates the Arms Export Control Act. The amicus brief from congress may help, but the court showed in the Obamacare ruling that they currently don’t give much consideration to what congress may have actually intended the law to mean.

    4. Michael Hiteshew Says:

      Odd that you bring up Arms Export Control Act. Virtually everything we do is stamped by default that it must be reviewed for ITAR (International Traffic in Arms Regulations) before it may be sent out of the country or given to foreign nationals. Until very very recently, everything was stamped or marked by default that it WAS covered under the Arms Export Control Act because so much of what we do has ‘applicability’ to various sorts of weapons systems.

      I think 3D printing is genie that can’t be put back in the bottle. The Chinese, for example, will be happy to sell them to anyone if they think it will gain them strategic advantage. So will the Russians.

      Finally, guns are an expression of the dysfunction in the black community. They are not the cause.

    5. tdaxp Says:

      I am not familiar with the 3D printing industry players. This seems to tell a different story, but its a press release so may only be part of the truth

      Worldwide shipments of 3D Printers rose +35% year-to-date (YTD) through the first three quarters of 2015 on the back of shipments of low priced Personal/Desktop 3D Printers, according to figures released today by CONTEXT, the IT market research company. Of the total 173,962 units shipped year-to-date, 95% of these were Personal/Desktop printers, mostly priced below $5,000. This represents a 38% YEAR-ON-YEAR growth for this sub-category compared to a decline in shipments of -3% YTD in the Industrial/Professional segment which saw only 8,706 units shipped through the first three quarters of 2015. Most of the growth came in the first half of the year however, with Q3’15 showing only a 4% YEAR-ON-YEAR growth in Personal/Desktop printer shipments and the Industrial/Professional sector struggling again, down -7% from Q3’14.

      Taiwan’s XYZprinting is the global leader in the Desktop/Personal 3D Printer space so far in 2015, with a 17% global share, taking the top spot from the previous leader at the same time last year, MakerBot.

    6. Grurray Says:

      “Finally, guns are an expression of the dysfunction in the black community. They are not the cause.”

      I wholeheartedly agree. If there were more responsible gun owners in the inner cities with safe access to firearms instead of guns only in the hands of criminals the dire situation would immediately improve. That’s one of the reasons why this case is so important. Restrictions and chilling effects on the second amendment are the worst in cities. Effcient gunsmithing kicked off the industrial revolution in America. Imagine what digital gunsmithing will do for the urban poor.

    7. David Foster Says:

      Michael H….”One place I fully expect 3D printing to go is into circuit board substrates.”

      Could you expand on this?

    8. Grurray Says:

      Dan, I don’t doubt that desktops are still the straw that stirs the drink in terms of total sales. Just browsing through Kickstarter you can still see all the new 3D printers that are still constantly popping up. However, prices are dropping, margins are getting slimmer, and the printers are getting commoditized. I believe David Foster mentioned awhile ago that over the last couple years several industry patents expired, so the number of companies selling them is rapidly rising.

      The big money is in the industrial space in terms of revenue.

      Research firm Gartner has concluded that widespread consumer adoption of 3D printing is still five years away. That predication is reflected in the makeup of worldwide sales of 3D printers and related technology. Sales for industrial-scale 3D printers reached $1.12 billion globally in 2014, while the desktop market lagged behind at only $173.3 million, according to consulting firm Wohlers Associates.

      Wohlers are the go-to guys on industry stats. They mention that there are so many companies making 3D printers now that it’s hard to keep track of all of them.

      According to Wohlers, FDM clones abound and over 300 brands are sold globally. Some are only sold locally, so it is very hard, if not impossible to find information on how many brands of 3D printers are actually in production. It certainly seems as though more are coming into the market daily. The industry is seeing a lot of diversity in build volumes and processes between various machines.

      We could be seeing a race to the bottom. For instance, the goal of the RepRap Project is to make 3D printers that make 3D printers.

    9. TM Lutas Says:

      On arms control export, at worst we’re going to be back to printing, legally crossing the border, scanning, and uploading internationally. It’s been done before:
      http://www.pgpi.org/pgpi/project/scanning/

      Today’s high speed scanners make this sort of thing trivial.

    10. Michael Hiteshew Says:

      David

      Currently, bare multilayer PCB’s are etched in individually sheets for layer pairs, drilled, laminated in a press, drilled again, copper plated, have solder mask applied, finish plated, have part marking applied, then routed to size. That requires copper clad stock of various thicknesses and resin/glass combinations, acid baths, cleaning baths, plating tanks, drill machines, etc.

      I can foresee building the whole thing up a layer at a time from resins and metal powders. It would eliminate all the chemistry and drill machines and router tables and lamination presses and movement from step to step. It seems like an obvious application, especially as it would allow features to be incorporated at almost no cost which now are quite expensive; buried vias, buried passive components, 3D RF elements, etc.

    11. David Foster Says:

      Thanks, Mihael. In today’s process, how roboticized is the assembly process typically?

    12. Michael Hiteshew Says:

      Small, easy to build prototypes are sometimes built by hand, but complex prototypes, batch runs and production runs have most or all of their parts installed by machines.

      Here’s a demo: SMD PCB Pick & Place Machine Assembly

    13. Grurray Says:

      “It seems like an obvious application”

      Israeli company Nano Dimension has been working on it with their conductive “inks”.

      Israel is a major hub for 3D printing. All their major universities are involved research. Stratasys is co-headquartered there, and 3D Systems’ CEO for over a decade (until he was just forced out in the latest shake-up), Avi Reichental, is Israeli.