Editor’s foreword: This article was submitted by Peter Jameson and accepted on the basis it paints an alternative view regarding several aspects of 3D printing. It reminds us to be careful when there are signs of a bubble being created in the media and by the investment community. In no way does this detract from those who just enjoy 3D printing nor run a small business offering a service.
3D Printing Media Coverage
A lot has been said in the media and press about 3D printing over the last 18 months but how does it stack up with the industrial or commercial reality?
It is interesting to look at the Google data in the image above for the search term “3D printing”. It is a coarse statistic but clearly shows a rapid rise in that term being researched from around 2011. This dramatic rise in the number of searches is impressive but how much of it is driven by the media hype? It is the same story for related terms too such as 3D printer.
Not a day passes without major media outlets like CBS, BBC, RT (an endless list) pumping out some news story. In some ways frustratingly these tend to congregate around ‘how a 3D printer was used to make a house’, ‘food for people that can’t chew’ or someone trying to ‘3D print a brain made out of biodegradable plastic’. You get the idea. All interesting and various but rarely do they take a deep dive into the subject matter.
The question on everyone’s lips by now after 3 years of meteoric media coverage, search term growth and matching investment is this:
3D printing looks great but where is the money?
If you are an investor perhaps you are wondering. If you’re not asking this question you then may be it will be better to start asking the hard questions.
The Data
The problem with all the data presented by the analysts and turbo charged by the media is that it does not correlate with the financial performance of the main industry players. Here are the stock prices for the two largest manufacturers:
3D Systems
Stratasys LtdYou only have to look at their revenue growth to understand why their stock prices have not continued to climb. They should be doing better if a greater proportion of the searches and media attention were turning into revenue of some kind. Admittedly it has been good for some but are there real sustainable and indeed increasing earnings in support.
The 3D Printing Market
All the figures quoted by researchers, such as a $7B industry by 2016 or a CAGR of 27% is going to continue, are perhaps just finger waving in the air. The fact of the matter is that whilst one can predict growth in a market as whole, the scale of that growth in financial terms and precise dollar amounts is much harder to estimate.
We are already seeing cracks in the projections for sales of consumer based 3D printers which are not being sold in the numbers that many thought. To get behind the truth or untruth of this statement is not easy. One way would be to look at the inventory being held. Those figures are of course closely guarded but there have been some reports from retailers. More to the point, witness the statement from Hewlett-Packard that they do not intend to get involved with consumer based 3D printing. In fact, where are the really big players? HP, Sony, Samsung et al are all conspicuous by their absence. This could be telling us something.
Some Reality
Following the media and press hype, we now have the usual over indulgence of venture capital throwing millions of dollars at hundreds if not thousands of start-ups. Similarly, Kickstarter and other crowd funding businesses are also ablaze with projects. However, only a handful of these will succeed. 3D printing is a fashionable topic , it attracts investors for that reason alone. Those Investments can also produce healthy balance sheets for a time but it is not the same as growing revenue.
It is a sad fact of life but most of the companies popping up each day will not go onto great things. There are signs that the 3D printing industry increasingly resembles a number of previous tech bubbles created by over enthusiastic investors being egged on with ‘wall to wall’ media coverage. And we know how fickle all of those can be when the money fails to materialise.
Highlights In Additive Manufacturing
Those caveats aside, there are some areas in 3D printing that have greater potential than others.
The top 3 or 4 manufacturers of 3D printers will of course grow as they are adopted in a wider range of applications and across wider geographies. We can probably assume that these will be the businesses which sell 3D printers to industry. Manufacturing of 3D printers increasingly looks to be B2B. The point is not so much which companies but how much they will be able to grow their revenue.
The rump of 3D printer manufacturers as in the computer industry will either go to the wall or stay as niche players for very narrow applications. Some of those will be profitable but many will not.
The reality of 3D printing is that it is not a one size fits all market. In many ways it makes no sense to talk about a headline figure of $7B for the 3D printing market at all. There is no single market as such. There are only profitable and unprofitable market segments.
The Killer Market Segment
The question to ask in many respects is;
What are the killer applications?
This is only an opinion. The application where 3D printing can have the most profitable and relatively widespread impact is in medicine. The reasons are numerous but the main one is clear: there is no other practical way to make the items needed and in the quantity required whether it is tissue, organs, valves or blood vessels. Indeed, cost and customisation also comes into play with prosthetics, orthopaedics and dentistry. Just consider medical applications which we are now regualrly seeing in the media like 3D printed prosthetic hands.
The Wider Market
After reading a previous article on local 3D printing, it should be evident that there are some big possibilities if it can service consumers. The setting up of chains and franchises is possible but very open to debate.