Gains in 3-D Printing Technologies5 Nov, 2013 By: David Ramos
By now you have heard, read or seen some level of information regarding the subject of “3D printing,” and you have more than likely noticed it has created more buzz in our industry since output device technology jumped from analog to digital.
Additive Manufacturing (AM), or 3D printing as it most commonly referred to, is a process of making a three-dimensional solid object of virtually any shape from a digital model. 3D printing is achieved using an additive process, where successive layers of material are laid down in different shapes. 3D printing is also considered distinct from traditional machining techniques, which mostly rely on the removal of material by methods such as cutting or drilling (subtractive processes).
3D printing technology is used for both prototyping and distributed manufacturing with applications in architecture, construction (AEC), industrial design, automotive, aerospace, military, engineering, civil engineering, dental and medical industries, biotech (human tissue replacement), fashion, footwear, jewelry, eyewear, education, geographic information systems, food, and many other fields…if you are a dealer principal reading this you are probably conducting a Google search right not to get in touch with a maker of this technology to gain distribution rights for your market. There are several 3D technologies today that make up the AM or 3D printing space. It is important for the channel player researching this as a potential business strategy to understand this is more than comparing Xerox vs. Samsung, or Toshiba vs. Sharp. There are technological differences in the products and also of equal importance the materials leveraged in each of the respective technologies require their own level of expertise and support capabilities.
- A photo sensitive liquid is focused on by a laser to solidify the liquid at the point of contact to create 3D object.
- Fused deposition modeling (FDM) where a filament (i.e. plastic or metal) is melted and deposited in layers to create a 3D model. PLA or ABS material
Selective Laser Sintering (SLS)
- Deposition of powdered (granulated) nylon materials and melting them to form a 3D shape using a laser or electron beam.
Lamination (LOM) Layer object modeling
- Laminating layers of materials that are bonded together. The unusable area is then cut with a laser to form a 3D object.
Print Head Technology
- Layering of photopolymer using a piezoelectric print head to form a 3D Object with accuracy up to 16 microns. The thin layers are cured using UV.
Full Color 3D Printing
- Color jet printing which uses a gypsum powder and a binding agent to solidify the object and applies CMYK, simultaneously applying millions of color combinations.
Direct Metal 3D Printing
- Metal powders and a laser or electron beam create the object layer by layer.
To gain an appreciation for the impact and hype surrounding this technology and its short/long term future, one only need to read the daily news to see announcements like General Electric (GE) recently announced in the Investor’s Business Daily (IBD). GE is expanding the uses for 3D printers and expects the “emerging” technology to be involved in more than half of its manufacturing in 20 years. Less than 10% of GE's manufacturing uses 3D printing in some form today, though that share should rise to 20%-25% in 10 years and 50% or more in 20 years. You likely noticed I put the word emerging in quotations.
3D Systems Corporation Sheds Light
As you sit here learning about AM today, 3D Systems Corporation is celebrating its 27th year in business and is the founding company behind the 3D printing technology and industry. The first working 3D printer was created in 1983 by Chuck Hull of 3D Systems Corporation and subsequently in 1986 founded 3D Systems. In its infancy it was called rapid prototyping. At the time Mr. Hull created this new mechanism, it was leveraged by engineers, designers, architects, etc. so they could get products to market faster, so it truly revolutionized product development. That is where it all started. What 3D Systems Corp found was that each company who embraced the use of rapid prototyping technology leveraged it as a true competitive advantage, allowing for those companies to design products faster, more inexpensively and go to market sooner than their competitors.
Cathy Lewis, Vice President of Global Marketing at 3D Systems, sat down with me recently to discuss the company, the technology and the future. “The market for this technology began to really change about 12 years ago and is what lead us to the point where we are today. People started to talk about the benefits of the applications beyond rapid prototyping. At that point, we along with our clients realized not only was there a market for rapid prototyping but also rapid manufacturing, which was high value but low volume ‘production printing’ using 3D technology. And that’s where it got really exciting; because at that point, you not only revolutionize your product development but in some cases under the right circumstance you change your methodology for delivering products to the market. Today the future is very bright for these technologies.”
Cathy, in conducting my research for our discussion I was astounded by the level of applications and industries leveraging AM technologies. I am interested in space exploration and have been since I was a boy, when I read NASA is conducting tests to assess the potential of 3D printing to make space exploration cheaper and more efficient I felt like my head was exploding as I read the myriad of possibilities and potential this technology provides. Now NASA is also preparing to launch a 3D printer into space; the agency hopes to demonstrate that, with the printer making spare parts on the fly, astronauts need not carry large loads of spares with them.
David: My next question is what are the limitations if any for this technology?
Cathy: There are no limitations…this technology is magical with regard to the impact it will have and already has had in our lives. Professionals in healthcare were among the first to embrace 3D Systems’ additive manufacturing systems and services. One example is Shriners Hospital for Children treating cleft palates with CAD/CAM and SLS technologies by 3D Systems or doctors separating the Egyptian conjoined twins leveraging our technology to guide them through their process. Application design will continue to develop as more people gain access to the technology.
David: The unit and revenue forecasts for AM from our firm as well as many others that track this technology space are very bullish. Bloomberg’s for example projected the industry to be $3 billion by 2016, Goldman Sachs states that the industry currently is a $2.2 billion market and that its revenues will reach $10.8 billion by 2021, certainly optimism is bountiful regarding the industry. I’ve seen some estimates that shipments will grow by as high as 50% this year and 75% next year in the sub-$100K 3D printer market. Credit Suisse last month initiated coverage on three different 3D printing stocks and also expressed bullish research on the market as a whole, however, one point of interest is they gave your company their firms “preferred pick” of the stocks it is currently tracking in the AM space.
David: Can you share with me what differentiates 3D Systems and or how your firm is positioned uniquely comparative to other players in the market?
We created the technology that created an industry, we are the largest, we have the highest level of resources, and we have the highest level of support from a sales, service and support standpoint, all important points. But what makes us unique is that yes, we develop continually new technology but that we are also acquiring and enhancing new technology as well. At Xerox, we would acquire a new technology company, and then clip its wings and hamper its development so it wouldn’t compete with the “core technology.” Here, we are only focused on making things better. If we make an acquisition, it’s only to leverage and enhance it for the betterment our clients.
David: This question is of high interest to imageSource readers. Does 3D Systems now or will you in the future leverage a “dealer” distribution model for your products and corresponding materials?
Cathy: We already have a sophisticated distribution model in place. Currently we have over 500 resellers in the United States and more are coming on board every month. Some names you will recognize, Synnex, Ingram Micro, Amazon.com. These partnerships actually provide your channel an opportunity from a service and support standpoint because they have no direct servicing capabilities.
David: As you know, I work with independent “office equipment” technology companies that provide a variety of services today, Manage Print Services, FM, Managed IT Services, ECM. They have shifted their approach to business through the services they offer due to decreasing equipment placements and a shift from A3 to A4 hardware and corresponding decline in average unit selling price (AUSP). Of most concern is the trend with images and output. Volume attrition is the biggest long term issue for them as end users and the company’s they service become more aware of output and the related costs associated with hardware, consumables, parts and labor. Compounding the volume decline is that the revenue per image and per device is also declining. In an industry where the basis for the business model is predicated on the fact that almost 75% of the operating income contribution is derived from the annuity stream driven by volume of pages printed/copied there are many companies in the space concerned about the future.
Our readers are studious and they see the possibilities this technology could potentially provide for their company’s future. The opportunity to ride another technology wave is appealing. I see the breakdown of your technology:
• Direct Parts
• Service & Parts
David: Let me close with a couple questions. First, how would the independent channel capitalize on this emerging technology, associated growth potential in the market and make money in the process i.e. what is the business model? And second, is the annuity stream with regards to materials similar to which they already manage with output on printed pages; is there revenue per click business model?
Cathy: I appreciate you asking the questions, we provide all of this specific guidance on marketing and financials as part of the reseller program. But there are a few points of advice and insight I can share today.
• Ramp up is longer than average traditional 2D printing, comparatively speaking it would be like the investment needed from a time, resource and capital standpoint to entering the Production Print space
• You will need a showroom and equipment to demonstrate the applications
o You will need to create samples customers and prospects can touch and feel, think of it like printing color samples in the Graphic Arts color hey-day
• You will need someone on your support staff that understands CAD modeling
o This will enhance your ability to assist the user understand application development
• Each 3D technology carries a different pricing model and level of service support
• You will want to learn to sell software solutions that drive the hardware and corresponding applications
• Think beyond only selling the hardware, service and materials…consider selling the application development, and output. Many of our resellers today are selling the services of application design, modeling and output not just the devices and materials.
Cathy: I will also share that our resellers don’t have an average unit selling price decline issue and our distributors don’t experience low-margins on materials and yes, the annuity stream model is similar to what your readers know today in 2D printing (materials are the gift that keeps on giving). We are at the point in the evolution of this technology and business model where we are creating the wave, not riding it into a mature or flat market…with the creation of this wave, it brings our resellers the ability to increase business with existing customers all while attracting new clients. Every day I speak with resellers that are reaching new markets with multiple revenue and profit opportunities by offering this magical technology from the leader in global 3D printing.
David Ramos is Director, Channel Strategy Service, InfoTrends. Contacts: 781.616.2151 and 407.416.4923 (cell).