strategy+business Winter 2013 : Page 22

strategy+business issue 73 essay technology 22 480 million households in the West have at least one PC, as do nearly a quarter of the 1.3 billion households in emerging economies. What penetration rate might we expect for small-scale, tabletop 3D printers? The fundraising suc-cess by startup Pirate3D on Kick-starter Inc. offers a glimpse of the potential. The company’s Buccaneer home 3D printer project, promising an easy-to-use unit priced as low as $247, raised $1.4 million from more than 3,500 backers in a mere 30 days, easily blowing past its tar-get of $100,000. But comparing 3D and desktop printers offers the best way to assess the potential pen-etration rate. The standard printer as we know it has fairly simple in-puts that do not require much from the consumer; similarly, it produces standard-size outputs. Importantly, a single home printer can handle most of the variants we throw at it. It can print black and white or color, on 4x6 glossy photo paper or on standard bond paper, with reasonably high quality photos or text. Given such versatility, it is common for a home printer to get extensive use. The world of 3D printing pre-sents a vastly different scenario. A printer for metal cannot print ABS plastic, and one that prints ABS plastic may not print any other type of plastic. And although designers continue to make digital printers simpler, there remains a required minimum level of technical know-how that is far greater than that needed to operate an ink-jet or laser printer. Moreover, even if we assume digital printing will get simpler over time, we should recall that despite the ease and convenience home printers offer, many people still outsource larger jobs to FedEx Of-fice or Staples. It’s therefore a stretch to envision a near-term future in which the typical consumer uses a 3D printer at home to make a plastic fork or a chess piece rather than buy-ing it from Walmart. Perhaps we’re wrong, and the 3D printer will become as easy to use and as ubiquitous as a smartphone. If the industry produces millions of printers per year, the high volume would move the device down the experience curve more rapidly—but with how steep a curve, and how fast would volume doubling occur? Under even the most optimistic forecasts, growth in digital print-ers’ sales would pale in comparison to the unit sales of the ubiquitous microprocessor. Digital printing will get cheaper, but it will likely not crochip: a significant but not earth-shattering slope, and a relatively slow doubling. Manufacturing Cost Drivers Experience curves offer one way to analyze the viability and potential of a new technology. But assessing the predictions of structural changes to the manufacturing industry, such as those prompted by the current hype around 3D printing, requires the application of two other well-tested concepts: economies of scale and total landed cost. When consider-ing how and where products will be manufactured, size matters, but so do location and the cost of transpor-tation around the globe. The concept of economies of scale dominated business thinking It’s a stretch to envision a near-term future in which the typical consumer uses a 3D printer at home to make a fork or a chess piece. have the volume to emulate Moore’s Law. Furthermore, unlike micropro-cessors, a 3D printer is an assembly of various older technologies. The microprocessor running the printer will drop in cost rapidly, but many of the parts, such as the actuators moving the print head, are already far down their own curves and have limited further potential. And a sig-nificant portion of the cost is in the physical structure or casing of the printer, which does not benefit from miniaturization (unless you care to print only really small items). Thus the experience curve for 3D print-ing is likely to be more like that of the gas range than that of the mi-in the early stages of the Industrial Revolution. The theory built on Adam Smith’s observations about the benefits of the division of labor, concluding that larger companies would have greater opportunity to create specialized labor categories. Over time, the focus shifted away from simple division of labor to automation for eliminating labor. Larger companies could invest in advanced production technologies, creating more output with fewer resources. The proof of the concept could be seen in the growth of fo-cused corporate behemoths such as Cadbury, General Motors, Siemens, and U.S. Steel. During the first half

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