Cheap 3D Printing Investing
Patents are Set to Expire
3D printing has been receiving much press lately, both in specialist trade journals and in the popular press. It’s easy to see why; 3D printing is radical, it’s “cool,” and it definitely has amazing potential.
That potential goes all the way from simply printing out figurines for kids to architects gaining vastly more powerful tools for modeling to the healthcare sector being able to print off ultra-precise molds and, perhaps some day, organs for implantation.
Major names like Amazon (NASDAQ: AMZN) and Staples (NASDAQ: SPLS) have pushed 3D printing in recent times. Amazon recently unveiled a section on its vast website dedicated to 3D printing, and it now features 3D printers and supplies, including filaments and other accessories. And Staples, not long back, launched its own variation on 3D printing, called the Cube.
Brooklyn, New York-based Makerbot, one of the original forces behind 3D printing, has already established itself as one of the most prominent names in the nascent 3D printing market. Evidently, there’s a lot of interest bubbling around, but for some reason, 3D printing hasn’t quite hit the mainstream yet.
That’s because, as Quartz notes, certain key patents that protect a technique known as laser sintering—the cheapest 3D printing technology—have yet to expire. The good news? These will expire in February 2014, which isn’t very far away at all.
Laser sintering allows for high definition in three dimensions and can thus produce goods that are basically as good as finished products. To clarify what I’m talking about, consider that today you need to rely on the kind of industry-level 3D printers companies like Makerbot and Shapeways use in order to get a quality printed product. Today, 3D laser sintering printers can cost several thousand dollars.
So you can imagine what’s going to happen once the patents that protect the laser sintering technology expire. It’s going to be a flood of cheaper printing devices, which on the one hand undoubtedly spells troublesome competition for Shapeways and their ilk but on the other hand means 3D printing will finally hit the mainstream.
This isn’t just speculation, either. When an earlier form of 3D printing technology saw its patents expire (I’m talking about something called fused deposition modeling), the immediate aftermath was a flood of FDM-based printers, which is actually what passes for the consumer-grade printers on the market today. These are the printers sold by Makerbot and other hobbyist 3D printing concerns.
And, by the way, Makerbot was recently bought out by Stratasys (NASDAQ: SSYS), a major 3D printing company, for $400 million plus about $200 million in stock bonuses.
Also, as a result of the FDM printing explosion, the cost of FDM printers cratered—you can now buy a basic printer using FDM tech for a mere $300 or so. The patent expiry on FDM is what lies behind the exploding popularity of 3D printing.
Thus, you can predict a similar unfolding of events after the laser sintering tech patent expires next year. That’s what makes this an exciting time to get in on the laser printing action. On the one hand, you know there is a lot of interest and a lot of players waiting to get started. On the other hand, you actually can predict, more or less, when that interest is going to take off because you know a key patent is going to expire on a given date.
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From an Investor’s Perspective…
China, somewhat expectedly, seems set to lead the way. The FDM machines I mentioned earlier are mostly being manufactured there. Not only does the nation have a healthy 3D printing industry already, but the national government also decided to invest $32 million to fund and develop 10 research centers devoted to 3D printing tech. That was last year. Clearly, China intends to seriously develop 3D printing, and this ongoing research ought to benefit the nation a lot when the 3D printing sector cracks open next year.
It’s worth noting that all we’ve seen of 3D printing thus far is just the beginning. Laser sintering is a whole different game—a bit like laser printing compared to the old dot-matrix printing (does anyone even remember that?).
One thing you as an investor could do to help guide the emerging 3D printing market is to invest wisely. 3D printing right now is very much an “indie” sector. As this TechCrunch piece notes, there is a real attention to detail and quality in the printers being made today. That’s because they aren’t easy to make and hence are expensive.
Next year, that could change, and mass production is undoubtedly not far off. But we should probably expect a decline in specifications and quality when the big guns get in on the game. Investing in smaller, more dedicated companies can help keep them in competition against monolithic corporate giants—and ensure that 3D printing actually gets its day in the sun.
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