Although we’ve been selling and supporting 3D printers for nearly 10 years and now have many customers with multiple systems, a lot of our new business comes from businesses who are buying their first 3D printer. For these new buyers, the intertwined risks of investment and technology can be paralyzing. At the front of their minds is often the idea that “We don’t want to buy something that’s obsolete.”
Well – relax! Because any 3D printer you buy is already obsolete. So make sure the investment makes business sense anyway.
Last week I purchased an Apple iPhone 5. I’m well aware that Apple is introducing the 5S and 5C models in mid-September. And there is no question that the 5S is “better” than the 5. But the new features are not something I use all day, every day. The cost of the new phone will likely be higher, it wasn’t available for at least a month, and there is some risk of teething problems attendant in the introduction of any new, complex product. For me, the costs of missing customer calls on my aging Android phone, the increased utility of some of the apps shared with an iPad, and the proven reliability of the product made it the right business decision – even though it is “obsolete.”
The consumer products industry in general and the fashion industry in particular are built upon a strategy of planned obsolescence: the time frame for becoming obsolete is built into the product. More complex and expensive products like automobiles use a strategy of “Continuous detail improvement” so that, while the old product remains usable, new product features are regularly introduced so that the new model becomes increasingly attractive. The vehicle we purchased in 2006 remains perfectly useful – even though it does not have any means to hook up an MP3 player and relies on radio or CD’s. The 2009 model has an MP3 connection and can also play DVD’s – but no Bluetooth integration like the latest models. So all three models perform the basic task of transportation, and newer models probably last longer, but those without the latest features are less appealing to consumers.
Far more likely in the 3D printer industry is what might be waggishly called “Unplanned obsolescence.” Innovations in the industry have disrupted established markets a number of times. In 2004 Stratasys introduced the Dimension systems at a price point of $30,000, supported by local dealers. This was about 40% of the price for similar capability the year prior. Over 300 systems were sold in the first year at a time when most manufacturers sold dozens of systems a year.
Rapid obsolescence comes with a significant danger to system manufacturers: prospective customers will delay purchase. So system manufacturers have adopted more flexible architectures that accommodate new materials or electronics, and/or implemented extremely generous trade-in policies. Customers can generate sufficiently high returns on investment to justify initial purchase, without being penalized for early adoption.
The explosive growth of the low-cost “maker-grade” systems has called into question the value of professional systems, which now comprise the market space from $10,000 up. But this ignores the very real difference in capability between even the very best maker-grade systems and the least-expensive professional systems. Maker systems thus far have supported hobbyists interested in exploring a new technology but without any business objective to support.
By contrast, professional systems support paid employees developing products where time-to-market is king. The systems are expected to run uninterrupted for days to support rapid product development.
In our experience, prospective customers tend to assume that price points will decline over the long term. While this may be true, in the short run, system manufacturers generally use a different pricing strategy. They establish price points ($10,000, $25,000, $50,000, and so on) that recognize the various levels of authority to “sign-off” such an investment within corporate design environments, and continue to add features over time to keep the offering competitive. So five years from now, a $25,000 printer may be faster and more capable – but there will still be offerings at that price point.