The Beginning of the End?

Published in the April/June 1998 issue Prototyping Technology International, UK & International Press Copyright 1998
by Terry T. Wohlers

The average selling prices of machines and RP models have dropped considerably in the last couple of years. Some system manufacturers and service bureaux have laid off employees. Others have gone out of business. Industry-wide revenue growth of product sales and services worldwide was a dismal 7.5 per cent last year, compared to 42.6 per cent the year before. 1997 marks the first year in which growth fell so dramatically and into single digits. Do these recent developments and trends signal the beginning of the end for RP?

In April this year, an auction was held at a Detroit service bureau that had ceased trading. Eight RP systems, some of which were almost new, sold for six to 35 per cent of their new list price. Cubital’s Solider 5600 machine, installed last year, sold for US$27,000. The new list price of this machine is US$470,000. Sinterstation 2500 systems from DTM sold for US$140,000 and US$120,000 each. New list price: US$399,000. FDM1650 systems from Stratasys sold for US$28,000 and US$11,000. Price new: US$120,000. Are these prices an indication of the real value of RP systems? With so few attending the auction, probably not, but it does make you wonder.

Many manufacturing companies are interested in minimizing and eventually eliminating prototyping – at least expensive prototyping. Already, software developers offer products that enable designers to produce the first few iterations of a design in a 100 per cent digital environment. Solid models, digital prototypes – call them what you will – reduce the need for physical prototyping. As software improves and computers become faster, and as designers become more confident with these systems, the need for prototypes will decline even further. Already, some designs require only one physical prototype. So is this the beginning of the end for RP? Not a chance.

General Motors recently bought three SLA-5000 systems, priced at $400,000 to $540,000 each, and a new Sinterstation 2500. RP capacity has grown to an estimated 19 systems total. Yet sources within GM estimate that only 10 to 15 per cent of the company is currently taking advantage of the technology. If demand doubled, the company would need to purchase an additional 19 systems.

Companies smaller than GM are also buying systems in impressive numbers, even at a time when you can buy RP models at service bureaux for rock-bottom prices. In many cases, the advantages of having one or more systems in house outweigh the costs. Indeed, revenue growth of product sales and services slowed dramatically last year, but unit sales are still strong. Growth was 34.3 per cent, representing sales of 1,057 machines, compared to 787 machines the previous year. Furthermore, many countries are beginning to embrace RP for the first time. Unit installations in many countries have doubled over the past year.

RP has become critical to the business of making models and prototype parts at countless companies, so do not believe for a moment that RP will disappear. Companies such as 3M, Black & Decker, and Outboard Marine do not develop new products without first producing at least one RP model. This is how important RP has become to these companies. At the same time, we should prepare to face the likelihood (harsh reality for some) that RP systems will look a lot different in the future, just as cars, phones, and computers have altered considerably over the last 20 years. Prices and volumes will also change dramatically. To me, that is what is exciting and what presents us with so many new opportunities.

Some people in the RP industry believe that a US$20,000 RP system is the answer. Others believe it needs to drop to US$5,000, or even below US$2,000. Unquestionably, a US$20,000 system would lower the risk and bring the technology within the reach of small companies that today cannot afford the higher prices.

"While the benefits of using RP are obvious to many, justifying high-cost machines is not easy. The single largest benefit of RP is the ease of identifying potential problems in a design before they are integrated into the manufacturing cycle," says Larry Blasch of OPW Fueling Components. Regrettably, this is also a "cost avoidance" to the financial department and cannot be quantified, Blasch explains. So until machine prices drop to a point where risk has been reduced to a minimum, justifying RP will continue to be an obstacle for some.

Suppose a company such as Canon, Epson, Hewlett Packard, or Ricoh were to introduce an RP system for offices, one that is fast, reliable, and easy to use, similar in quality to its 2D printing products. Suppose also that this system produces strong and accurate parts. It could do for modeling and prototyping what CAD has done for design and drafting. The RP industry, as we know it today, would look very different. It may occur next year or in 15 years, but it will almost certainly happen.

I believe that there is an enormous iceberg hiding below the surface and we have only seen the tip of it. Much of it represents systems, materials, and markets that have not yet been developed. The challenge facing today’s system manufacturers, material suppliers and service bureaux will be to negotiate this huge, concealed object without taking on water and going down. Some will make it; many will not.