A friend of mine pointed out the incredible degree of strategic replication in the 3D printing market. Due to this, I try to second guess all of my own opinions and long-held beliefs, as well as those of our industry. Today, we’re going to tackle one such 3D printing truism—one that I previously have been guilty of promoting.
No One Wants to Race to the Bottom
The narrative is simple really. No one wants to race to the bottom. Since no one wants to compete head on with Creality, Anet, and the desktop 3D printer clone army, every desktop 3D printer manufacturer is moving up in the market. We’re seeing dozens of players migrate to greener pastures.
What is happening is that companies who used to make $1,500 printers are now making more expensive machines. They’re going to sell to the enterprise market and produce manufacturing machines. They add features, more extensive bills of materials, and most of all price. But, do they have what it takes? They all leap in blind without considering this.
It’s as if the company is a good Olympic marathon runner and decides that, since there are so many competitors, it would be better to do the 100-meter dash. Yes, technically the field is narrower, but how suited is a given company to sprinting? If you run the marathon, how suited is your body, regimen, and temperament to the new sport? In my opinion, a lot of firms are not giving this enough thought, abandoning their markets too soon, and rushing ahead into ill-fated ventures.
However, the trend continues: every desktop printer manufacturer is abandoning the $2,500 machine for the $5,000 model, regardless of what they are good at. Meanwhile, those in the higher market segments are focusing on dialing in materials, applications, software, and machines. They then develop value propositions that are ideal for a particular vertical, customer, type of customer, or part.
If the industry wants to achieve manufacturing excellence, then this is a logical approach. The quickest path to excellence is to develop solutions for specific applications. You can then segment your market as much as you like and sell everyone nice and expensive systems that are perfect for them.
However, what if we’ve all gotten it wrong?
The PC-3D Printer Analogy
The tumultuous computer revolution saw the repeated building of empires that would clash, rise, and fall. From Compaq’s stormy ascendance and later acquisition by Michael Dell’s dorm-room-to-billionaire behemoth, these were global battles. Acer, Toshiba, NEC, Fujitsu, Apple, HP, and more battled for the PC market for decades. PCs and 3D printers are obviously very different things, but I am one analyst who likes to draw parallels between the 3D printing and PC markets to develop my thinking.
Wang Laboratories started in 1951. Cofounded by the brilliant An Wang, it was a business that relied very much on his genius as he placed himself at the center of decision making and future plans. Wang did this very successfully. His tiny firm grew to become one of the world’s largest computer makers with over $3 billion in revenue. What’s more, the company negotiated treacherous waters and went from making technology licensed by others to producing Digital Control Units for machine tool makers and then phototypesetters that enabled the layout of newspapers. From those expensive machines, it went on to completely dominate the desktop calculator market. Still later, it expanded into computers.
That far, Wang’s development demonstrated real entrepreneurial zeal and inventiveness. A lot of companies were merely one-trick ponies that showed up to the right parade at the right time. Wang was demonstrating repeated success by repeatedly bringing novel products to very different markets. The company went on to manufacture specific computer packages for specific markets and had success in this field.
Application-Specific vs. Generalist Computers
All throughout, however, Wang had been making consistently good calls while building up more and more confirmation bias. The core computer strategy was always to produce the best designed proprietary machine for a given task or worker. Wang was continually trying to build the best word processor for secretaries or the best switch for phone networks. The business was always attempting to craft the ideal solution for the ideal application. But, of course, with PCs one can write general applications for a lot of bog-standard boxes built to standards. And this broad software can be better than the specific program and hardware combination that one firm can come up with for just one task.
The PC seemed to be overly expensive for most tasks and was not what a lot of companies needed. Specific word processing stations or solutions would fill the needs of firms much better. Architecture-wise, specific networked word processing systems could be easier to use, easier to manage and more efficient. The company sold integrated systems for whole departments, where scanners, image workstations, storage and printers worked together. However, clients wanted PCs, people at home wanted PCs and application-specific computer manufacturers were a whisper amid a chorus of PC proselytizers.
Early Wang PCs did not run IBM PC software. In fact, the company’s first fully compatible PC was released just before bankruptcy. As this Wikipedia article points out,
“A common view within the PC community is that Wang Labs failed because it specialized in computers designed specifically for word processing and did not foresee (and was unable to compete against) general-purpose personal computers with word processing software in the 1980s. Word processing was not actually the mainstay of Wang’s business by the time desktop computers began to gain in popularity. Although Wang manufactured desktops, its main business by the 1980s, was its VS line of mini-computer and ‘midframe’ systems. The market for these minicomputers was ultimately conquered by enhanced micro-computers like the Apple Macintosh and the ‘Wintel’ PC on one end and Sun, IBM and Hewlett-Packard servers on the other end.”
I’d put it a bit differently and say that Wang´s failure to develop a PC lost the firm the business productivity market and gave it no exposure to the desktop PC-at-home market. By the time that this was one of the driving forces of the industry, Wang was too late to enter that latter sector.
Meanwhile, another standard, the Intel x86 running Windows, gave enterprise customers a powerful chip, hardware, and software combination, along with applications that defeated the cash cow, specialized machines that Wang made. Large servers, on the other hand, were dominated by firms that focused on the development of the ¨server¨ as a general product. Many firms were developing standard devices that were being pushed by these players and the media. These standard products relied upon the creativity of many firms working in different specialized areas, such as software or operating systems, to create competitive products. In several instances, therefore, Wang lost out to many businesses establishing the same chaotic development teams, while offering its own proprietary solution.
Application-Specific vs. Generalist 3D Printers
Now, please note that Wang´s idea to have his son succeed him seems to have been a bad one, and the firm had considerable leadership challenges. Also consider that just this kind of complete top-down, controlled approach made Apple big, then small, and then a giant. It’s also healthy to realize that the decentralized, thin client architectures that Wang promoted were proven right over time for many applications.
So, the Wang example is messy and not perfect for the 3D printing industry, but what can we learn? We can learn that you can be logical, correct, and make the perfect solution and then you will have but one product in this market. Anything wrong with it will hurt you and you will be slow to correct it. You can reap the rewards, if it is perfect but if it is not, you will succumb to the competitive pressure of waves of players working in unison.
So, for 3D printing, if a company spends all of its time developing custom products, painstakingly created with partners as the perfect solution for its customers, it may find that it doesn’t have a market or that this solution doesn’t even work. Either way, they’d be slow to adjust and catch up. If they made 100 perfect solutions for customers, they could still be surpassed by missing out on just the three key applications.
Wang manufactured many perfect products, but no good PCs, servers, or Wintel machines. The only three it got wrong would turn out to be much more valuable than all those it got right.
With regards to 3D printers in particular, a riotous competition of standard machines can become very powerful if prices are lowered, with materials and software made just for those machines. If the Prusa clone becomes the standard and the software is powerful, then materials will be developed for all of the specific application niches anyway.
At Wang, you can easily imagine, given its track record, the confirmation bias that existed in executives and at the firm in general. This is similar to the almost-universal way we all feel that developing specific machines, materials, and software integrations for given applications is the best path forward. Indeed it has been working so well so far!
However, perhaps we should consider that we should at least try to also make a great Prusa clone, play in the riotous desktop market, and make software for the millions of desktop machines, just in case they win. I’m not saying that those angling for higher-end markets have to stop what they’re doing, but maybe they should have a skunkworks in place to bet on the multitudes, as well.
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