The growth of the 3D printing space has been very impressive over the last 18 months. There has been an explosion of interest coming from just about every direction. Consumers are buying more printers, the media seems to have an infatuation with the technology, and manufacturers are lusting after ways to incorporate 3D printing into their manufacturing and prototyping processes.
Because of these recent trends, we have seen more and more companies, big and small, enter the business of manufacturing printers. From the giants like 3D Systems, and Stratasys, to the upstart companies seeking funding on Kickstarter, to the large corporations like Hewlett Packard and Epson, who have intentions of entering the market, they all have their work cut out for them. The competition over the coming 2-3 years will be fierce. For consumers, this is outstanding news, as prices will be driven down, as innovation within the industry continues it’s exponential growth trajectory. The competition will drive companies to find new, clever business models. Many models which we have seen in place within other industries will likely creep their way into the 3D printer industry. I have personally named each model accordingly.
The Las Vegas Model
This business model is one which is used, like it’s name implies, in Las Vegas. Casino’s in the gaming town entice gamblers to enter their properties by offering an array of free or cheap amenities. These include free or cheap airfare, rooms, food, shows, you get the picture. This model is used by Hewlett Package and other 2D printing companies as well. They sell their printers cheap, often times for a small loss, in hopes that the incredible mark-up on their exclusive ink cartridges will make up, and exceed their losses from the hardware. If HP were to enter the 3D printing market like they claim they will be doing this year, than this could be the very model they use. They may offer 3D printers at prices well under their competitor’s, while charging a large markup on special patented filaments.
The Apple iPhone Model
This model is based on Apple’s business strategy used with their flagship product the iPhone. The iPhone costs more than the typical smartphone out there. Apple can getaway with charging a premium on their products simply because they are above and beyond that of the competition’s. They built up their ecosystem, which keeps people coming back, so they know that they can keep their margins close to 40%. One or two companies could take on this model, but to do so, they must build some sort of exclusive software ecosystem, or an online store for designs catered just towards their printers, which will keep people coming back. It’s worth paying a little extra for a printer if that printer is easy to use, fun, and prints in a quality better than its competitors.
The Google Android Model
This model is based on Google’s recent success with their Android OS for smartphones and tablets. They provide the software free of charge, in hopes that hardware manufacturers will jump on board and start building their devices based on Google’s OS. In turn, the Samsung’s, and HTC’s of the world are able to build hardware at a cheaper price than their competitors who do not use the Android operation system. What Google has done is give away the software in order to help their partners sell more hardware, which in turn drives traffic to Google owned sites. This model could play out indirectly within the 3D printer market. For instance, a company could produce extremely cheap filament, undercutting all other brands, but keeping the quality the same, if not better. They could do this by producing it in bulk. Then they could sign deals with a few large printer manufacturers who would get exclusive rights to build printers that can use that specific filament. Printers will sell based on the fact that filament for them can be purchased for prices much cheaper than that used with competing printers on the market.
Another way of looking at this model is with what Autodesk seems to be planning to do with their Spark 3D printing platform. They will release an open source software which other printer manufacturers can adopt, or customize for their own products. In doing so, they will indirectly obtain new clients to their paid software offerings.
Likely in the coming couple of years we will see all three of these business models implemented in the industry in some way or another. Which will win out, if any? That’s anyone’s guess. Let’s hear your opinion on these three possibilities in the 3D printer business model forum thread on 3DPB.com.