strategy+business is published by PwC Strategy& Inc.
or, sign in with:
strategy and business
Published: November 26, 2013
 / Winter 2013 / Issue 73


A Skeptic’s Guide to 3D Printing

Revisiting the data in 1975, Moore—who by then had cofounded Intel Corporation—noted that his prediction proved correct but adjusted his future forecast to a doubling every two years. Despite ongoing debates about the limits of what has become known as “Moore’s Law,” a steady rate of improvement continues to drive the microprocessor industry; the latest generation of chips contain well over a billion transistors.

Researchers continue to test and confirm the empirical validity of these tools even today. In a paper released in early 2013, a team of researchers from the Santa Fe Institute, a think tank dedicated to complexity science, collected and examined data sets on cost and production volumes for more than 60 technologies over various time frames. One set covered integrated circuits from 1969 to 2005. The researchers found that the cost of a transistor in a chip dropped 43 percent with every doubling of cumulative volume and that the cumulative production doubled at a rate of every 1.2 years over the 37-year period. Their full data set shows that many technologies exhibit both a steady rate of volume doubling and a steady rate of cost decline (measured as the slope of the logarithmic curve), making Moore’s Law and Henderson’s experience curve effectively indistinguishable.

However, they also found that the rate of change varies dramatically across technologies. For example, the evolution of hard disk drives between 1989 and 2007 revealed a 49 percent cost reduction with a doubling of cumulative volume every 1.1 years. Polystyrene, in contrast, dropped at only a 16 percent rate and took 3.5 years to double in cumulative volume from 1944 to 1968. And freestanding gas ranges exhibited a much steeper cost curve than polystyrene, with a 32 percent reduction at each doubling, but cumulative volume doubled only once between 1947 and 1967.

Therefore, to predict the cost curve of a new technology, we need to consider both the rate of volume growth and the rate of cost decline, also known as the slope of the experience curve. The question becomes this: Will 3D printing behave like a microchip or a gas oven?

The 3D Experience Curve

Although the $250 price point for hobby offerings of digital printing clearly demonstrates progress down the experience curve, the product remains in the nascent stage of growth. The relatively short history of 3D printing began with the introduction in 1986 of its foundational technology, stereo lithography, by Chuck Hull through his company 3D Systems. However, it took nearly a decade—and advances in solid-state lasers—before the technology captured a foothold as a true enabler of rapid prototyping.

Consumer applications for 3D printing, which have more recently garnered considerable attention, face the traditional constraint of household penetration. This limits the potential market size and accordingly affects the likely degree of volume doubling that is needed to drive the experience curve to rapid expansion. The case of similar technologies suggests caution; for example, we know that nearly a third of the households in the industrial world have multiple televisions, but few have more than one stove. Personal computers offer another benchmark: Thirty years after the technology was introduced, more than 70 percent of the 480 million households in the West have at least one PC, as do nearly a quarter of the 1.3 billion households in emerging economies.

What penetration rate might we expect for small-scale, tabletop 3D printers? The fundraising success by startup Pirate3D on Kickstarter Inc. offers a glimpse of the potential. The company’s Buccaneer home 3D printer project, promising an easy-to-use unit priced as low as $247, raised $1.4 million from more than 3,500 backers in a mere 30 days, easily blowing past its target of $100,000. But comparing 3D and desktop printers offers the best way to assess the potential penetration rate. The standard printer as we know it has fairly simple inputs that do not require much from the consumer; similarly, it produces standard-size outputs. Importantly, a single home printer can handle most of the variants we throw at it. It can print black and white or color, on 4x6 glossy photo paper or on standard bond paper, with reasonably high quality photos or text. Given such versatility, it is common for a home printer to get extensive use.

Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.