Seeking Alpha

3D printing hype overdone, says Nomura's Kim

  • "We think recent market optimism about the 'Third Industrial Revolution' potential of 3D printing is overdone, given uncertain growth potential in the consumer market, limited pragmatic applications, and a lack of mass-production ability," says Nomura's James Kim.
  • "We do not expect 3D printing to garner a meaningful share of the global manufacturing industry in the near term, with the total market size of 3D printing, as per Wohlers Associates, estimated to grow to $6B by 2017 (from $2B last year), largely falling short of the conventional manufacturing space ($93B)."
  • Nevertheless, big players with consumable businesses like Stratasys (SSYS) and 3D Systems (DDD) and pure raw materials supplies could be long-term beneficiaries of 3D printing development, says Kim.
  • Also mentioned is ExOne (XONE) for its binder jetting technology currently employed by Ford to create part prototypes, and Organovo (ONVO) for 3D bioprinting technology to create functional human tissue.
  • On the 3D printing software side, Dassault (DASTY), Autodesk (ADSK), ANSYS (ANSS), and PTC (PMTC) get a mention, while Proto Labs (PRLB) is noted in services.
Comments (17)
  • DrP79
    , contributor
    Comments (614) | Send Message
     
    To be able to triple the market size in 3-4 years is still a big deal
    9 Dec 2013, 08:51 AM Reply Like
  • jppoczatek
    , contributor
    Comments (77) | Send Message
     
    As everyone keeps saying DDD, SSYS &DASTY will be the biggest players in the 3D market for the foreseeable future with lots of growth to come. Stay long on these a 3 and you will make plenty of money on this technology!
    9 Dec 2013, 08:59 AM Reply Like
  • leonct74
    , contributor
    Comments (106) | Send Message
     
    I agree but I would personally see greater potential reward staying long in ONVO. It is a real break-through technology, difficult to replicate with a wider range of potential applications from healthcare to cosmetics and maybe food and with potential to save human life which is rather invaluable.
    9 Dec 2013, 09:34 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (7887) | Send Message
     
    Anyone who attended the Wohlers conference at Euromold in Frankfurt last week would agree.

     

    Investors who bought early made good money so far, but at the current level, the loss-making potential for new entrants is huge, with all additive fabrication stocks firmly in bubble territory.
    9 Dec 2013, 09:09 AM Reply Like
  • Esekla
    , contributor
    Comments (2295) | Send Message
     
    Also, Pacific Crest has come out this morning with Sector Perform rating for XONE: http://bit.ly/IAULT9

     

    My article includes pretty much the same analysis as Nomura, and goes beyond to give metrics for how additive manufacturing will NOT compete head to head with traditional manufacturing. Yet it still makes a bull case for some companies which are positioned for the areas that AM will grow into, while discounting others, like DDD, which are more consumer oriented. The market is still clearly leaning to differentiate between entrants in this space.

     

    http://seekingalpha.co...
    9 Dec 2013, 09:13 AM Reply Like
  • DrP79
    , contributor
    Comments (614) | Send Message
     
    AM will not compete directly with traditional methods of manufacturing any more than a screw driver competes directly with a hammer.

     

    Similarly job shops perform different functions than assembly lines.

     

    All tools/processes have different strengths and weaknesses and should be used for the purposes that they are best designed. Which tool to use will depend on the speed, accuracy, volume, and materials and other factors.
    9 Dec 2013, 10:28 AM Reply Like
  • Esekla
    , contributor
    Comments (2295) | Send Message
     
    Glad that you seem to agree with me....?
    9 Dec 2013, 10:43 AM Reply Like
  • Lonnie Starr
    , contributor
    Comments (296) | Send Message
     
    There is also another explanation for why the metrics seem to presently say that 3d printing will not compete head to head with traditional mfg. 3d Printing is a new entrant into the market place and hasn't had the hundreds of years behind it, that these other methods have already had.

     

    Deadlines of work in production and the ability of companies to predict delivery, using the means they already are using, is a block of inertia that will have to be slowly eroded away, it won't simply vanish like a soap bubble in the face of a new alternative technology.

     

    When the Gutenberg printing press just arrived, it was hardly going to go head to head with traditional hand copied books. There was work in progress that had to be completed on predictable schedules, that prevented the immediate adoption of the new technology, and that's if one could find out where to get one of these presses. But, gradually these barriers eroded as more companies grew up to make presses and they became more widely available at better, more affordable prices.

     

    I don't think that taking a snapshot of progress at this early time, allows one to conclude what the future actually will hold. The change over to any new technology takes time, during which it might very well appear that the new technology won't be a competitor with the old. When the first computer arrived, they didn't think that it would supplant the typewriter or the ten key adding machines. It was a process that took time and lots of it. Much more than one would imagine, given the computers prowess over the other technologies. But, inertia also stood in the way. Businesses had deadlines and large workforces they had trained at some expense, that allowed them to meet deadlines with the steady predictability that businesses require. So, only gradually did they accept the new technology, and then only for selected tasks. As these computers performed those tasked acceptably, and the means of operation became clear enough, could they then be more widely deployed and given more and more of the tasks that were done by legacy means.

     

    This "revolution" will be no different. As more of these machines enter the work places, more and more work will be assigned to them. As they prove their ability to perform, and as their performance is better understood, more and more tasks will be assigned to them. By which time there will be newer, faster and more capable machines to choose from. So then, that would be the time to make an assessment such as the one this article is making. That time is at least a year and probably more than two years into the future.
    9 Dec 2013, 11:41 AM Reply Like
  • OkieKid1868
    , contributor
    Comments (3) | Send Message
     
    I like to thank of tech stocks like this, once the technology enters the mainstream media, it is more than a bubble. Will these stocks rise and fall, yes they will. Will the market rise and fall yes, it will. I truly believe that when the mainstream media picks up the trend it is of to the races and the technology will follow becoming mainstream itself! I would buy and hold on the dips, the growth for these stocks is huge.
    9 Dec 2013, 09:40 AM Reply Like
  • Lonnie Starr
    , contributor
    Comments (296) | Send Message
     
    When the Gutenberg Press arrived, it did not immediately supplant the hand copying of manuscripts So it didn't go head to head with legacy systems of getting work done. But what it did do most rapidly was, allow for more "customized" printing, which became newspapers and handbills, something not as widely seen before.

     

    But that didn't make the climb simple or any quicker, since the arduous task of copying manuscripts meant that there was little for the masses to read, there were few people who were even capable of reading. So that was another barrier the printing press had to surmount. Only after printed material became more commonplace, did enough people learn to read, to make printing businesses viable.

     

    Of course, history fails to note these little details and makes it appear as if the printing press sprung full blown from the inventors shop to full blown market domination, when nothing is further from the truth. Same thing with computers today, they didn't take the world by a sudden storm, but were gradually adopted over time.
    9 Dec 2013, 11:56 AM Reply Like
  • CandleFlight
    , contributor
    Comments (161) | Send Message
     
    The mentioned lack of mass production competitive capability is what one would expect for a technology intended to make prototypes and personalized products. Instead of competing with mass production, the rapid prototyping capability for volumetric printing would be expected to enhance it. Likewise, the need for quality prototypes in a hurry means that mass production needs should also enhance the marketplaces for 3-D printers and their consumables.
    Sometimes the growth of one market is beneficial rather than a threat to another that would be perceived (without adequate scrutiny) to be similar.
    9 Dec 2013, 10:53 AM Reply Like
  • natlsecur
    , contributor
    Comments (3) | Send Message
     
    They said that Edison's lamp was just a fad. 3D is going to be as big as the hand held battery drill in the construction industry.
    9 Dec 2013, 11:14 AM Reply Like
  • Grethe
    , contributor
    Comments (36) | Send Message
     
    OK Mr. Kim, comments noted. One of your former colleauge probably wrote the same about Henry Fords assembly line idea; but the thinking that only a limited sector of mass production will be substituted is really not good industrial thinking. There is actually a number of pretty visionary production experts out there.
    Stocks overpriced?... underpriced? Time will show. (My son just had a new 3D tooth implanted in less than 2 hours.....and just imagine the global number of missing teeth....ha,ha)
    9 Dec 2013, 11:18 AM Reply Like
  • Izzy1
    , contributor
    Comments (179) | Send Message
     
    Few people said that 3D type technology will change the world by next week. Manufacturing companies are slow to change but they will change once they digest the process and numbers. I expect it to take close to another five years before this process is as common as NC machines. It is coming, we can argue if it will take 3 years or 6 years but it will come.
    I have been studying Organovo and they may be the real diamond in the ruff. Companies testing new drugs will be able to test it on pure tissue. Now a drug may be tested on rats or other animals. Testing on humans can be a real problem. But testing on liver tissue or heart tissues gives the drug companies a fantastic advantage before bringing the drug to market. I currently own shares of DDD, SSYS, OXONE and now ONVO
    9 Dec 2013, 12:45 PM Reply Like
  • mkbgsoar
    , contributor
    Comments (93) | Send Message
     
    I didn't see mentioned the important role of 3D printing technology improving the production of spare parts as needed rather than stocking them. I see that as a very important role reducing the cost of weharehouse's inventories and eliminating the waste of unused spare parts. It will reduce the cost of all mechanical, electrical and electronic equipment parts maintenance and repairs. The manual provided by the manufacturer will have the code of the graphics stored in the machines' data base like spare parts repair shop and retailers have now; but, thanks to a 3D printer and added materials they will be able to provide most small spare parts as needed with no more waiting time than it takes a lock smith duplicate a key nowadays. Also, some 3D printers will be able to reproduce many undocumented parts by scanning the old one and/or modify them as needed. The potential there is enormous. That is where 3D apps will grow the most, using printers of all sizes that can process small metallic objects like SGLB manufactures ammunitions for the government with high quality precision, or DDD manufactures prostheses and jet's parts with Phoenix's metal sintering technology, and others like Arcam in Sweden, etc.
    9 Dec 2013, 02:06 PM Reply Like
  • just1tom
    , contributor
    Comments (15) | Send Message
     
    This is a picture of "where it stands now".
    Only history has allowed us to look back to see, and, understand the "industrial revolution" with crude technologies, mass production, crude materials. Because it took so long to manufacture our way here, we think every new "revolution" will take as long.
    We have a cleaner "starting" or "jumping off" point now, which history cannot measure on a "look forward" basis.
    Companies that are used to growing will look to continue that by acquisition in a new field.
    Liquified natural gas, 3D printing and the like are small, and yet have explosive growth ahead.
    I can't believe that I am the only one that sees what is coming down the road. Let me try to put it in some written form for people to digest.
    With the industrial revolution, it was "smokestack" America. Big plants built to do big things. Railroads shipped products to end points and distribution took place.
    In the future, let us think of a 3D printer as only a "tool". It is a tool that can manufacture whatever it is capable of.
    So, let's say, a large, multinational company decides to buy a 3D printer company. Then, they have their new subsidiary make 10,000 printers for them. Next step is to strategically place those printers in "manufacturing" facilities around the country. Understand, the "facilities" could be your house, your garage, or the storage shed in your back yard.
    You now are a manufacturer for a major conglomerate. The software and designs are sent to you via internet. You are tasked with producing 10 of the latest widgets and shipping via FedEx, UPS, or USPS to the "customer". If there are 50 of you, in an area close to the customer, and you all make 10 widgets, that is 500 widgets, produced and delivered in 2 days time. How hard is that?
    This will be the new wave of "manufacturing".
    How do I want to play it?
    I am long ONVO.
    I believe they will be acquired by a company that keeps striving in the medical technology field.
    My preference is to see General Electric take them out on a 1 share of GE for every 2 shares of ONVO basis, but, GE may not be fast enough. Who knows? Certainly not I.
    The one thing I know, is, I am long ONVO and will stay that way.
    9 Dec 2013, 02:50 PM Reply Like
  • pointofgrille
    , contributor
    Comments (5) | Send Message
     
    Seems as if Fortune 500 magazine disagrees with you. Ranked number 2 tech company and number 5 in Fortune's 100 best business list
    9 Dec 2013, 02:52 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|