New digital frontiers


THE digital tidal wave up-ended the music, book, film and
newspaper industries. The rise of new printing technology now threatens to
wreak similar havoc on producers of three-dimensional objects.

While this shift will take years, 2012 is shaping up as the
year the technological hype hits the mainstream.

A 3D printer takes digital blueprints or scans and recreates
them one layer at a time. Layers of plastic, metal or other compounds are
bonded together to produce an object.

If a rare car breaks down in a remote area, for instance, a
suitably equipped local workshop might be able to produce the needed part
immediately from a downloaded file instead of waiting for it to be shipped. 

So far, only a few materials can be used, the process can
take a long time, and items need to be assembled afterwards. But 3D printing is
already changing manufacturing around the edges.

Additive manufacturing, as it is formally known, is
currently most widely used in making prototypes. Barclays estimates this and
other specialised markets such as dental fillings add up to about $2.5bn a year
at the moment. 

As printers become cheaper, new materials become available
and machines can handle more complex tasks, the impact will increase. Local
manufacturing will cut down on time and shipping costs. Companies will need to
hold less inventory.

Customisation – of orthopaedic parts tailored from digital
scans of patients, for example – will become far simpler. Manufacturers will be
able to switch or modify parts more easily, and pioneers will find new products
that only printers can make. 

But anything involving just a digital file and a readily
available printer will encourage copying and piracy. The day may well come when
teenagers can scan or download their friends’ designer sunglasses and print a

Listed companies that produce 3D printers, such as Stratasys
and 3D Systems, both valued in the $600m to $800m range, offer immediate plays
on the sector, and other producers are considering IPOs. Related companies,
such as $6.8bn design software firm Autodesk, may also benefit.

But the technology is developing rapidly. Opportunities will
abound, but investors should beware hype in the coming year – and look out for
disruption to traditional manufacturers over the next several.

 – Reuters

* The author is a Reuters Breakingviews columnist. The
opinions expressed are his own. 

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