No shortage of Brains

From: Charles Overy (
Date: Sun May 02 1999 - 08:28:35 EEST

This is a GREAT group. Within 24 hours on a weekend I have had 4 offers of
help for brains for lawyers. Big brains, little brains and squishy brains.

If we could just make functional brains we would really have a great market.
(for practical references see this months Sci Am. )

Seriously, I think that the RP market needs to continue to diversify away from
the pure mechanical and industrial design markets. It appears to me that the
current pricing of the machinery only allows for a limited market where the
"rapid" provides a distinct strategic advantage. This is good for first
adopters, but leaves out a very large traditional market. In the architectural
markets our company has a niche where we can charge top dollar for cycle times
under two weeks for a fairly complex but inaccurate (by RP standards - don't
tell my customers) model. We cut 2D parts with a laser from CAD and build by
hand. Utilizing, readily available architectural students we can build for
significantly less (fully burdened cost of a 12" x 6" x 4" model at
approx.$550) than an RP machine. Until the machines can compete with the
traditional cost of building in an accountants mind (e.g. not including the
intangible "strategic advantage" or other variables like error savings) RP
technology will continue to be under utilized.

I too was surprised that Brock, (or anyone else) cannot put together a business
model that supports a market price of approximately 20K. This is exactly
where my initial estimates show that RP makes sense. I would imagine that a
large number of other businesses can do a reasonable cost justification at this
price point. It is about this point where you can live with realistic duty
cycles of 25% to 40% utilization and still make the payments. I would imagine
from the number of foreclosures and auctions that some people were estimating
significantly higher throughput which is probably not reasonable given the
state of the technology that supports this new industry. (CAD and associated
software to translate, correct repair and stage a job)

Everyone who remembers Yakov's experiment with the EPSON RP printer will recall
the pent up market demand for a low cost machine. I spent HOURS searching the
web that night for news of the Epson machine. I was sorry that he did not try
that experiment with a more realistic price. It might have turned some heads
at some PR vendors. I would argue that two sales of $25K are better than one
of $50K even if the margins are much lower. If in fact vendors are losing
money with their current pricing then they need to look to other industries
where quality and price reduction initiatives have made good products
feasible. That and lean heavily on the universities( that are using their
machines and diluting the price point for commercial vendors) for long range
product development as well as short term testing .

There was one very good post that suggested that SL service bureaus should
price on Value not cost. This is probably true, although at less than 20
dollars an hour they were not pricing on cost either, but it is VERY difficult
to communicate intangible benefits like value especially when you are competing
with in house or established channels. Remember if you have to educate your
consumer, like we do, it will increase your marketing costs and time to
adoption by an order of magnitude. In addition, if we see a small economic
slump, those functions that are competing for an outsource dollar based on
strategic value may find themselves unable to compete in a time of excess
capacity. Would you outsource a model and lay people off or keep staff and
keep the work in house?

In short, IMHO, compete on price, price on value, and EXPAND the market by
demanding robust platforms for diverse applications.

P.S. just to start the flames, Milling cannot compete in most of these
markets. The large invstment in hard tooling and its
assoicated skills has allowed millling to suceed but it is inherently less
attractive once you get outside the tradtional markets. I would love for one
of the eng. students to research this as there seems to be a good paper in
there about the technical - hard numbers here - merits of subtractive vs
additive processes.

thanks to all for their brains.


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