RE: No shortage of Brains

From: Brock Hinzmann (
Date: Thu May 06 1999 - 04:12:18 EEST

I should correct an impression I may have made about the $20k machine.
It's not that I can't make a business model for a $20k machine (actually, I
wasn't asked to write the business plan for the SRI technology). I think
we can and did. However, the financial investors considering the SRI
technology had specific internal hurdles and returns on investment they wanted
to see within a specified length of time and they didn't see that. An
entrepreneur, with vision and a willingness to sacrifice something in that
short-to-medium-term time frame, in order to meet a long-term vision or
personal goal, might make a different decision.

I will argue that the early adopter of the new machine will still be
someone that sees a distinct advantage, but, as Charles suggests, that
advantage for one type of user might be different from the one the current
industry is geared up to fulfill. I tried to get some test projects going with
the art community, for instance, but SRI's scientists and engineers must
survive on paying customers and, as the DARPA funding ran out, we were not
able to consumate explorations of those nonindustrial user needs.

Charles Overy wrote:
Seriously, I think that the RP market needs to continue to diversify away
>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
>"rapid" provides a distinct strategic advantage. This is good for first
>adopters, but leaves out a very large traditional market. In the
>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 -
>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
>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
>traditional cost of building in an accountants mind (e.g. not including
>intangible "strategic advantage" or other variables like error savings)
>technology will continue to be under utilized.
>I too was surprised that Brock, (or anyone else) cannot put together a
>model that supports a market price of approximately 20K. This is
>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
>cycles of 25% to 40% utilization and still make the payments. I would
>from the number of foreclosures and auctions that some people were
>significantly higher throughput which is probably not reasonable given
>state of the technology that supports this new industry. (CAD and
>software to translate, correct repair and stage a job)
>Everyone who remembers Yakov's experiment with the EPSON RP printer will
>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
>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
>money with their current pricing then they need to look to other
>where quality and price reduction initiatives have made good products
>feasible. That and lean heavily on the universities( that are using
>machines and diluting the price point for commercial vendors) for long
>product development as well as short term testing .
>There was one very good post that suggested that SL service bureaus
>price on Value not cost. This is probably true, although at less than
>dollars an hour they were not pricing on cost either, but it is VERY
>to communicate intangible benefits like value especially when you are
>with in house or established channels. Remember if you have to educate
>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
>slump, those functions that are competing for an outsource dollar based
>strategic value may find themselves unable to compete in a time of
>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
>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
>there about the technical - hard numbers here - merits of subtractive vs
>additive processes.
>thanks to all for their brains.
>--------Laser Graphic Manufacturing--------
>Precision Models for Architecture and Development
>--------------- 800 448 8808-----------

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