Josh Grasmick

As you know, a perfect storm arises when a rare brew of forces meet.

Usually, you hear about these events when fierce winds join on the ocean or coastline.

But they can occur in finance too, when barriers are broken and human action enables market movement.

Today, we show you such a financial perfect storm that is brewing in the tech sector. And as you are about to see, whether you are an investor or not… you are in for a hell of a ride.

“…the massive number of key patents set to expire in February 2014… have to do with mature 3-D printing tech.”

I am talking, of course, about the newest version of the 3-D printing revolution, which we predict will reach a new level in popularity and adoption as 2014 rolls around.

From there, the market will only go up…

According to a recent statement by Citi analyst Kenneth Wong:

“3-D printing and related services are now predicted to triple by 2018.”

Feeding this perfect storm are three powerful forces. They are as follows…

Storm No. 1: Key patent expiration makes way for hypercapitalism

The first thing that should make your investment radar go from “bleep” to “blip-blip-blip” is the massive number of key patents set to expire in February 2014.

What’s more, these key patents have to do with mature 3-D printing tech.

See, there are a few ways to 3-D print. Most people are familiar with fused deposition modeling (FDM). FDM makes 3-D products that look a lot like toys. And compared with other forms of 3-D printing — such as electron beam melting, stereolithography or laser sintering — FDM is, indeed, child’s play. It is that last kind I just mentioned that is so important: laser sintering.

Many selective laser sintering (SLS) patents were filed in the 1980s by the University of Texas at Austin’s Mechanical Engineering Department (UT ME). Originally developed by an undergrad, those SLS patents generated some of the highest revenue through intellectual property for UT Austin for many years.

Laser sintering is exceptionally cheap. In fact, without patents and licensing fees, it could easily become the lowest-cost 3-D printing method. What’s more, this method can print in high resolution in all three dimensions. Goods can be sold almost immediately as finished products.

As a round of patents expires in February 2014, competitors have every reason to upgrade to laser sintering machines. Small businesses can get ahead on R&D by buying their own printers for less cost, higher quality and less time. We saw the same thing happen when key patents expired on the more primitive FDM. Within a few years of FDM patents expiring, such printers fell from thousands of dollars down to as little as $300.

I think of this storm as a kind of “hypercapitalism” in the 3-D printing market. In short, the key patent expiration I mentioned breaks cost, time and quality barriers.

That’s just the first storm, set to really take off in February.

But there’s a second storm that is already happening…

Storm No. 2: Intuitive software and 3-D faxing create seamless user-ease

The second big reason that the 3-D printing market will triple in the next five years is the advent of newer, intuitive software platforms.

When I say “intuitive”, by the way, I am referring to the same quality that made the iPad and other touch screen tablets so popular. The iPad, for example, does not need to come with an instruction manual for you to figure out how to use it. The same thing is happening with computer aided designs (CADs) for 3-D printers.

Superstar entrepreneur Elon Musk recently came out with a video that shows such new 3-D printing design software. It was used to design SpaceX’s Merlin Rocket Engine.

Check it out by clicking on the video below.

During Musk’s demonstration, he says:

“I believe we’re on a major breakthrough in design and manufacturing in being able to take the concept of something from your mind, translate that to a 3-D object really intuitively on the computer, and then take that virtual 3-D object and be able to make it real just by printing it. It’s going to revolutionize design and manufacturing in the 21st century”

Our thoughts exactly.

In addition to hands-free intuitive design platforms, there is also an explosion of software coming online that makes 3-D scanning and faxing easy.

Don’t want to design your own product? No problem. Just take a picture of an object with your smartphone, upload it onto your computer, and make “edits” to something that already exists.

This 3-D copying reduces the learning curve and time it takes to design your own products.

At this rate, you will eventually be able to take a picture of something on your phone, and immediately print it to a remote location — hence the advent of 3-D faxing.

How intellectual property will survive with that kind of technology around is a discussion for another issue… but one thing is for sure…

Intuitive software destroys another barrier to widespread 3-D printing adoption: the prevention of user-ease.

Storm No. 3: The JOBS Act — private-equity crowdfunding gone wild

If you have been reading this letter long enough, you know our views about 3-D printing technology’s impact on the greater economy. We tend to agree with Wired’s former editor-in-chief and our friend Chris Anderson.

Chris believes 3-D printing will democratize manufacturing the same way that PCs democratized publishing (as publishers, we know what he’s talking about).

In the old days, the means of production used to be limited to the elite: the Carnegies, Rockefellers and J.P. Morgans of the world.

As Karl Marx said, “The class which has the means of production at its disposal has control…”

Marx was right. Inventors went broke making a prototype and waiting on pending patents, and after all that, they needed a factory. They couldn’t mass-produce in their own workshop, so they had to license their inventions to a manufacturer. That was not just difficult, it also forced them to lose control of the inventions.

Now, with the rise of private-equity crowdfunding, any inventor can become an entrepreneur.

Why?

Because that power, the means of production, is no longer limited to a certain class. It is now available to anyone with a laptop and a 3-D printer.

Already, crowdfunding sites have exploded with ideas for the 3-D printing industry.

The JOBs Act, expected to go into effect in the coming months, will help destroy a third barrier to widespread 3-D printing adoption: the funding barrier.

In sum, the perfect storm for 3-D printing investors destroys three barriers: the cost (quality, and time) barrier, the user-ease barrier and the funding barrier.

The first of these barriers will be destroyed in February 2014. The second has already crumbled, and will stay so for as long as the industry is around. And the third… well, in the government’s hands, it’s not as reliable. But the third barrier should be broken sometime in the coming months.

There has never been a better time to be a 3-D printing investor. We will keep you updated with forecasts of “the perfect storm” in the coming months as these events unfold.

Best,

Josh Grasmick
for The Daily Reckoning

P.S. If you want specific advice on exactly how to make money from this coming revolution, check out The Daily Reckoning email edition. Every single day, subscribers are given the opportunity to discover real actionable plays, many of which are designed specifically to capitalize on the tech sector. You owe it to yourself to be one of them. Sign up for free, right here.

You May Also Like:


Richard’s $2 Billion Dollar (Severed) Hand

Peter Coyne

Richard Van As, a South African carpenter, lost four of his fingers to a circular saw. But rather than purchase an artificial limb, he decided to take matters into his own hands (no pun intended). Find out exactly what he did, and how you can profit from his innovative solution, right here...

Josh Grasmick

Josh Grasmick is managing editor of Tomorrow in Review and associate editor of Technology Profits Confidential and Breakthrough Technology Alert. After graduating from Washington College with a degree in English, the self-described autodidact was interviewed by Time magazine for his novel entrepreneurship and worldwide eco-adventures. His experience with those in the fields of science, medicine and technology puts readers ahead of the curve and on top of the market.

  • Battlespeed

    Circuits can be printed. Some of the parts, case etc. can be printed. Just a few more steps in the evolution of this technology and all will be possible. If we can print living body parts (and we can), a cell phone shouldn’t prove to be too problematic, do ya think?.

  • http://www.takeshiyashima.com/ Takeshi Yashima

    You just talked about 3D printing may start as an entry point to the creative industries, and gradually expand the larger market space.

Recent Articles

From Creditopia to Utopia

Richard Duncan

Our friend Richard Duncan believes the U.S. economy requires credit growth to survive. Here, you’ll see what he thinks will happen if the U.S. doesn’t continue expanding credit. You’ll also find exclusive footage we shot in the Daily Reckoning’s studio explaining how the U.S. could lose it’s global dominance… and how programs like Social Security or Medicare could go bust...


Video
Why Democracy Won’t Survive the New Depression

Richard Duncan

The hum of the printing presses and the steady drip of cheap credit over the past five years made it easy to believe the U.S. economy was in a true recovery. But what happens when the excess liquidity begins to dry up?


Don’t Blame Obama (He Has No Power)

Chris Campbell

The Americans who voted for Obama were expecting some big changes. But, six years later, the government he acquired has only spied harder, the drones have flown lower, and the weapons have gotten bigger. But don’t blame Obama. Read on…


Your Personal Gold Standard

James Rickards

All paper currency has a shelf life. It could be 5 years or 500 years, but at some point, the value of any paper currency eventually reaches zero. That's why, for centuries, people have turned to one shiny metal to safeguard their personal store of wealth. And, as Jim Rickards explains, you still have that option. Read on...


October Plays Another Dirty Trick – Here’s What You Do Now

Greg Guenthner

Bad things have a funny way of happening in October. Remember October 1929? It raised the curtain on the Great Depression. Or maybe you recall the infamous Black Monday crash in 1987. The Dow tumbled 22%— the largest single day loss ever. Guess what? That was in October, too. The 19th to be exact. Notice a trend here? Fast forward to this October... You know what happened this month. And if all that wild market action kneeds you in the gut, here’s what you should do now. Greg Guenthner explains…