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.
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.
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.
for The Daily Reckoning
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Once or twice in every generation, a new invention will change the trajectory of entire industries – the assembly line during the industrial revolution, for example, or the Internet in the ‘90s. Well, if Wayne Mulligan is correct, the next great technological innovation is already here. And savvy investors are lining up to get in on the action. Read on...
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.
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?.
You just talked about 3D printing may start as an entry point to the creative industries, and gradually expand the larger market space.
Look, we’re not talking about cheap value plays here. Investors have paid a huge premium for these social media companies. They’re demanding serious growth these firms just haven’t been able to offer. And that, my friend, is a recipe for rapidly falling stock prices.
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