"Perspectives", a monthly column authored by
Todd Grimm and Terry Wohlers
for "Time-Compression Technologies."
This column was published in the
March 2001 issue. For more great articles,
visit the "Time-Compression Technologies'"
Web site at www.timecompress.com.
Here Lies - Obituaries of RP Manufacturers
Todd Grimm and Terry Wohlers
"Those who do not remember the past are condemned to repeat it." -George Santayana
In the United States, business failures are an everyday occurrence. Only 8% to 10% of all businesses make it past their third year. But, when a business fails in a small, tight-knit industry, the sound of the door closing for the final time is deafening. The final slam sends a shockwave throughout the entire community.
Rapid prototyping is such an industry. When companies have failed, the impact was significant. The shockwave was powerful. Yet, above the noise and confusion, one question was heard loud and clear, "Why?"
Whether it is morbid curiosity or a desire to learn from others' failures, this question is always raised.
In the last Perspectives, more failures in the coming years were predicted. It does not take a crystal ball to see that the obstacles and risks that terminated those in the past are still present. Nor does it take high intellect to predict that others will fail.
To satisfy both the curiosity and the desire to avoid this fate, the factors that led to the demise of rapid prototyping manufactures are discussed, from our Perspective.
Quadrax (1990 - 1992)
With its short existence in the distant past, few are aware that the second company to offer a stereolithography process in the US was Quadrax. After selling just two systems, the company closed its doors.
What happened to Quadrax? The answer is simple...patent infringement and litigation. Patent problems are a common barrier to the creation and success of a new player in the rapid prototyping market.
In 1992, 3D Systems was successful in protecting its patents, and Quadrax was forced to cease operations. Ultimately, 3D Systems gained the rights to several of the company's patents, one of which resulted in the release of the Zephyr recoating system used in 3D's SLAs.
Ballistic Particle Manufacturing (BPM) (1988 - 1997)
With a patent issued in 1987, BPM began operations in 1988 as Perception Systems. The Personal Modeler promised to be one of the first in the market of concept modelers.
Selling time-to-market reduction, BPM did not practice what it preached. It took eight long years for BPM to place systems in service. With intense competitive and investor pressures, the product was prematurely released in 1996.
Eight years and millions of dollars in product development were not enough to make the technology ready for commercial application. The performance and reliability of the Personal Modeler led many of the original 16 sites to return their systems. With news of the problems, the industry viewed the company negatively and turned its back on the technology.
Even with a reliable product, there is doubt that BPM would have been successful. When compared to the offerings of Z Corp., Stratasys and 3D Systems, the Personal Modeler lacked both speed and satisfactory material properties. With no clear advantage over the established technologies, the Personal Modeler would have faltered.
On the surface, weak technology and poor reliability appear to be the two factors that caused BPM's failure. But, these issues where only the result of the real problem. Lacking strength in its management, BPM did not have a sound direction, strategy or plan.
Cubital (1991 - 2000 *)
Cubital entered the rapid prototyping market with the distinct advantage of delivering the highest throughput of any system. The process also offered a benefit over its chief competitor, 3D Systems. To overcome the challenges of support structures, required in stereolithography, and their removal, the process offered an ingenious wax support material that surrounded the prototypes.
In the beginning, interest was high. Faster part production and lower unit cost were the goals of every active and prospective user of rapid prototyping.
The differentiating factors that promised superiority actually led to the company's decline. To achieve the high throughput and to automate the addition of support material, Cubital's technology became overly complex. Loaded with many mechanical operations, the systems required frequent repair and experienced many lost hours in downtime
The technology was not only unreliable but also expensive to operate. One customer calculated operational expenses at $700.00 per vertical inch for consumables only. Due to contamination during the build process, the system consumed large quantities of expensive resin. Filters, toner, eraser rods, ion guns and a $125,000 maintenance contract also contributed to the high operational expense.
Of the 33 systems sold over the past nine years, few remain in operation.
*Cubital no longer manufacturers its RP machines, although the company still exists.
Helisys (1991 - 2000)
A staple at the early rapid prototyping shows, Helisys consistently drew large, interested crowds to its LOM technology. Through the years, Helisys had placed more than 375 systems into service. Yet, in November 2000, the company folded.
Helisys's challenges came from two different directions. The first was technological and the second marketing.
Like Cubital and BPM, Helisys had some reliability and maintenance issues in the earlier years. Although they worked to overcome the problems and did so successfully, the reputation stuck. You can still hear people state, "wasn't that the company who's machines caught fire?" In the small world of rapid prototyping, reputations are quickly created and difficult to shed.
The business mistake that Helisys failed to see was that they did not heed the tenet to find a niche and conquer it. The LOM process was best suited for thick walled applications, like patterns for sand or investment casting. But, the market was demanding functional prototypes and prototypes for injection molded products. Helisys was quick to proclaim "me too."
Trying to be everything to everyone caused Helisys to lose its focus on the company's core competency. It also caused them to sell systems into unsuitable environments. This, in turn, created dissatisfied customers-another reputation that was hard to shed.
In the later years, Helisys regrouped and retrenched to return to the application that had created earlier success. But, it was too late.
NTT Data/CMET (1988 - 2000)
As 3D Systems was introducing rapid prototyping in the US, NTT Data/CMET was doing the same in Japan. Both offered stereolithography technology. But while 3D systems sold 32 units that year, NTT Data/CMET only sold two. This trend continued through 2000.
Being first to market can facilitate success and market share. In 3D Systems' case, this was true. NTT Data/CMET, on the other hand, illustrated that being first to market does not guarantee success.
Although the company sold 50% more machines than its closest Japanese competitor, the total, over twelve years, was only 166. NTT Data/CMET was first to market, but the Japanese market was small and resistant to development. The key barrier to market growth was the lack of 3D CAD usage and adoption. Without the 3D data, there was no fuel to drive the operations of a rapid prototyping system.
The demise of NTT Data/CMET was overdue, and if it were a US company, it would have happened years sooner. In Japan, failure is not an option. Throwing in the towel has tremendous negative implications. To save face, NTT Data/CMET continued to produce and sell machines even though the financial picture remained bleak.
In 2000, NTT Data/CMET could no longer continue. So, the only respectable course of action for a Japanese organization was to be acquired by another Japanese company, in this case, Teijin Seiki.
"The only real mistake is the one from which we learn nothing." -John Powell
It is ironic that these companies fell prey to the very issues that they promoted. Rapid prototyping exists to decrease time-to-market, increase customer satisfaction, improve product quality and reduce product costs. Not listening to their own message, the deceased ignored the issues that they promoted as being critical to success.
Learn from the mistakes of these companies to avoid the same fate. The rules of success are the same for RP systems as they are for any product.
Be prepared for the next shockwave, because it will happen. What companies will suffer at the hands of an unforgiving master? The names may not be known, but the circumstances are clear, and the outcome is obvious.
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