A recent article about openness in consumer product labeling has got us thinking about control points and new technology. Regulators are apparently looking at how inkjet cartridge OEMs label their product. Seems consumers can’t easily figure out which cartridges are cost effective, and what the long term cost of ownership of a particular printer and its proprietary supplies might be. There’s something like this going on in 3d printing, though without the same regulatory interest at the moment.
There’s an aphorism I have encountered in technology procurement: “never swallow a control point”. Avoid depending on a single source with proprietary claims. Buyers of new technology want to have options, backup plans, and competition in the marketplace. Competition does good things. Competition draws out the strengths and weaknesses of functionally similar products; produces new choices that may better meet a buyer’s needs; provides greater flexibility in sourcing orders; and allows a customer to reward or penalize a supplier for its behaviors by staying loyal or changing sources. What’s not always pointed out is that when there’s choice, technology buyers generally want to go with the strongest choice. They want their choice to prosper because they want that supplier, like a great restaurant, to be there for them in the future. They are even willing to pay more to make that happen, so long as it is their choice to do so.
This gets to the development involving printer ink. Inkjet printer OEMs use a business model we can call a “razor and blade” approach: sell the printer cheap, make the ink specific to the printer, and make big profit over time selling ink. This is the “embedded proprietary consumable” model. The text and workbooks, the printer and ink, and in 3d printing, the printer and the OEM powders and binders. It’s not a problem when the consumables are open. Then we can source any supplier willing to provide the consumables. It’s much more a problem when the consumable is proprietary. It takes a deft OEM with proprietary positions to serve rather than swyve its customers.
The challenges start when that proprietary printer becomes a control point aligned against practice. This cuts two ways. First, the control point may be used to exclude us from local practice that’s within the claims of a patent but outside the specs of the product. A US patent has this property, as it gives its owner the ability to exclude all practice under any claim of the patent, even if the product the owner puts on the market doesn’t provide all the functions covered by the claims of the patent.
Excluding local practice does not build customer loyalty. It does the opposite. It creates incentives for customers to find other sources for the next generation of 3d printer. It creates incentives for customers not to report innovative practice back through the sales and support chain to the company for fear of infringement or voiding warranty or losing company support for maintenance and repairs. It creates the perception that the company does not support best, creative practice, but rather works to suppress any practice that it has not anticipated in the product feature list. Poof on that.
Second, a proprietary OEM may establish a control point by requiring materials used in its 3d printer to be purchased from the OEM. This control point means that until an OEM gets around to it, a lot of print materials are generally not available, whether at a lower price, easier to order, more consistent in quality, or with alternative composition. Of course, if the OEM only provides premium materials, for which it has the best margin, then the product exists primarily to serve the company, and only the wealthiest, least exploratory of customers.
While control points look wonderful in MBA theory on maximizing income, they do not necessarily serve a company’s long-term outlook for customer loyalty and staying on the innovation curve. Instead, control points build into premium pricing a mass desire to find alternative technology at the earliest opportunity, creating a classic case of the “innovator’s dilemma” in selling up-market until only the rich and the laggards can afford to stay with you.
With our work, we have identified new materials that work quite well in conventional powder/binder ink-jet based 3d printers. These materials may be obtained from a wide range of sources, with no controls on them, for 2% or less of the cost of OEM-supplied materials. The OEM materials are designed to be great stuff. But for exploration of design, for rapid production in quantity, and other common requirements, it makes no sense that warranty service is voided simply by using common, open materials rather than the proprietary OEM materials at 50 times the cost.
Similarly, we see ways to modify 3d printers to accommodate new print modalities. Rather than working in isolation from manufacturers, we would just as soon be inviting them into our labs, demonstrating what we are doing, and expecting to collaborate on developing new technology that extends the range of the equipment. We have no problem with a company quality control step, or even an emphasis on compatibility with established conventions. And certainly we are good with the understanding the new stuff may have to be supported by the community and not by the OEM. But we’d like to be able to plug in, swap out, and extend the functions of the printer and the materials we use, free of company control points–and with as much company engagement as possible.
What brings us back to do business with companies in the 3d print business is not their MBAs who have figured out optimal price functions, and lawyers aiming to prevent customers from using anything other than supplied product within spec. Rather, we come back for continued engagement that supports the growth of the practice and identifies new roles, products, and services where the company can legitimately earn its keep. That, we think, is a great bargain. We want our technology OEMs to succeed. It’s in our procurement genes. We expect that same commitment from our OEMs. Now if only we could get more of the OEM community to see it this way.