Back in November 2006, I speculated as to the type of businesses which might emerge using a hybrid of mass customization, crowdsourcing, micro manufacturing and online factory business models. One such hybrid has emerged recently in New Zealand. Ponoko describes itself as the world’s first personal manufacturing platform where anyone can click to make, buy and sell digital products.
Ponoko is the brainchild of software entrepreneurs Dave ten Have and Derek Elley. The business was founded on ‘the disappointing experience people face when making (individualized) products’, citing complexity and high financial and environmental costs.
Encouraged by the rise of what they call the Internet connected ‘creative-class’, along with smarter, faster, smaller and cheaper digital manufacturing hardware (laser cutters, CNC routers and 3D printers that connect to your everyday PC), they formed Ponoko, to make real the idea of mass-individualized products created by the Web community and made on a globally distributed network of manufacturing hardware, controlled from any PC.
Users create product designs which they upload to the Ponoko site, and select the materials to be used in manufacturing. Ponoko then makes and delivers the product, or the product parts. This making process can be used to perfect the design.
The next step is to make the final design available for sale through Ponoko, by posting it in the Ponoko showroom for people to view and buy. Ponoko can make the product and deliver it to the customer or, alternatively, deliver the parts to the user for final assembly and delivery to the customer. Ponoko handles the payments between customers and the user whose design is purchased.
The other possibility is that customers could buy a design and make it themselves, using desktop manufacturing systems (laser cutters, CNC routers and 3D printers). While 3D printing systems are currently very expensive and impractical for home use, a number of separate projects are currently underway on 3D printers that would be affordable for home users.
Ponoko’s founders take the view that today’s product making and distribution model is financially and environmentally unsustainable. It is also under pressure to digitize like the music and video industries. The hold the view that because today’s 100-year old product making and distribution system is so ingrained into our every day lives and delivers so much benefit, problems are not so obvious. However, they make a number of points in relation to industrialised manufacturing:
1) Making and delivering (individualized) products is a time consuming, complex and expensive process. This pain does not fit well in a world that increasingly demands instant satisfaction from mass personalized and customized products at low cost.
2) Product making and distribution is cost prohibitive for new entrants without relatively deep financial reserves. This is stifling mass creativity of real products and the progress of humanity on unimaginable fronts.
3) Low cost mass production and global distribution relies upon using lots of cheap energy and labour. But these two resources are running out.
4) Product making and distribution is a major contributor to the global warming problem (according to the WRI, perhaps 20% of the problem). Being environmentally unsustainable, the increasing ‘carbon currency’ costs also make the current model financially unsustainable.
5) Finding individualized products is very difficult and buying such products is a time consuming, relatively complex and expensive burden.
Many of these are very valid points. For existing businesses that use mass customization model, there is already a saving of working capital in not carrying finished goods inventory. However, working capital must continue to be used for raw materials or components.
Ponoko proposes to eventually use a business model where product design data is sold digitally, and downloaded by customers for manufacture at home. If a business (or individual) can move to a situation where it can sell designs as data, it immediately becomes a seller of digital information rather than a manufacturer. All of the expenses related to manufacturing can be eliminated completely, as the company moves towards a purely digital trading model. Ponoko is attempting to position itself as a broker that joins digital design vendors with customers who will become ‘end-manufacturers’ as well as ‘end-users’.
However, it does not automatically follow that a distributed model will provide large reductions in carbon emissions. The energy expended in moving finished goods around the world might simply be replaced by energy expended in distributing raw materials more widely in a distributed manufacturing model. However, this does not take away from the potential of the Ponoko business model to actually bring about the ‘post-industrial revolution’.
A distributed model significantly lowers the barriers to entry for new product creators, and reduces the financial risk. With Ponoko, creators can ship digital product designs with the click of a mouse, rather than physical products requiring costly handling and delivery. And because product designs can be sold to a large global audience from day one, pay back periods can be shortened.
In addition, Ponoko’s proposed distributed manufacturing model means that the marginal cost of selling each additional example of a design is practically zero. (Once the design is completed and on the market, it costs almost nothing extra to the creator to sell one extra copy. There is no requirement to use up materials or components, only the need to transmit the design data to each new customer.)
Because no physical product exists until purchase, product design collaboration makes it possible for everyone to co-create and personalize ‘almost anything’ they need and want. Ponoko says that, as adoption increases, prices for their design-to-order and made-to-order commodity type products will become unrecognisably low.
Ponoko is currently in the beta testing phase. The first manufactured product made by Ponoko from a user’s design was recently unveiled on the Ponoko blog.
While Ponoko is positioning itself as a broker of digital designs in the longer term, if it is successful in the medium term, it implies that significant investment in manufacturing capacity will be required by the company to fulfill orders for finished goods placed through the site. Ironically, if Ponoko is to be successful it may need to become a big manufacturer before it can become the ‘iTunes of design’.