Rapid Prototyping Equipment Financing
The Limits Of Forecasting:
The Best You Can Do Is Not Be Wrong Too Often
This is a good point for us to tell you about some mistakes we've made. You might learn from our errors. You might benefit from being reminded that you can make mistakes, too.
During the past few years there has been a big move across the RP industry to develop low end machines that can do some (and the manufacturers wish all) of the things a high end platform can do. As it turns out, some of the smaller, less costly systems are absolutely terrific, at least when they are brand new. When these small but very capable machines started gaining market share, we worried that they would clobber the residual values of full size machines. We reviewed the residual value risks in leases we were writing with this possibility in mind.
The result was that our leases, which are the most widely used in the industry, became a bit more costly. In some cases, this persuaded our prospective customers to buy rather than lease RP systems. So our prediction made it harder for us to do as much business as we wanted to, or to take value risks that we would be willing to take under other circumstances.
It turns out, at least so far, that this was a mistake.
The new small RP systems have, in general, required more maintenance than anyone expected. The cost of that maintenance has become a lot higher, relative to the cost and capacity of the small system, than we had reckoned. The result is that large RP systems have retained more appeal than we once thought. And small systems are hard to remarket.
The lesson for all of us, but particularly you if you are thinking of getting a brand new type of RP system, is that while you absolutely have to try and guess what the future value of that system is likely to be, it's pretty easy to be wrong.
The only thing you can be sure of is that innovation in the RP field creates uncertainty. In the long run, innovation will enable you to get better equipment at lower prices. But in the short run, the advent of new platforms will produce economic effects that can add to the cost of owning or leasing any RP platform.
It's a safe bet that technology will always produce surprises. It's too bad you can't place that bet.
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Cincinnati, Ohio 45202
Phone: (513) 333 0221
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