By Clay Dillow
September 3, 2013

FORTUNE — If there was any doubt Wall Street is warming up to 3-D printing it was extinguished last week when Citi analyst Kenneth Wong initiated coverage of 3-D printer manufacturers Stratasys (SSYS) and 3D Systems (DDD), at the same time expressing in a client note that he believes the market for 3-D printing equipment and services will triple by 2018. The market “is on the cusp of seeing much broader adoption across more upstream production applications and the consumer end market,” Wong wrote. Shares of Stratasys and 3-D Systems — as well as others in the space — spiked.

“Increased utilization of existing systems as customers start to extend use case beyond small batch digital manufacturing” is behind this growth, Wong says. Or, more plainly, 3-D printers are becoming less expensive, easier to use, and applicable to more — and more complex — kinds of objects and designs. Factor in a confluence of other catalysts, like the expiration of key patents that currently discourage competition in the space, and 3-D printing is poised to explode in the next few years.

Wong isn’t the first analyst to make this observation, though for whatever reason his decidedly bullish client note found traction in the popular press, helping to buoy 3-D printing stocks for an afternoon. But has 3-D printing really reached its tipping point? To hear the hype machine tell it, the world is hurtling headlong into a 3-D printing revolution. But while cheaper printers, expiring patents, and a wider range of applications will certainly help drive the market — and perhaps even triple the value of 3-D printing’s nascent marketplace in the near term — a desktop manufacturing revolution this is not. Here are five reasons why.

1. Patents will expire, but they’re not what’s holding 3-D printing back

The patents set to expire in 2014 concern laser sintering, one of the oldest and lowest-cost 3-D printing technologies on the market. Laser sintering can produce high-resolution objects, good enough to be finished products in some cases. But though the cost of printing is low, the cost of the actual printers is quite high — in the tens of thousands of dollars for industrial grade machines. A lack of competition caused by intellectual property protections keeps that price high, the theory goes, and when those patents expire next year the price of these machines will drop, increasing access to laser sintering technology and lowering the overall cost of manufacturing by 3-D printer.

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However, the idea that expiring patents will fuel an explosion in 3-D printing suffers from a key flaw: Patents aren’t really what’s holding the 3-D printing market back.

“The reason 3-D printing isn’t bigger than it is today is largely not because of intellectual property issues or who owns what patents,” says Duncan Stewart, director of technology, media, and telecommunications research at Deloitte Canada. “It’s the fact that for most of the things that we need in the world today, 3-D printers are too slow, too expensive, or that — because of the limitations in the kinds of materials they can use — they cannot easily make the things that you want to. The single biggest factor keeping 3-D printing smaller than it might otherwise be up until now has been the utility of 3-D printers, not the patents.”

The expiration of patents addresses one of those issues — expense — but it won’t solve the more fundamental problem of functionality, Stewart says. “When the patents come off, that will help, but it doesn’t suddenly transform the market.”

2. Cheaper printers could have a cooling effect on the market

There’s no question that the technology underlying 3-D printing has come a long way over the last half decade, allowing printers in the sub-$10,000 price range to churn out high-quality, high-resolution objects in a range of materials. But at the lower end of the price spectrum there could be a problem, says Smartech Markets Publishing President and CEO Lawrence Gasman. The emergence of sub-$1,000 printers — and even sub-$500 printers — aimed at the consumer market has placed 3-D printing within the grasp of just about anyone. The problem, Gasman says, is that the lower-end printers aren’t very good.

“There’s beginning to be a low end to it, something like a $400 printer,” Gasman says. “And one concern we have for this space, and it’s shared across the industry, if you set the expectation high for what these things can do and someone buys one for $350 and finds that it’s next to useless, that will put them off the whole concept.”

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You can do amazing things with a printer that costs about two-and-a-half-grand, Gasman says — a relatively inexpensive machine as far as 3-D printers go, but the kind of expense that warrants a discussion in most households. And will consumers want a $350 machine dedicated to making trinkets? Until quality comes downhill along with cost, widespread adoption by consumers could be muted.

3. Intellectual property could still cause problems for the industry

The field of 3-D printing is broad enough that the industry doesn’t have to worry too much about regulation at this point, Gasman says. Any regulation that might be passed would likely target an application (like printing firearms, for instance) rather than the technology itself. But that doesn’t mean litigation and other legal issues might not slow 3-D printing’s acceleration. There’s simply too much money at stake.

Industries worth tens and even hundreds of billions of dollars could feel threatened by 3-D printing and the ways in which it might circumvent their intellectual property protections. And while the legal waters get murky here, that might not stop companies in, say, the automotive parts business (valued at something like $140 billion annually) from moving to protect their interests via legal channels, tying up some 3-D printing technologies or applications indefinitely. The issues run deeper than mere intellectual property theft. Warranties, licensing of designs, liability (“what if my 3-D printed part breaks and destroys my $10 million dollar machine?” Stewart says) — from a legal standpoint there hasn’t even been a first, much less final, word on this.

“I have talked to lawyers about this, and their eyes spin in their heads like the dials on a slot machine,” Stewart says. “This is an enormous issue. It is worth tens of billions, hundreds of billions of dollars, and nobody knows how it’s going to work out, how it’s going to be enforced, or even what the law is.”

4. 3-D printing is not the savior of manufacturing

Or the “factory for the home” — at least not in the next five years. While 3-D printing technology can make product designers and manufacturers more efficient, it’s remarkably slow. It’s great for mass customization, Gasman says, but wholly implausible for mass production. Nor is it capable of producing the kinds of things that now rule the average person’s life.

“In every kind of way a 3-D printer could’ve gotten better in the last three years, they have improved,” Stewart says. But they still can’t make silicon chips, and they probably never will be able to. People spend roughly $5,000 per year on chips, largely without realizing it, and the inability to produce electronics means the concept of the “factory for the home” will remain limited in scope.

5. Even if the 3-D printing market triples, it’s still a really small market

There’s no reason not to be optimistic about the growth potential in the 3-D printing space, Stewart says. Both he and Smartech’s Gasman believe Wong’s assessment is correct — the market, currently valued at around $2 billion, will be worth roughly $6 billion by 2018. The companies in the space are poised to grow, and the customer base will likely continue its rapid expansion. But a $6 billion industry is still just a $6 billion industry when compared to something like automotive parts or light bulbs or airliners, Stewart says. One reason 3-D printing is able to grow so fast is because it’s so small.

“When you look at the 3-D industry tripling by 2018, that’s enormous growth,” he says. “But it remains a drop in the bucket compared to the global industry of making things.”

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