Kinect to a Manufacturing Revolution

Microsoft (NAS: MSFT) Research has come out with so many fascinating innovations in recent months that it's hard to believe how little recognition it gets. Blogs were abuzz when Google (NAS: GOOG) closed down its Labs earlier this fall, but Microsoft consistently comes out with ideas that are both functional and forward-thinking to virtually no fanfare. Redmond can't get any respect -- but the media's blind eye could be your goldmine, as Microsoft's got another great idea up its sleeve.

The future is 3-D
We've heard plenty of things about the Kinect's amazing popularity and its futuristic possibilities, but KinectFusion takes the device to another level. It's a research project that turns the Xbox 360 accessory into a real-time 3-D scanner. The precision and fidelity of the Kinect creates highly accurate 3-D models at a fraction of the cost of existing 3-D scanners, which cost thousands and are typically reserved for professional work. It's like the leap made from the first digital cameras to those in use today, a massive improvement available at a fraction of the cost.

This isn't a revolution by itself, but the connection is obvious: 3-D printing has been gaining ground, with 3-D Systems (NYS: DDD) and Stratasys (NAS: SSYS) leading the charge. Fool contributor Brian Stoffel offers some compelling figures: 20% of current 3-D printing output is finished products (rather than prototyping), and that number should only rise as the technology improves. 3-D Systems already has a home model available for $1,300, and Stratasys has partnered with Hewlett-Packard (NYS: HPQ) to roll out a competing device. That's still too high for most home users, and keeps it low-end 3-D printing in the hands of a few intense hobbyists and well-paid engineers who really like engineering.

HP controls 42% of the boring old 2-D printer market, and that brought the company almost $26 billion in revenue last year. Putting a 3-D printer in every home could make that seem like peanuts. Just think about the potential cost of cartridges that print materials rather than just colors on a piece of paper. More use, more replacement, more revenues. It's terrible for manufacturers, though, because it keeps the overall cost of use high.

The tipping point
Simply scanning and replicating objects like on Star Trek isn't going to be the killer KinectFusion app. It's just as -- if not more -- likely that the KinectFusion could become indispensible to a new generation of amateur designers. Combining high-fidelity raw images with sophisticated 3-D modeling software such as Autodesk's (NAS: ADSK) 3ds Max and Maya would empower artistic and technically gifted people to take existing objects and tweak them to perfection. A development process of months could be shortened to days, and final designs could be sold as files for users to download and print in their homes. You won't have to keep the designs you download as-is -- just use the KinectFusion to scan any crazy old thing you want to graft onto your designs, and with a few mouse clicks you can come up with a printable light-bulb-covered chair, or a TV growing wings. Who knows? When you print your own products, the only limit is your imagination . . . and how much "ink" you have left.

Once Stratasys and HP bring a consumer model to market, it can only increase the pressure on 3-D Systems to lower its prices. Like most modern printers, you can probably expect much of the long-term profit to come from printing supplies. Combine printer pricing pressure with the KinectFusion's inexpensive scanner, and 3-D printing could make rapid strides toward mass adoption.

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At the time thisarticle was published Fool contributorAlex Planesholds no financial stake in any company mentioned here. The Motley Fool owns shares of Microsoft, Autodesk, 3-D Systems, and Google.Motley Fool newsletter serviceshave recommended buying shares of Microsoft, Google, and Stratasys and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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