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3-D CAD software and "additive manufacturing" is helping jewelry retailers offer greater personalization.

Today’s $260 billion jewelry market is experiencing transformation with the increased use of Computer-Aided Design and Additive Manufacturing, which hands consumers the reins for creative control and merges technology with personalization.

Computer-Aided Design, or 3-D design software, and Additive Manufacturing, the 3-D printing process, were introduced in the Eighties, with the earliest adopters using rudimentary software to print raw materials for the sake of experimentation. CAD and 3-D printing technology make it possible to create more complex jewelry designs, offer opportunities for customization and speed up otherwise lengthy production processes by improving modeling capabilities. Together, CAD and 3-D printing can produce an array of finished products with a wide range of materials, from photopolymers, which create mock-ups of a piece of jewelry, to the final product in directly printed precious metals.

Dassault Systèmes, a $3 billion European software company that specializes in 3-D design, engineering, 3-D CAD, modeling, simulation, data management and process management, is one of the largest vendors in the market. The company’s SolidWorks unit offers a product personalization platform called SolidWorks Make, whose design efforts are led by Igal Kaptsan, the vice president of product management, that allows customers to create one-of-a-kind jewelry online with a retailers’ own materials. The platform gives design control to the consumer while upholding the brand’s aesthetic and identity.

SolidWorks Make is a cloud-based, Software-as-a-Service, white-label platform that functions as a widget embedded within the web sites of e-commerce retailers that enables consumers to personalize products without requiring any background in CAD or engineering. Interactive clicks display a what-you-see-is-what-you-get real-time, 3-D rendering of customized jewelry. The software’s “design editor,” an online tool that guides the personalization process, is invisible to the customer and allows the retailer to exclusively incorporate their own identifying characteristics — namely colors, gems, materials, settings, shapes, or sizes into the system. The platform’s on-demand manufacturing model reduces traditional manufacturing and supply chain management costs while bridging the gap between production and point-of-sale. Moreover, because the platform’s on-demand production is based on existing and new digital data, superfluous production and stored inventory costs are diminished.

Once a design is created, the platform exports a data package to the retailers’ 3-D printer of choice. When the data package is received, it prints a tangible 3-D mold of the object layer by layer in materials ranging from wax to steel, a process comparable to building up pieces for a topographic map. After the mold is fully formed, it is used next in the metal casting stage, or if precious metals are printed, is ready for immediate use after a post-process clean. Separately, gemstones are added to complete the design process. The software platform is wholly independent of the 3-D printing process, but the firm partners with companies that offer printing services.

Cecile Raley Designs, a jewelry brand that added the software platform to its e-commerce experience, evangelizes the personalization experience it offers for their customers: “The fastest-growing segment of my business is custom orders. SolidWorks Make allows my customers to take charge of customization and make something they love while simplifying communication and pricing their design options on my end,” said Yvonne Raley, owner of Cecile Raley Designs.

Albeit, for an industry that prides itself on generational skill and production, resistance was strong in the early stages of CAD development. “When CAD was first adopted by members of the jewelry industry, there was quite a bit of stigma associated with the technology and many believed that it detracted from generations of skill acquired at the bench. Much of the jewelry industry was made up of family businesses that still operated with paper ledgers. The industry is slow to change,” said Eve Streicker, a CAD expert and founder of Original Eve Designs.

Operating costs for 3-D printing have sharply declined over the years as technology continues to improve at an accelerated rate. Today, advanced 3-D printing systems are available at affordable prices: At-home printers can be purchased for under $2,000 and professional jewelry industry printers equipped to produce “castable” resin begin at approximately $5,000. Designs created by SolidWorks Make include a small premium built into the price of each personalized design, but generally, costs for 3-D printing vary significantly based on brand, printer type, location and most critically, volume, which dramatically impacts 3-D printing prices.

Awareness of 3-D printing among relevant industries, including architecture, construction, engineering and manufacturing has increased from 66 percent in 2014 and 74 percent in 2015 to 79 percent in 2016, demonstrating intrigue and momentum for the technology, according to researchers at Business Advantage.

“Today, many in the jewelry industry view CAD [and 3-D printing] as a tool — a means to a faster and more efficient end — however, I think we will see as mastery of the technology improves, finesse with the technology will emerge,” Streicker said.

“For generations, craftsmen have manipulated metal at the bench, creating beautiful works with incredible, intricate skill. I think it is only a matter of time before the artistry that can be honed with CAD is realized and masters of the medium emerge,” she added.

EUROPE will never create a hub of tech firms and investors to rival Silicon Valley, many experts on entrepreneurship concur. Its markets are still fragmented along national lines, flows of capital into the region are limited and because of lingering, conservative attitudes to risk, few startups grow to rival American champions. “Europe is toxic”, argues Oussama Ammar, an outspoken founder of an incubator in Paris. “Life that should happen, does not happen”, he says.

But some digital life does flourish, spread among cities rather than fixing in one spot. Fintech firms cluster in London. Gamers and music-sharing sites do well in the Nordic countries. Berlin has a crop of companies that go beyond the kind of me-too consumer sites incubated by Rocket Internet, a notorious startup factory: new companies with expertise in the “internet of things”, for example. Milan, with strong medical universities, has flourishing biotech startups.

The most striking case of fresh growth is in Paris. Mention of France has long elicited sighs from venture capitalists. Its rigid labour laws and hefty taxes on wealth and on stock options have meant that Silicon Valley has more than its fair share of entrepreneurial French immigrants. Efforts by the government to help startups with tax relief for research have mostly taught founders to complete forms rather than win clients, say observers. Genuine local successes—such as BlaBlaCar, a ride-sharing service, or Criteo, which serves targeted ads online—looked like exceptions, not evidence of wider success.

Yet recently, Nicolas Brusson, a co-founder of BlaBlaCar, says he has witnessed an upsurge in entrepreneurial ambition in France. A venture-capital investor says there has been a “huge shift in mindset” among founders of firms: they are now expert not only as inventors but as designers of business plans. Henning Piezunka at INSEAD, a business school near the capital, says that a “new vibe” and a more global attitude are also evident in the widening use of English.

Venture capital is beginning to gush. Last year France saw 590 rounds of capital raising, more than any country in Europe, according to Dealroom, which watches tech-industry trends. Although slightly more capital went to startups in Britain (€3.2bn) than in France (€2.7bn), the rate of increase in France was dramatic (see chart).

One reason for the French gains is that earlier investments in infrastructure for startups are starting to pay off. Established business figures, such as Mr Ammar and Xavier Niel, who started Iliad, France’s fourth-largest mobile operator, which owns the brand Free, have set up training facilities and incubator firms that are now producing entrepreneurs. Four years ago Mr Niel (pictured) co-founded 42, a computer-programming school with a capacity of 2,500 students that charges no tuition fees. It trains programmers even from unexpected corners such as the capital’s troubled housing projects, and has opened a sister campus in Fremont, California, near Silicon Valley, encouraging ties.

Mr Niel’s next step, in April, will be to open what he says will be the world’s largest incubator, called Station F, in central Paris. It will have over 3,000 workstations. Last month Facebook’s Sheryl Sandberg said her firm will take spaces in Station F, lauding French talent. She said the country now has “some of the most innovative technology companies in the world”.

The main factor behind all the new activity is a change in graduates’ aspirations. A member of the board of one engineering school near the capital says that there is clearly new entrepreneurial ambition among students, especially those who do an internship with a startup abroad. He estimates that a fifth of graduates from his school now try launching their own firms, a big increase on five years ago.

Graduates are particularly keen on startups in the so-called “deep tech” sector—involving, among other things, artificial intelligence (AI), machine learning and big data. Philippe Botteri of Accel, a venture-capital fund, who oversees investments in Europe, says 80% of his firm’s activity these days is in deep tech, an area in which Europeans, often in possession of specialised and further degrees in engineering and maths, have advantages. France has emerged fastest in the last few years as a top destination for capital, he says, largely because its graduates have particular strength in these fields.

Julien Lemoine, for example, co-founded Algolia, a startup with funds from Accel that provides customised search services using AI. From an office with glass walls in central Paris (and from a sister office that opened in San Francisco in 2015) his firm serves 2,300 paying clients globally—two-thirds of revenues come from America. Algolia will employ 200 people by the end of the year, up from 60-plus now. His staff only speak English. From the start Algolia sought clients globally, while tapping a local pool of recruits. Those hired in France, notes Mr Lemoine, are far more loyal than job-hopping staff in Silicon Valley.

It is a similar story at Shift Technology, a Paris-based firm founded by three maths graduates. It uses AI to detect fraudulent insurance claims on behalf of big insurers. Jeremy Jawish, one of the firm’s co-founders, says Paris is a suitable space to grow simply because it is “the next AI centre”. When he was in university, the dream was to be a banker in London but “now everyone is excited about AI startups”, he says. Cisco and Facebook have both set up AI operations in Paris to attract local talent, he notes.

The old problems have not vanished, of course. Stiff labour laws still make firing permanent staff difficult, a particular headache for young, fragile firms. But here, too, change may be in the air. At least one candidate competing in the upcoming presidential election is well-disposed towards the technology sector. Emmanuel Macron championed digital growth when he was economy minister; this week in London he urged French expats to come home “to innovate”. France might have been slow to get started, but it is catching up fast.

- SNAP will trade on NYSE today

- Original range was $14/$16

- At that price, Snap has a market value of about $20 billion, based on 1.16 billion shares outstanding after the IPO. Based on the number of fully diluted shares -- 1.39 billion, the person said -- the market value is $23.6 billion.

- Morgan Stanley and Goldman Sachs Group Inc. led the offering. Goldman Sachs will be the stabilization agent

- Underwriters: Morgan Stanley, Goldman Sachs, JPMorgan, Deutsche Bank, Barclays, Credit Suisse, Allen & Co

- Biggest IPO since Alibaba

- Demand outpaced the number of shares being offered by a multiple of 10, people familiar with the situation said.

Macro :

- Trump May Sign Order Lifting Federal Coal Leasing Ban: Reuters

- Fed’s Kaplan Says U.S. Economy Strong Enough for Rate Increases

- Fed Beige Book: Business Not Quite As Optimistic As Last Report

- U.S. Individual Investor Bears Rise to Highest Since Oct.: AAII

- Fed’s Brainard Says Rate Hike ‘Will Likely Be Appropriate Soon’

Keep an eye on :

- ABI BB : AB InBev Adj. Ebitda Misses Ests; Raises Cost Savings Target

- ACS SM : ACS Shareholder Iberostar Hoteles Said to Plan Stake Sale

- ADEN VX : Adecco 2016 Revenue, Net Income Rise, Beat Estimates

- AREVA FP : Areva, EDF to Set Up Joint Nuclear Engineering Unit: Les Echos

- BATS LN : Japan Plans to Include E-Cigarettes in Smoking Regulations: NTV

- BGN IM : Banca Generali to Enter FTSE MIB Index on March 20

- CSGN VX : Credit Suisse Starts New Legal Entity for Asset Mgmt Switzerland

- DBK GY : Deutsche Telekom 4Q Adj. Ebitda Miss Estimates; Dividend EU0.6

- DVT FP : Devoteam FY Net Income Climbs 22%; Co. Sees 2017 Organic Growth

- EDF FP : Areva, EDF to Set Up Joint Nuclear Engineering Unit: Les Echos

- ENGI FP : Engie Targets 2017 Net Recurring Income of EU2.4B-EU2.6B

- EVK GY : Evonik 4Q Adj. Ebitda Beats, Targets Maximum Profit of EU2.4b

- FLO FP : Groupe Bertrand, Walter Butler Eyeing Groupe Flo, Figaro Says

- HEN3 GY : Henkel Offers $1.05b to GCP Applied Technologies for Darex Unit

- IRE IM : Iren Orders Below EU1.55 Risk Missing Out, Book Covered: Terms

- DEC FP : JCDecaux Expects ‘Slightly Negative’ 1Q Adj. Organic Rev. Growth

- KGX GY : Kion 2016 Revenue, Adj. Ebit Beat Estimates, Sees FY Increase

- KLED SS : Kungsleden Sets Rights Offer Subscription Price at SEK45/Share

- LHN VX : LafargeHolcim 2016 Adj. Oper. Ebitda in Line, Lafont Steps Down

- LHN VX : LafargeHolcim Says Syria Allegations Won’t Impact Performance

- LUX IM : Luxottica FY Adj Operating Income In Line; Positive 2017 Outlook, Luxottica FY In Line, Guidance Below Market Expectations: RBC

- PWTN SW : Panalpina FY Rev. Misses; Sees 1Q Performance Below Prior Year

- ROG VX : Roche’s Perjeta Meets Goal in Aphinity Breast Cancer Study

- SAL IM : Salini Impregilo-Astaldi Consortium Gets EU397m Contract

- SNAP US : Snap Confirms $17 IPO Price, Above Range

- SRCG VX : Sunrise Has Slight Decline in Earnings, Keeps Dividend Policy

- TEC FP : TechnipFMC Put Volume at Highest Since 2010 on Block Trade

- VOW3 GY : Volkswagen Emissions Defendant Schmidt Gets April Trial Date (1)

- YNAP IM : Yoox Net A Porter FY Adj. Net Income Beats Analyst Ests.

>>> Up

*Acciona Raised to Buy at Deutsche Bank, PT EU84

*A.G. Barr Raised to Hold at SocGen, PT 538p

*Credit Agricole Raised to Equal-Weight at Barclays, PT EU12

*Genus Raised to Buy at Liberum

*Nordex Raised to Hold at Deutsche Bank

*RBS Raised to Buy at Berenberg, PT 275p

*Saipem Raised to Reduce at AlphaValue

*Smurfit Kappa Raised to Buy at Jefferies, PT EU29

>>> Down

*Debenhams Cut to Sell at Berenberg, PT 46p

*Eurotunnel Cut to Sector Perform at RBC, PT EU9

*IAG Cut to Reduce at HSBC, PT GBP4.90

*Nordex Cut to Neutral at Goldman, PT EU13

*Valora Cut to Neutral at Credit Suisse

*VimpelCom Cut to Market Perform at Renaissance Capital

>>> Initiation

*Wilh Wilhelmsen Rated New Buy at ABG Sundal, PT NOK50

We are raising our 2017 year-end S&P 500 target to 2450 (from 2300), driven by two changes: (1) we lower our end-of-year equity risk premium (ERP) assumption to 400bp (from 450bp), and (2) within our five-factor framework, we adjust our fair value model weight lower in favor of our sentiment model. These changes reflect an increasing likelihood that we are entering the typical later stages of a bull market, during which fundamentals typically take a back seat to sentiment and technicals. We think the market still has the potential to move higher as investors capitulate into equities; note that the “Great Rotation” out of fixed income into equities has yet to happen. But as we noted in our Year Ahead, we see a wide range for 2017, and investors are likely better served focusing on the internals of the market rather than on a year-end number. And for longer-term investors, elevated valuations and high leverage today shift the riskreward

balance for the market to more risks than were evident a few years ago.

Typically, in the later stages of a bull market, corporate earnings are cyclically elevated and the multiple that the market assigns to those earnings is often elevated as well. As a result, market prices can become significantly overvalued relative to their intrinsic fair value, and this divergence can last for years. Thus, we would highlight the distinction between our year-end target of 2450 (driven largely by sentiment and technicals) and our estimated intrinsic fair value of 2230. For investors with long time horizons, our long-term (year 2025) target of 3500, which is based solely on valuation, indicates a solid but below-average annual price return of 4-5% (or total return of 6-7%).

The combination of improving investor sentiment, accelerating global growth and hopes for stimulus (i.e. the “Trump Put”) is driving the market to new highs and compressing the ERP faster than we had assumed. The normalized ERP has fallen to post-crisis lows and is less than 100bp from the 30-year average (excluding the Tech Bubble), and seems

to be in the process of undershooting as it typically does at the end of bull markets. Our fair value model currently assumes that any further ERP compression will be offset by rising normalized interest rates, and thus, no further expansion of the normalized PE. 

We would expect the rally in lower quality stocks to fade as we get more clarity / details of potential stimulus and tax reform, where expectations today are quite optimistic relative to the likelihood of delays, friction and more negative offsets than the market is currently pricing in. Meanwhile, economic surprises are close to a five-year high and we

expect S&P 500 earnings growth to decelerate in the second quarter. While we see further room for market sentiment to improve, the market may take some time to digest the recent surge in optimism before heading higher. So while we expect stocks to end the year higher than where they are today, the road could get bumpy as we head into spring and summer months. As such, we see an elevated probability that the market falls below our 2230 fair value estimate before the end of the year.