With its user-friendly design templates, rapid-manufacturing technology, and online marketplace, a company called Ponoko intends to help bring an end to the era of mass production. Instead, it believes, its service opens up the way to mass individualization–the creation of one-of-a-kind products by way of user-driven design and manufacturing.

A visitor to Ponoko’s website can either upload a digital design for a product or select another user’s design, and within five to ten days, the company has manufactured the components of the product and is ready to ship them back. Customers can also design objects without building them, leaving their designs on file for others to use; the website has a “showroom” where customers can browse through a catalogue that lists pictures and prices of designs and products created by other users.

“For a number of years, it has been accepted that users often are the source of innovation,” says Frank Piller, a professor of business management from RWTH Aachen University, in Aachen, Germany, who works with the MIT Smart Customization Group. “Until recently, innovative users required a professional manufacturer to turn their innovations into ‘real’ products. But companies like Ponoko are changing this game.”

“To be fair,” Piller adds, “the offering Ponoko provides has been around for many years in the form of small workshops. But those came at the high cost of placing an order, negotiating a price, and also processing the order. At Ponoko, the system is much more stabilized.”

For most companies, product design and development is a long process of trial and error, involving, among other things, in-house designers, committees, timed product releases, and, ultimately, customer feedback. Until a product sells, or if it doesn’t sell, it takes up costly shelf space in either stores or warehouses.

But by letting individuals dream up, make, and then sell unique products on demand, Ponoko is attempting to eliminate the product-development wing. Ultimately, it hopes to eliminate the need for a centralized manufacturing plant as well, by recruiting a large enough community of digital manufacturers–people scattered around the world who have 3-D printers, CNC routers, and laser cutters. Moving the site of production as close as possible to the point of purchase will reduce the need for long-distance shipping.

“Just as personal computing went from the mainframe to the desktop, and the result was distributed desktop computing, we see the same trend occurring with digital manufacturing, as it moves from the warehouse to the desktop,” says Derek Elley, the chief strategy officer for Ponoko.

For the moment, however, Ponoko remains a small outfit of five full-time employees and eight part-timers at a single location in Wellington, New Zealand. Most products offered on the company’s site are tchotchkes or simple furnishings with jigsaw edges. While Ponoko is on the verge of opening a second office, in San Francisco, and it’s working to build a community of digital manufacturers, it still relies on a single laser cutter to execute all its incoming orders.

“When PCs first came out in the 1970s, they were rubbish compared to today’s PC,” Elley says. “But the people who first became involved in that movement, they saw a bright new future. And they really drove what was at the time a niche market, until the Apple II came out in 1977. So that’s where we are today with our technology.”

To turn an idea into a product, a Ponoko customer uses one of four different programs–Adobe Illustrator CS, Macromedia Freehand MX, CorelDraw X3, or Inkscape–to create a design and store it in an .eps file template. (Ponoko is working on a program that will allow users to scan and upload hand-drawn sketches.) After the customer uploads the file, she selects the raw materials from which her product will be constructed. Currently, Ponoko offers acrylic, styrene, hardboard, plywood, whiteboard, and a few others. With some materials, users can choose from a variety of colors, too.

At that moment, the user is given a price quote, which will depend on the sophistication of her design and the materials requested. If everything is to her liking, she pays with a credit card, and Ponoko sends off a raw-material order to its supplier. Materials are always purchased on demand; there is no stock carried.

When the raw materials come in the door, Ponoko opens the laser cutting machine, which is like an oversized photocopier, and puts them inside. (The laser cutter is made by Universal Laser Systems, based in Scottsdale, AZ.) Then someone taps two buttons on a computer and one on the laser cutting machine, and presto: it starts cutting the design out.

Ponoko also offers its customers a couple of other services. During the process of uploading a template file, users can choose a “sell” option, which lets them sell the blueprints of their products on the website. (If the user adds a creative-commons license to the blueprint, she can even allow people to riff off, embellish, or improve upon her .eps file.) A user who wishes to sell a physical product she has already ordered and received can also keep a listing on Ponoko’s site.

Phillip Torrone, senior editor at Make, a magazine devoted to design and do-it-yourself technology, has a laser cutter in his home and uses it to etch and customize laptop shells. But when Ponoko launched at TechCrunch40, Torrone thought he’d give its service a try by designing an iPhone stand.

“They did everything that was required for me to get my product,” Torrone says. “Their tutorials are fine; the templates were good examples. Pretty much, they did everything right. Now the question is, is there a demand? How much money does a company like this need to make to stay afloat?”

Ellery’s answer is that, eventually, Ponoko’s revenue will come entirely from digital services, not from manufacturing fees. The company intends to develop six revenue streams, including ad sales and commissions on design purchases. But at the moment, its only source of income is the one it would like to decrease: selling people manufacturing time and materials.