Robots mean business
Today, robotics is far more than a cool hobby, toy, or hard-to-fund hardware startup. Robots have entered the 21st century as cost-effective solutions to market problems. The Robobusiness Leadership Summit, which just took place in Pittsburgh proves this point. This annual conference, held since 2004, is about the business of robotics. To my knowledge, it’s the ONLY business event for robotics companies. Bravo!
Robotics companies are all about getting robots into the marketplace. Dan Kara set the stage for the Robobusiness keynotes and panel discussions, with his talk, “The robotics industry, today and tomorrow.” Dan is president of Electra Studios, a startup providing educational and research robotics products and services, and analyst-at-large for Robotics Business Review.
Dan’s talk was about how companies are integrating business into robotics, or integrating robotics into business. He segments the robotics market into three areas:
- Professional service; and
Industrial. The use of robots in industry is gaining traction with new applications like food handling, cosmetics, and construction. One example is German company Kuka’s KR 1000 Titan, which can lift 1000 kg and is the world’s most powerful robot. Worldwide sales of industrial robots were up 38% in 2011 at $8.5B, with 181K units sold. If you add software, the market size in sales grows to over $20B. Industrial robots are attractive because they average 12.5 years working, with no overtime, no downtime, and always on time. Rodney Brooks’ company, Rethink Robotics, launched its robot, Baxter, at Robobusiness. Baxter is a low-cost industrial robot, focused on small business manufacturing. Rodney’s goal is to bring manufacturing back to the US through using easy-to-use, easy-to-train, cost-effective robots. NewVenturist posted a story about Rodney and Baxter last week, and previously had profiled Rethink. NewVenturist had also posted stories on Seegrid and RedZone Robotics, two companies in the industrial space that are proving that there is growing demand for solutions that only robotics can provide.
Professional services. Sales for professional services robots were $3.6M in 2011, with 16,408 units. The markets include defense, agriculture, medical, and logistics. Many robotics companies started with military applications. The best example is iRobot, which has multiple products in the defense industry, but also has consumer products, the best known of which is the Roomba. Healthcare is probably the strongest segment for applications like lab and hospital automation and surgical systems. NewVenturist posted stories about Aethon, MedRobotics and Ekso Bionics, all in the healthcare space. NewVenturist’s stories about and Harvest Automation and VGo prove that the market for robots in professional services is strong.
Consumer. Robots for consumer markets had sales of $636M and 2.5M units in 2011, up 15% from 2010. Markets are largely service and entertainment. This market has been the most disappointing from projections made 10 and 20 years ago by people anticipating personal assistant, android-based, intelligent robots. The technology is just not there at a price that consumers can afford. Robotic toys have entered the market, but that market is highly competitive, and a number of companies in that market are struggling and changing direction. NewVenturist has posted about such companies: Interbots and BeatBots. In a bold move, Bossa Nova Robotics has just pivoted from toys to personal robots. In his talk, “Where is my Rosey Jetson?” Martin Hitch, CEO, talked about Rosey, from the 1962 television show, The Jetsons: “Rosey was a great role model. She embodied service, social, technology, and cost. She could do everything.” Martin introduced the brand new MoBI to the audience at Robobusiness. Is MoBI the new Rosey? We will see… 4moms, also featured in NewVenturist, has demonstrated strong growth in the consumer area – equipment for children. So, while there are niche markets opening up in the consumer space, real penetration is a long way off.
Trends. Acquisitions give hope for the robotics industry which has labored under difficult funding issues and a long timeline to exit in the past. Kiva Systems’ acquisition by Amazon for $775M and Evolution Robotics’ sale to iRobot for $74M were positive recent events. Dave Becker, of Meakem Becker Venture Capital, invested in the last round of Kiva. Dave had actually invested in Kiva’s Series A as Clearwater Capital. Clearly, he saw the promise. Companies like Rethink have been well capitalized, indicating that funders recognize the value that robotics companies can bring. But VCs in general have been skittish about hardware companies. While robotics involves software more and more, there is still the need for mechanics. This requires time, money, and a lot of work to get the systems r
Dimitry Grishin, of Russian Grishin Robotics, believes that we can bring the internet culture to the robotics industry by introducing the concepts of lean development and fast iteration to ensure that products meet customer demand. Jan Westerhues, of Robert Bosch Venture Capital, a $250M corporate VC, expressed his company’s interest in strategic investing in the automotive and sensor industries, which generally puts them in front of hundreds of robotics startups every year: “because they are all seeking funding!” Jan exclaimed.
Rodney Brooks discussed a change in how Japan views robotics: “The last 18 months has been an awakening in Japan of making robots more real. Fukushima was a wake-up call which has changed the mindset of Japanese researchers and companies. Japan will play differently in the future.”
Aldo Zini from Aethon presented a compelling case study of University of Pittsburgh Medical Center (UPMC) using his TUG robots in several hospitals. UPMC piloted the TUGs to solve critical issues they were facing with personnel: high cost of labor, high turnover, and jobs that no one wanted to do (like soiled linen and meal delivery, both of which involve heavy carts). A big concession was dedicating an elevator to the robots. The UPMC representative talked about how skeptical nurses and other hospital workers were at first about using robots, “They would deliberately play with the robots, put things in their path and try to stop the robot,” he stated. But they were all quickly won over as the robot proved to be safe and effective. “We didn’t want the TUGs to reinvent the old processes; we wanted them to help us invent new more efficient processes where there was clear ROI.” The TUG beat the live person in every comparative test. In an initial contract of just over $2M, UPMC has deployed 21 TUGs in five facilities. The TUGS deliver 18,000 meals per month and travel 30 miles in one day per facility performing various functions. UPMC estimates that the savings equate to $2.7M labor savings per year. They want to expand the TUGs throughout their $10B, 20-hospital system.
Jeremy Brown, founder of Jaybridge Robotics, gave a talk on the rise of robotics in agriculture. Corn and soy are the biggest markets. He outlined farmers’ use of augmented GPS to increase precision related to farming – to map fields, track yields, etc. Farmers are sophisticated; they buy lots of equipment. The demand for food is growing. Workflow focused autonomy is the latest trend. The goal is not a fully autonomous farm, but to have tools that help. Robotics is a key to that help.
Parting shot. Maybe soon, companies will stop putting the word “robotics” in their names. After all, it’s not about robotics; it’s about business!