Five developing trends in the robotics industry
The robotics industry is going through major changes as costs are continuing to drop and the industry is going through changes from a business and technological standpoint. Investments include the bid by Midea to buy 49% of Kuka, KraussMaffei by ChemChina; Paslin by Wanfeng and Gimatic by Agic Capital. Five trends that are driving these changes are highlighted below.
Industrial robots used to be dumb, somewhat inflexible, and mostly blind - but also fast, precise and very efficient. As the cost of components, sensors and vision systems has been dropping, vision-enabled robots are becoming more prevalent and capable, and the industry is dramatically changing. Those changes can be seen in recent trends in China, investments in and acquisitions of robotic companies, by an analysis of recent startup companies, new and widening application areas for robot use, and technological developments.
For the past 50+ years, industrial robots have picked the low-hanging fruit of manufacturing by handling the dull, dirty and dangerous tasks. However, mobile and vision-enabled robots are emerging and being deployed in many new application areas, particularly for small and medium-sized enterprises (SMEs) and in logistics, but also in government, agriculture, surveying, construction and healthcare. These changes are being driven by consumers' desire for more personalized products that are quickly delivered to them. Costs have dropped and company executives are pushing for greater productivity through automation to meet this changing market.
The industrial robotics sector, whose revenues have represented 75% of the industry's overall sales (as reported by the International Federation of Robotics (IFR) for the past few years, is forecast by various sources including the IFR to have double-digit compounded annual growth (CAGR) for the remainder of this decade.
However, when one studies the figures for the biggest five user-countries, all except China are projecting CAGRs of 6% to 9% while China is expected to exceed 25%. Service robots are also expecting double-digit growth with over 80% of those new companies located in Europe and North America. This explosive growth in service robotics, plus the steady growth in industrial robotics, is suggesting that the next 5 to 10 years will all be double-digit years for the industry as a whole.
This growth also promises to change how work is performed and by whom. For example, Oxford Martin School researchers estimate that robotics and artificial intelligence are on track to take over 40% of the US workforce within 15 to 20 years either as a computer program that will be able to do what many of us do today, or it will be a machine or robot that replicates the physical process of work that we do.
With that in mind, these five trends are going to be key in driving the robotics' industry forward.
Trend 1: China's economic growth
China's economy has and continues to transition through all the economic stages of industrialization, urbanization and consumption-driven growth. This movement is both politically stimulated and self-propelling. In the realm of robotics, there are many factors driving growth: A desire to export cars requiring a level of quality that can only be provided by utilizing proven robotic automation methods; multi 5-year governmental incentive plans fostering a home-grown robotics industry; rising wages changing the metrics of human-robot deployment; and general availability of capable factory workers.
Because of that, China is eating up the market both as a buyer and an emerging seller. However, for Chinese companies to fully capture the robotic market within China, they will have to shore up missing components that are hard to make and improve quality and precision overall. Components such as end-of-arm tools, speed reducers, and harmonic drives will need to be manufactured locally instead of being imported. Many retired Japanese engineers are "consulting" to help speed up the process.
Chinese venture firms are also helping by acquiring international companies, investing in Chinese companies that are attempting to perfect these components, and investing in global companies and reorienting them toward sales and manufacturing in China. One good result: As the industry moves in-country, there will be less blatant thievery, copying, and reverse engineering as there has been in the past.
China's government has encouraged this in-country market by providing loans and other incentives to companies and to local governments to get them to provide real estate and tax incentives. An industry plan drafted by several ministries, for 2016 to 2020, aims to have 100,000 industrial robots produced annually by domestic companies, with annual sales of 30 billion yuan ($5.4 billion) a year.
There have been many reports about the misuse of those funds and the falsification of progress reports. The most recent is the 2015 statistics from the IFR showing that even though China did well, the rate of growth has diminished and projections have been halved. Nevertheless, internalization is ongoing and progressively gaining traction.
Trend 2: Collaborative robots
Much has been said about the fast-growing market for collaborative robots. The most current are articles describing car companies replacing old-style industrial robots with a combination of humans and co-bots assisting humans to gain needed flexibility. The major benefits of these new co-bots are their flexibility, safety, ability to be rapidly deployed, and ease of training. Turning co-bots into a commodity may not be good for profits, but it is good for businesses, particularly those wanting to take their first step into using robots.
Trend 3: Robotics as a Service (RaaS)
In a recent research project on robotics in the agriculture industry, a very cost-sensitive industry, many companies are offering services utilizing robots - instead of selling the robots and having the farmer operate them. Thinning, weeding, spraying, aerial imaging, and analytics are some of the services being offered. This concept of offering services instead of the products used in providing the services is designed to introduce untested products into the marketplace, but many enterprising startups are finding economies of scale benefit the service provider. This has crossed industry boundaries and is being offered not only to agricultural companies, but to oil and gas companies, NGOs, and governments wishing to monitor hard-to-get-to areas. Security companies are beginning to offer RaaS to supplement, augment and replace interior security, etc.
There is also a blurring of the line between real robots that perform tasks in physical space and software bots that perform a virtual robot-like service. As a consequence, many companies and service providers are going beyond offering SDKs (software development kits for the making of apps) to opening up their
application protocol interfaces (APIs) so that these new bots can increase their scope and effectiveness and make it easier for their users.
Trend 4: Logistics and materials handling
Better and lower cost vision systems, particularly low-cost 3-D vision, navigation, and mobility are enabling a variety of existing and startup companies to offer enhanced material handling methods for factories, warehouses and distribution centers. During the financial crisis, capital expenditures for logistics were put off because existing systems seemed to be able to handle the load.
All that changed when consumers wanted their products faster and warehouses couldn't keep up without massive investments in new tech, new methods, and in many cases, new vendors. Further, these new technologies had to accommodate existing facilities and systems. Because of that, customers are changing their methods and systems rather than build new facilities.
Upstarts like Amazon/Kiva, and startups like MiR, Clearpath, Aethon, and Fetch are joining established companies like Swisslog, Grenzebach, FMC and many others as they attempt to bring new tech to help speed up the picking process and the movement of picked items to the packing/shipping stations.
Trend 5: Investments in robotics
The Robot Report reported that in 2015 investment activity, 55 startups received funding totaling $1.32 billion; that 32 acquisitions occured totaling $2.27 billion (for those reporting amounts); and that there was one IPO. 2016, through mid-June, shows 56 startups received $427.5 million; and that 20 acquisitions have happened thus far totaling $4.53 billion (from the 11 reporting amounts involved). If the $3.5 billion Uber funding from the Saudi sovereign wealth fund isn't objected to, and the bid for 49% of Kuka for $2.5 billion is accepted, the figures are much higher.
Of particular interest are the investments in Western robotic technology by Chinese investors: the bid by Midea to buy 49% of Kuka, KraussMaffei by ChemChina; Paslin by Wanfeng and Gimatic by Agic Capital. China is definitely on an acquisitions spree.
China is also stimulating in-country growth. For example, Tsinghua Holdings, a state-owned fund founded in 2003 by Tsinghua University, kicked off two projects announced at the World Economic Forum in Tianjin. One focuses on helping startups and the other on commercializing scientific findings. The fund will set up 1,000 business incubators in China by 2021 and another 50 in nations including the U.S., the U.K. and Germany. The size of a parent fund will exceed $3 billion.
Frank Tobe is the owner and publisher of The Robot Report. After selling his business and retiring from 25-plus years in computer direct marketing and materials, consulting to the Democratic National Committee, as well as major presidential, senatorial, congressional, mayoral campaigns and initiatives all across the U.S., Canada and internationally, he has energetically pursued a new career in researching and investing in robotics. This article originally appeared on The Robot Report. The Robot Report is a CFE Media content partner. Edited by Chris Vavra, production editor, CFE Media, firstname.lastname@example.org.
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