Trend Watch: The Fast-Changing and Rapidly Growing Robotics Industry

According to a recent Global Industrial Robotics Market Forecast & Opportunities report issued by the technology research firm “Research and Markets,” overall robotics revenues are expected to increase by roughly 25% from 2013-2018 and will likely reach somewhere around $37 billion in total global sales. Much of this projection is based on already-placed orders from major Chinese manufacturering enterprises. Importantly, that $37 billion, of course, only accounts for the “large scale” industrial segment of the industry. As this compilation of other studies makes clear, demand for robotics in areas outside the industrial sphere (e.g., medical science, human services, information delivery and, maybe most significantly, for military applications) is also expected to surge sharply upward - in some cases at even exponential rates of expansion.

From an investment perspective, whenever we see growth like this intersecting so many different fields (and especially with regard to a technology that’s probably comparable to where computers were in the early 1980s) it’s usually safe to assume investment opportunities abound. Nevertheless, the enormous number of unknowns here make robotics an extremely interesting but uniquely challenging bet. With that thought in mind, the near-term picture does at least appear to be revealing certain developments worth watching:

  • As noted, there is simply no way that larger emerging economies like China and India will be able to meet consumer demand without new generations of advanced industrial robots. First world economies are tougher to read (at least on the industrial side) due to continuing shifts from away from traditional manufacturing toward high-tech and service professions, although it’s probably safe to say that nations like Germany will still likely be major robotics purchasers (and inventors/producers) over the next five-ten years. That invention/production piece of the puzzle also fits for Silicon Valley and could actually stimulate US manufacturing.
  • The New York Times recently looked at the growing push to create and market “humanized robots” – not merely for entertainment – but for social and practical purposes. Psychological analyses demonstrate that robots designed specifically to help individuals (for example, while cleaning a home, assisting the disabled, providing driving directions or helping nurses deliver patient care at a hospital) are able to perform their tasks better (that is be used by their human owners more efficiently) when humans begin to sense even an obviously artificial form of emotional bonding (The popularity of Apple’s “Siri” – a product that is still usually LESS technically proficient than traditional text-based searching – clearly shows this principle in action…).
  • A second important point about “robot humanization,” also noted in the NYT piece, is the obvious reality that most human environments – e.g., almost anything that isn’t a factory – are, unsurprisingly, designed for humans. Therefore, the more “human-like” a robot can be, the more successfully it will be able to navigate its surroundings and engage in tasks mostly inapplicable for its industrial counterparts. Abilities like stair-climbing, opening doors and delivering food or medicine all require specific types of human characteristics.

“This is the wave that’s happening in robotics right now,” said Charlie Kemp, an associate professor in biomedical engineering at the Georgia Institute of Technology in Atlanta. “Things are not the same when you’re interacting with people. That’s where we want robots to be; it’s where we see there are huge opportunities for robots; and there are very distinct requirements from what led to the classic industrial robot.”

Each of these basic observations only begin to scratch the surface, but robotics is most certainly one of those areas where smart investors (and smart companies) should be able realize upside – if not immediately, than almost without question as a long-term play.

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