2010 Robotics Predications; Reality Check for 2009

Trick math question: If you have $100 and lose 50% and then gain back 50% of that, how much do you have?

1. $100
2. $50
3. $75
4. None of the above.

Stock markets around the world rose dramatically in 2009. Robotic stocks did as well or better than the major tracking indexes, particularly service robotic stocks. But the real story isn't the gains of 2009 but the lack of recovery from 2007.

An example: U.S. publicly-traded industrial robotic companies saw their stocks rise 40% in 2009. But those same stocks lost 53% in 2008. Thus their year-to-date rise in 2009 of 40% really only recovered 16 points of the 53 lost the year before. U.S. industrial robotic stocks are still down 37% from their close at the end of 2007 as are almost all robotic stocks worldwide. That is what these Robo-Stox™ charts - one for industrial robotic companies and another for service companies - attempt to show. Click to enlarge.

Most countries' robotics stocks didn't fare as well as the American NASDAQ Index with the exception of Canada, India, Israel, Taiwan and a very few individual stocks. Thus although 2009 was a significant up year for stocks, and robotic stocks in particular, robotic stocks have yet to recover their highs of 2007 and have a long way to go to do so.

The serious effect of the recent worldwide stock market and economic crash causing the drop in market value of the companies, the loss of jobs, orders, revenue and profits - is a long way from recovery. Although jobs in the robotics sector are available for qualified takers, particularly in the service sector, unemployment in general is dramatically high and most economists are predicting that it will be well into 2012 before any real gains occur.

That is not to say that all is pessimistic, particularly for robotic businesses. 2010 looks to be a good year with definite "drivers" effecting selected marketplaces.

Worldwide military, police and security agencies are continuing to purchase and invest in R&D for all types of unmanned, remote-operated aerial, underwater and ground robotic devices. More jobs - with the likelihood of continued growth over the next few years.

Medical robotics (included in the services sector) are poised for many years of rapid growth propelled by:

1. Growing patient demand for non-invasive surgery,
2. The current effort to reduce hospital costs by increasing productivity through a variety of robotic activities (non-invasive surgery, pill dispensing, materials transfer, lab assistance, etc.),
3. Hospitals, which have held back capital purchases (such as Intuitive Surgical's million dollar da Vinci devices) for the past two years, are beginning to reinvest in these types of equipment.

With the return of small amounts of discretionary income back into the economy, consumers are once again interested in robotic toys and kits as can be seen by 2009's Christmas rush to buy millions of robotic hamsters (Zhu Zhu) and thousands robotic penguins.  And the hit of CES was an indoor-flying, iPhone-controlled, quad copter by Parrot that will sell for $129.

For industrial robot manufacturers, orders will stay down for quite a while. For those vendors that have switched or are making inroads into the services sector, the horrendous spate of bankruptcies (photo: used robots for sale from closed Chrysler plant) and buy-outs has stopped and the future is looking brighter expecially in new markets including the SME market.

Small and Medium-sized Enterprises (SMEs) are now being offered affordable robotic products that haven't been available to them before, first in Europe and Asia, and later in the U.S. Lightweight and easily trainable, these flexible robots are enabling these smaller manufacturers to increase productivity and not have to go off-shore to produce their products.

Optimism: A Conversation With Henrik Christensen

I met Henrik Christensen (Director Robotics and Intelligent Machines, Georgia Institute of Technology) earlier this year at International Experts Days at the Schunk factory in Hausen, Germany. His presentations and comments were business-like and focused on the numbers that make emerging products successful (large enough marketplace, serious need(s) satisfied by the new product, price comparable or less (with savings) with present methods and costs, etc.).

A few days ago we had a conversation that covered many of the current issues in robotics. Throughout the conversation, Henrik remained positive and upbeat, heralding the next few years as the tipping point for this emerging industry, particularly here in America. Of course, that's part of his current job: making robotics a key economic enabler in America. He is a significant player in the Roadmap for US Robotics presented to the Congressional Robotics Caucus earlier this year and continues to make presentations about robotics at various levels of government, encouraging cooperation and strategic funding to make things happen.

One area frequently in the news is robotic surgery. Intuitive Surgical is hot on the American stock parade. But almost 50% of the di Vinci surgical machines are not working at their capacity because many doctors don't have the skills to make them work for them. For example, one proctologist used to take 2-3 hours for a procedure that he now does using the di Vinci in 30-40 minutes. But many more proctologists take 3-6 hours (and after 4 or 5 hours it becomes somewhat dangerous to the patient). After giving it a few tries, they go back to their normal way. For them it's a matter of income - they can do more procedures in the old way and time. [There are new devices being reviewed by the FDA from Japan, Korea and the EU which, unless something is done, will also become underutilized.]

Henrik says there's a major case for simulation training and two of the companies that do airline simulation are working on moving into that area as are major programs at the University of Michigan, SimuLab and Immersion. Right now Intuitive Surgical only gives a four-hour training course on their machine. Airline pilots have to invest hundreds of hours in training and retraining. The Captain and officers of the new cruise ship Oasis of the Seas spent 500+ hours of simulation time before ever stepping aboard the ship! Henrik sees not only a growing need for such simulation training but the economics that can make such an industry work and be profitable.

Industrial robots are engineering wonders that are extremely precise, mechanically intricate and last forever... which is part of their expense. To reduce those costs, manufacturers are making their machines more flexible, safer, human friendly and less exacting. Rodney Brooks' new start-up Heartland Robotics hopes to make machines that are 20%-35% less expensive and more assistive in, as he calls it, the "as yet un-automated manufacturing" sector. This is similar to the EU project SME Robot which focused on small and medium manufacturers and their requirements for flexible and quick shop assistance.

One "as yet un-automated" sector is warehouse fulfillment, an area where Kiva Systems has been so successful that it can't keep up with its orders. Amazon and all the other big mail-order processors are in need of products similar to the Kiva system but unique to their specific methods. It's an area ripe for innovation and one in which Henrik sees many things happening as early as early 2010.

One area where the economics aren't right yet for commercialization appears to be in therapeutic and eldercare assistive robotics. The research and equipment have yet to find their niche, yet the needs exist with autistic children and people with strokes and other disabilities and eldercare needs. The economic model to make saleable products with today's state of the art research and products just doesn't presently exist.

Finally we talked about the need for regional incubators to foster start-up companies -- to help them make the big switch from research engineers to marketing and management executives and to focus on helping customers do their jobs better with robotic equipment.

Henrik wants to tie research grants to real needs which, if he is able to get an agreement from the government to make strategic investments as is done by DARPA and now ARPA-E, will pay off and make robotics a key economic enabler in America.