CNET on The
Robot Report "Is it Time to Invest in Robot Manufacturers?"
By Tim Hornyak,
Filed Under: Cutting Edge,
Is it time to invest in robot manufacturers? (Q&A)
By: Tim Hornyak
August 4, 2011 1:01 PM PDT
They vacuum our floors and help
fight our wars, but robots always seem to be just over the horizon. They're
never as commonplace as we expected.
Still, that hasn't stopped prognosticators from predicting that robots will
be the automobile of the 21st century, or that robots makers are now where
Microsoft was in the late 1970s. The markets for industrial and service
robots are already worth billions of dollars each, according to the
International Federation of Robotics (IFR) data.
Could hundreds of thousands of
assembly robots like ABB's Frida replace humans at Foxconn plants?
Robotkind certainly got a major
boost this week when electronics giant Foxconn, which makes everything from
iPads to LCD TVs, announced that it's replacing some of its human workers,
which number more than 900,000, with more than a million robots.
Of course, we all wish we'd bought shares in Microsoft and Google early on.
That's the kind of thinking that led Frank Tobe, author of
The Robot Report
blog, to look into the sector and try to identify publicly traded robot
makers that have growth potential.
In a recent critique of a list of 10 robot makers that appeared on the
Nasdaq Web site, the Report's sub-blog,
Everything Robotic, noted that some of the world's biggest robot
companies, such as Japanese industrial robot makers Yaskawa and Fanuc, were
Tobe also pointed out that Nasdaq missed rising stars like Intuitive
Surgical, which produces the da Vinci surgery system, and Adept Technology,
which makes automation systems.
Intrigued, we asked Tobe, a former political consultant, why he thinks now
might be a good time to invest in our robotic future.
Q: Robots are far from mainstream. Why should anyone consider robot
makers as an investment?
It's true that robotics is a niche market at present. Industrial robotics
has been a steady $5 billion industry but service robotics has been rapidly
increasing and is estimated to hit $20 billion by 2020. Combined with an
estimated $10 billion for industrial robots, that takes it from niche to a
Microsoft's Xbox Kinect device is a good example of an unintended
consequence helping the robotics industry by radically cutting costs for
vision systems. iPads and tablets are another example helping cut the
learning curve by using familiar devices as front-end controllers. Hence the
need to pay attention and track the progress of all that is
robotics-related. An investor doesn't want to be left behind when the market
Frank Tobe writes The Robot Report.
(Credit: Frank Tobe)
Why did you put together
this stock list, and how did you do it?
As an investor and wanna-be futurist, I thought the robotics industry was
ready to take off. So I called my broker and asked for a list of stocks to
buy. He could only come up with only two. I tried a quick look at Bloomberg
and found the same problem.
The IFR does an annual statistical analysis of the industry and includes
company names (but not whether they are publicly traded or privately held)
nor whether they are a division within a larger company or totally dedicated
to robotics. And you have to pay thousands of dollars for their reports.
So, since I couldn't really find the kind of information I needed, I decided
it would be fun to compile the list myself.
I harvested every article I could find on robotics, went to the Web sites of
the companies mentioned, and added them to my database. I supplemented that
information with member lists from global robotic associations. Then I filed
the companies [by category]: industrial, service for government and
corporate use, service for individual and personal use, ancillary
businesses, and research facilities and educational institutions. It turns
out that less 20 percent are publicly traded and 60 percent are foreign
I thought it would be interesting to make a Web site dedicated to tracking
the business of robotics and share the knowledge I was gathering and the
database I was compiling. Hence, The Robot Report.
What are the most promising sectors within robotics--for instance,
military versus medical?
War, security, defense, and first-responder robotics are a big and growing
market. But it's a marketplace dominated by aerospace conglomerates who
gobble up start-ups and control the pace of development to what the
government is willing to buy. Even though overall defense budgets are being
pruned, robotics is steadily increasing. The U.S. does things differently
than most of the rest of the world. DARPA, NASA, and the Department of
Defense drive research funding in the U.S. and their focus is on space,
military, and defense.
Commercial applications trickle down. The best example is Robonaut 2, a
NASA-driven effort to provide in-space astronauts with a robotic assistant.
General Motors was solicited to be a partner and the resulting two-armed
robot is now in the lab aboard the International Space Station. GM has begun
to transition their Robonaut 2 knowledge into practical uses in GM
America just recently set up the National Robotics Initiative and the
Advanced Manufacturing Partnership to do the same. I agree with the concept
that manufacturing is necessary. An untapped and quite large marketplace in
manufacturing is that of factory assistant--a trainable, safe robotic
helper--to increase productivity and augment capabilities of skilled factory
Robonaut 2, an example of trickle-down robotics.
Heartland Robotics' privately
funded endeavor has a greater chance of breaking into this market than the
big robot manufacturers because Heartland is starting fresh, has a specific
business focus, and has a price goal that makes sense and is affordable to
small businesses that manufacture things.
So, to answer your question, small- and medium-size business robotic factory
assistants and continued defense/security robotics are the two big
marketplaces where I see near-term breakthroughs and meaningful robotic
sales. Health care and home personal assistance robots are farther down the
If one does decide to invest in robot makers, what's your recommendation
for a weighting as a proportion of the average tech portfolio?
Fidelity Investments suggests that technology stocks represent 30
percent of an aggressive equity portfolio. They were, of course, thinking of
Amazon, Google, Apple, and Salesforce when they thought of "technology."
Robotics has yet to have its own place in that formula. The big robotic
companies are all foreign-owned and many don't trade on U.S. exchanges.
Nevertheless, some robotic stocks are good prospects for growth and I think
that 20 percent of technology stocks should be robotic.
What are your favorite robot stocks now?
Even though the aerospace/defense industry is likely to be a steady
beneficiary of robotic development, and two or three should take a position
in a robotics portfolio, I have a bias to not invest in that sector. This
limits my personal portfolio to non-defense stocks like American robot
manufacturers Adept and iRobot, Fanuc, American health care robotic device
makers Intuitive Surgical and Mako Surgical, and ancillary businesses to the
robotics industry like haptics provider Immersion.
Down the road, look for Caterpillar and John Deere to emerge as big players
in robotics--John Deere with their new line of lawnmowers and both companies
with driverless agricultural and construction equipment.
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