Robotics: The Business Depends on More than Patents
|Written by Jane Genova
Posted: January 5, 2013 @ 9:15 am
Like most industries driven by technology, the commercial potential of robotics depends on more than the patents, no matter how innovative. In robotics, the business part has been a mixed bag. This is despite the media hype the field has been receiving.
For example, the January 2013 cover story for the influential WIRED magazine champions robots as game changers equivalent in scope to the technology of Industrial Revolution. However, as constituencies ranging from investors to management experts know, there are a number of other factors, in addition to the patented technology, which will determine how far and how fast robotics reconfigures business in the 21st century. This article looks at some of those factors.
For the third quarter of 2012, iRobot Corporation’s (NASDAQ: IRBT) home robot business increased revenue 33 percent from that time the previous year. Its Chairman and Chief Executive Officer Colin Angie predicts the home robot piece will account for more than 80 percent of revenue for 2012 and 2013. The Roomba family of robotic vacuum cleaners, built on the Ava platform, has been a global success story because consumers embrace appliance automation and the company made the right decision about pricing. Although iRobot is struggling with other difficulties, such as its defense sector, the home robot niche is going well.
On the other hand Mako Surgical (NASDAQ: MAKO)seems to be in serious trouble. For example, it is being hammered by stock analysts such as Motley Fool’s Brian Stoffel who will not include it in his 2013 portfolio Mako’s Rio Surgical robot, whose technology focuses on easier fit and alignment in knee replacement, has had disappointing sales because of macro events in the medical technology segment. Those include a decline in procedures generated by higher co-pays and deductibles in health insurance. In addition, in 2013 begins the medical device 2.3 percent excise tax, geared to generate funds for the Affordable Care Act.
Another area of robotics held back by non-technical variables is personal care for the elderly and disabled. As readers of IPWATCHDOG know, the growth in the number of patents around the world over time is supposed to signal the potential of a field. Researchers Moritz Goldner, Cornelius Herstatt, Frank Tietze, and Saski Rehder investigated this and published their findings in the January 2012 paper Technologie – und Innovations management. In the late 1970s patents for devices which would accommodate the self-care and mobility needs of the aging and handicapped began to be filed. But it wasn’t until 1990 that the filings increased, numbering about 20 a year. By 2005, they totaled about 50 annually. The current trend in patent applications is now focused on humanoids, that is robots resembling and making movements like human beings. That is exactly the kind of story which attracts considerable media attention, creating the illusion that this robotics niche is taking off.
But taking off it isn’t, documents Frank Tobe, Editor and Publisher of THE ROBOT REPORT, in a November 2012 guest article for IEEE SPECTRUM. An example is that Johnson & Johnson (NYSE: JNJ) deep-sixed its iBot wheelchair which climbed stairs. And although Japanese companies, which are currently the leaders in this segment, have received considerable media attention for those humanoid personal care robots, the devices are not on the market yet.
This gap between the technology and marketplace success is happening despite the fact that, in theory, the robots provide solutions for many of society’s urgent problems. After all, the aging population is surging in developed nations. Automating the field of homecare aides would save money since the human version costs about $10 to $15 an hour in the U.S. and the machine version could be leased at about one-tenth that expense. Also, homecare workers, because of the lifting involved, incur more than the average of workplace injuries.
The obstacles to monetizing personal care robots actually are many. At the top of the list are concerns about safety. After all, can society trust the robot lifting mom from the bed not to drop her and how about the feeding robot which possibly could malfunction and “attack” the disabled person who cannot get out of the way. Also, in general, although the U.S. economy has been created through Yankee technical ingenuity, there is hesitancy about approaching the challenges of caring for elderly and handicapped through technology. After all, they are someone’s loved ones. It could well be that, at least at this time, the human touch is overvalued.
Then there is the attitude issue. Tobe reports that according to a study by Georgia Tech, the aging themselves embrace robots for household tasks (which is obvious from the popularity of the Roomba vacuum) but not for their own personal care.
In addition there are the purely business challenges. Tobe notes that to succeed, companies need, “ … (1) design and manufacturing capability, and (2) marketing experience in the health and eldercare marketplace.” And what investors demand, Tobe adds, is a solid business plan and evidence that the funding resources are available. Could it be that some established technology-driven companies and startups are simply not behaving businesslike enough in the field of robotics?
Of course, the obstacles facing robotics often differ for different applications. In manufacturing, the plan to install more than a million robots at the Foxconn facility in China in a few years could generate new kinds of worker complaints because of fear of losing jobs. In robot applications for packaging, shipping, stocking shelves, and welding, the machines are valued because they can carry out the assignments with more precision, speed, and cost-efficiency than do humans.
Organizations advocating for workers, including unions, oppose much of this. As the economy improves, their push-back against the intrusion of robots may become more aggressive and have more impact on workplace policies. The recent survey of employees by the ManpowerGroup found that in 2013, 86 percent planned to leave their jobs and only five percent intended to stay put. Eventually a new social contract between employers and employees may replace the former one of lifetime employment and a pension in return for loyalty and commitment to duty. That could well include the role robots will have at work.
Meanwhile, the potential of robotics around the world continues to be determined by factors beyond the proprietary technology protected by patents. In this situation, public companies as well as startups have to consider all the “usual suspects” such as values, habits, and emotions which the consumer products industry, professional services firms, and nonprofits have always had to. Constituencies ranging from investors to regulatory agencies are not giving a technical industry like robotics the kind of special treatment they initially gave to social networking companies ranging from Facebook to LinkedIn.
About the Author
Jane Genova, President of Genova Writing, Coaching, and More, recently has published on business topics in Motley Fool, Wall Street Jobs report, AOL, and Odwyerpr.com. On her syndicated blog, housed in the Library of Congress, she covers legal subjects from a business perspective. She had been awarded a place in the McGraw-Hill program on financial reporting.
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