Transitioning from Industrial to Service/Personal Robotics

Will big industrial robot makers such as ABB, Fanuc and Kuka, transition and begin making products for the consumer and service markets? I'm beginning to think not. And here are a few of my reasons:

I've been impressed by the possibilities for power companies to reduce costs and expand safety and efficiency by adapting robots for high voltage transmission line maintenance and inspection instead of their present methods. Consequently, I researched and found some interesting Japanese and Canadian robotic solutions - and also an American one scheduled to debut in 2014 - and suggested these three options to the companies that presently perform line inspection and maintenance.  I commented that this was the wave of the future and asked them whether they were going to use them. There was little, if any interest in doing so.

This lack of interest is not unique to the power industry.  When I talked with the big industrial robotic vendors I received the same message when I asked about the possibilities of their producing social and work-place-assistant robots or using open or non-proprietary operating systems and even using non-proprietary devices like an iPad or tablet for programming and training.

The resistance is on many levels: job protection, revenue protection, technology and systems protection, and product protection.  Notice the "protection" in each phrase? That's the main problem.

Bill Clinton, in a recent commencement speech at NYU, said that in the last 30 years companies have come to believe that they have obligations only to their shareholders.

The problem is that if you do that you ignore the other stakeholders. 

That could be why wages have been virtually stagnant for the past 30 years, because the workers are stakeholders. It could be why communities have been unable to undertake economic transformations in many places, because communities are stakeholders. It could be why customers don’t care so much what the source of their purchases are, they’re stakeholders.

He clearly said that the world we live in is too unequal; that the world we live in is unstable; and that the world we live in is unsustainable. [Abstract of Pres. Clinton's commencement address.]

In thinking about what he said and what I heard from the robot executives in relation to using robots instead of humans or helicopters to maintain and inspect power transmission lines. When helicopters are used companies that perform the service charge seven times the estimated cost of using a robot. Thus the profits derived are seriously more than would be derived from using a robot. Said another way, the profits from the sale of just one PacBot system is equal to the profits from the sale of 500 Roombas.

Protective and narrow thinking - as was expressed to me in many forms by the current vendors - is what will prohibit these vendors from transitioning into the different world of consumer/service robotics. That kind of thinking stultifies innovation and thwarts the goals of the corporation to all their stakeholders.

Consumer sales are whimsical, dependent on many variables.  Manufacturing and selling 500 or 5,000 or 5 million consumer products is an entirely different process than selling a single defense contract which rarely if ever ramps up into numbers over 100.

Further, defense, space and security robotics are mostly in the domain of large aerospace companies or spinoff startup companies from university research centers and derive their profits as a fixed percentage of their costs and overhead... a formula that doesn't translate into the commercial sector.

Finally, most service robots involve interactions with humans in human/robot roles entirely different than in a factory setting.

Therefore, I believe that disruptive startup companies will spin out of research facilities and throughout the world of inventors and venture capitalists and provide product solutions to consumer needs that they want to purchase. Further, I believe that the business model for these new companies is entirely different than the model for old-line robotic manufacturers and also the aerospace industry. Consequently, this will be a worldwide phenomena. With my US hat on, it means that the US has a fresh start at an industry that is soon to emerge: small business and personal service robots and vehicles.

The Importance of Making vs Selling Stuff - sidebar on Goldman Sachs

Much discussion is being focused in Congress, recent books, articles, and in the media, on the financial crisis and the contributing factors to that crisis.  Omitting until the end the role of Goldman Sachs, one important factor about the crisis must not be overlooked said James Kwak of The Baseline Scenario:

Remember that financial services are an intermediate product -- that is, we don't eat them, or live in them, or put them on in the morning.  They are supposed to enable a more efficient allocation of capital, so that the non-financial economy is more productive. But what we saw since the 1980s was the unmooring of the financial sector from the rest of the economy.  

Financial services are supposed to serve our economy; not be the economy.  Yet the trend is otherwise... over 40% of the profits of the entire US corporate sector went to the financial industry.  As a reference, in 1970 it was 4%!

Paul Krugman wrote:

A growing body of analysis suggests that an oversized financial industry is hurting the broader economy.  Shrinking the oversized industry won't make Wall Street happy, but what's bad for Wall Street would be good for America.

Martin Wolf, of the Financial Times, wrote:

...the financial sector seems to be a machine to transfer income and wealth from outsiders to insiders, while increasing the fragility of the economy as a whole."

Even the ethic has changed.  Doing things with ones hands - the pride in the skill and craft of so doing - used to be our ethic; now it's who can earn the most money.

The real issue is that America has changed from a hands-on country to one that sells the products of others. As more and more production and service jobs go off-shore, only financial services are staying behind.  And as Andrew Sorkin said on the Charlie Rose show last week:

...so many of these instruments on Wall Street, it's really just a casino, there is no underlying assets, they don't actually own these devices; people aren't getting mortgages because of this... What is the social utility of that?

All of this can be seen in the difference between the growth of the robotics industries in America and everywhere else.  America used to develop, design and manufacture their robots.  Then they only developed and designed them - the products were built off-shore.  Now much of the non-defense design is being done elsewhere and manufactured off shore without America having a piece of the pie.  Most of the iRobot products sold to the DoD are manufactured offshore!

Sidebar about Goldman Sachs

From a blog entry in The Huffington Post by Senator Carl Levin:

Most investors make the assumption that people selling them securities want those securities to succeed. That's how our markets ought to work, but they don't always. The Senators who in the 1930s investigated the causes of the Great Depression stated the principle clearly:

[Investors] must believe that their investment banker would not offer them the bonds unless the banker believed them to be safe. This throws a heavy responsibility upon the banker. He may and does make mistakes. There is no way that he can avoid making mistakes because he is human and because in this world, things are only relatively secure. There is no such thing as absolute security. But while the banker may make mistakes, he must never make the mistake of offering investments to his clients which he does not believe to be good.

Goldman documents make clear that in 2007 it was betting heavily against the housing market while it was selling investments in that market to its clients. It sold those clients high-risk mortgage-backed securities and CDOs that it wanted to get off its books in transactions that created a conflict of interest between Goldman's bottom line and its clients' interests.

These findings are deeply troubling. They show a Wall Street culture that, while it may once have focused on serving clients and promoting commerce, is now all too often simply self-serving. The ultimate harm here is not just to clients poorly served by their investment bank. It's to all of us. The toxic mortgages and related instruments that these firms injected into our financial system have done incalculable harm to people who had never heard of a mortgage-backed security or a CDO, and who have no defenses against the harm such exotic Wall Street creations can cause.

Levin went on to say that: 

Running through our findings and these hearings is a thread that connects the reckless actions of mortgage brokers at WaMu with market-driven credit rating agencies and the Wall Street executives designing the next synthetic. That thread is unbridled greed, and the absence of a cop on the beat to control it.

I couldn't agree more.  I'm pained to see this happening during my lifetime.  

Rethinking Singularity

I have concerns about Ray Kurzweil's Singularity.  The following three stories will show you where I'm coming from and give some background to what I want to say:

(1) In the '80s, Tom Axworthy, then Principal Secretary to Prime Minister Pierre Trudeau (and now with the Center for the Study of Democracy at Queens U in Kingston, Canada and the Gordon Foundation), spoke before my group, the American Association of Political Consultants, and told why Canadians and other countries distinguished themselves from Americans and American political campaign technology.  He said that Americans pursue life, liberty and the pursuit of happiness as a national credo whereas most other societies have as their goals peace, order, liberty and fraternity.  Fraternity being the sharing in the well-being of all of society.  Big difference between the individual pursuit of happiness to the altruistic sharing of the well-being of everyone.  And that difference translates into political orientation, campaign practices and social ethic.  In America elected officials have star status whereas most members of parliaments worldwide are part of the party and not well known.  They are often elected as the x-party member for the y area.  Hence there's less personality and more issue orientation.  Not Barney Frank versus Earl Sholley but instead Liberal versus Tory.  Axworthy's talk has stuck with me to this day because I strongly believe in his version of Fraternity and what it means for society and the future.  Also it was one of the many reasons I chose to sell off and quit my activities in politics.

(2) Ray Kurzweil's projections of logarithmic (exponentially accelerating) technological progress - particularly in the fields of robotics, biotechnology and nanotechnology - leading to a "singularity" or merging of these super-intelligent sciences sometime between 2040 and 2045, a merging where differentiating between a human with consciousness and a robot-like device acting as if it had consciousness, has been fascinating to me because I'm a technology enthusiast, particularly in the areas of computers, AI and robotics. I see it happening just as he says. In robots, genetics, longevity, artificial intelligence, aging, stem cells, and many more sciences, my vision of the future is similar to Kurtzweil's. And this is disturbing because his projections are leading to a conclusion that I don't want for society.

(3) While driving to and from Lake Tahoe last weekend, some friends and I listened to an audiobook entitled Death Match. Although it was a mystery, it was really about artificial intelligence. It involved a computer dating service that went beyond simple questionnaires and instead merged psychological, medical and financial data along with social data such as travel, movie and book preferences, phone call records, traffic tickets, etc. into a massive database which was then sliced and diced to provide information about the candidates well-beyond what they entered on their initial survey forms. Armed with all that data, the computer did it's match and was quite successful. A discussion occurred about individual boundaries, and computer capabilities. Coincidentally, I had recently listened to a podcast of an AI expert discussing how things were presently done (constructivist) and how they will be done shortly (software developing software). This shed light on what was fictional in the story. The discussion continued to include the fact that the story's software and manipulation of massive databases was available today but that it wasn't going to get too much better until more capable and extensive software could be developed and that was precluded because the present state of the art was constructivist (done by human programmers and limited by their time and capacity). Although software is used to create new computer chips, humans are still cranking out AI software. When AI software becomes self-generating, that's when robotics and other embedded sciences will grow - and the dangers I foresee begin.

This brings me to a long and old (2000) Wired Magazine article written by Bill Joy, co-founder and network computer scientist of Sun Microsystems, a VC at Kleiner Perkins Greentech and FOO (Friend of Obama).  In the article, Joy worked his way through his own history of thoughts about technology to an evening when he spent some time with Ray Kurzweil and learned, first-hand, what Kurzweil foresaw.

Ray was saying that the rate of improvement of technology was going to accelerate and that we were going to become robots or fuse with robots or something like that and John [Searle, also at the meeting] countering that this couldn't happen because the robots couldn't be conscious.

I had always felt sentient robots were in the realm of science fiction.  But now, from someone I respected, I was hearing a strong argument that they were a near-term possibility.  I was taken aback, especially given Ray's proven ability to imagine and create the future.  I already knew that new technologies like genetic engineering and nanotechnology were giving us the power to remake the world, but a realistic and imminent scenario for intelligent robots surprised me.

Joy wrote pages of his history in thought from then until he met scholar and author Jacques Attali who described his interpretation of Fraternity.

Jacques helped me understand... Fraternity, whose foundation is altruism. Fraternity alone associates individual happiness with the happiness of others, affording the promise of self-sustainment.

This crystallized for me my problem with Kurzweil's dream. A technological approach to Eternity - near immortality through robotics - may not be the most desirable utopia, and its pursuit brings clear dangers. Maybe we should rethink our utopian choices.

I believe we must find alternative outlets for our creative forces, beyond the culture of perpetual economic growth; this growth has largely been a blessing for several hundred years, but it has not brought us unalloyed happiness, and we must now choose between the pursuit of unrestricted and undirected growth through science and technology and the clear accompanying dangers.

We are getting a belated start on seriously addressing the issues around 21st-century technologies - the prevention of knowledge-enabled mass destruction - and further delay seems unacceptable. 

It seems to me that Joy's seriousness and concern is well-deserved and appropriate.  I share his concerns fully.  What do you think?

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 seriousness of the recent worldwide stock market and economy crash - of the drop in market value of the companies - of the loss of jobs and orders, and 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 and buy-outs has stopped and the future is looking brighter especially 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.

Robotics 2009 - A Review

Singularity Hub, a website reporting advances in nanotechnology, genetics, biology, AI, aging and robotics, presented their 2009 Best Robots pictorial, a graphic review of some of the most interesting robots in the news in 2009.  A few of the entries were frivolous or  prototypes with no prospect of near-term commercialization, and there were some major omissions, but overall it gives a favorable impression of the progress made during 2009 - and prospects for the future - in robotics. It made me think that it might be time to review my own progress through 2009.

In June, 2008, I began to research the robotics industry - and the future of robotics - with an eye toward selectively investing in publicly-traded or privately held robotics businesses. I set up The Robot Report as an adjunct of my research - to share the data I've collected and to provide a visual method to track the business of robotics.  I've also been compiling a database of robotic companies and facilities worldwide and developed an industry chart (RoboStox™) of publicly-traded service and industrial robotic companies from which to compare their change to that of the NASDAQ and the DJIA indexes. RoboStox™is updated and recapped monthly on The Robot Report.

My research was necessary because my stock brokers didn't have a list of companies involved in robotics. They had a few stock tips but nothing comprehensive about the industry. Nor was there a fund or index for the industry.  Not even a knowledgeable specialist or quant. I realized that I had to do the legwork myself. It's been an intensive project that has taken me to Korea, Germany, Japan, and all over the Internet. My eyesight has suffered but not my mind. I love what I'm doing and discovering.

September 2008 was right about the time that the economic crisis really hit. Stocks took their second and biggest dive. People were on the edge of panic. Things hidden behind years of obfuscation became painfully visible in the media.

Robotic stocks tumbled that September. Fell like bricks. But I was still optimistic. I thought that by the time I really grasped the business of robotics, I'd be able to select the good from the chaff, and ride the wave back up, should it ever happen.

Thus far I've identified more than 600 companies (worldwide) that produce robotic products, 150 of which are publicly traded. Of the 600, many are conglomerates or companies where robotics aren't their primary business - ABB is an example. Less than 1/3 of ABB revenue is from robotics, yet ABB is one of the major robotics providers in the world.  Many of the companies aren't listed on American exchanges. My database has another 650 companies, some of which are public, that are ancillary to the industry providing everything from engineering, integration, software, vision systems and other necessary components to purely educational and research facilities. I have another 200 UAV providers on hold because many are unlikely to become commercially viable due to restrictions in airspace and the probability that countless years will pass before those limitations are lifted.

Observations from 2009:

• Strategic funding toward a robotics industry via a roadmap is non-existant in the U.S. but not in Korea, Japan and the EU. Their "roadmaps" have been designed, plotted out, funded, the public-private groups selected, and the tasks and research are underway.  Korea's $1.25 billion Frontier Program has an overall goal of a robot in every household and for Korea to become the primary worldwide provider of industrial robots by 2018. Japan's $100 million transition to service robotics is reflected in a variety of prototype elder and home care robots and smaller multi-functional assistance robots. The EU has funded (at least $600 million) for a variety of public-private consortiums in the area of cognitive systems, human-robot and robot-robot interaction.
• In America, we are many years behind.  Our "roadmap" was presented to a congressional caucus in February but has yet to be approved or funded.  If it does get approved and then funded, it is unlikely to get into the budget until FY 2013 or 2014.  As an American, I find this to be quite disturbing.
• Pragmatic funding for robotics does happen in the U.S. particularly for defense through DARPA, space, and from a select few individual entrepreneurs.
• Although there is and will be stimulus for high tech from the 2009 Economic Stimulus Bill, there is NONE for robotics; rather, there's money for healthcare digitization, enhancing the national broadband system and for energy efficiency (mostly in the form of grants and tax credits) and the ARPA-E grants for the development of enhanced battery technologies, carbon capture and other non-robotic research.
• Industrial robot producers have been diversifying and consolidating into the service sector and improving their products by making them lighter, more capable, less requiring of a safety cage, and easily trained.
• Like other companies suffering the economic crisis, orders have been down and employee cuts were necessary.  But that trend appears to be reversing in the services sector.
• Proof of this last point came from job offer information from LinkedIn and the Robotics-Worldwide mailing list - sources for monitoring such offerings.  One can see particular progress in the areas of bionics, motion vision, human-robot and robot-robot communication, motion flexibility, and artificial intelligence.  
  
• Worldwide robotics stocks - in anticipation of a return to economic normalcy - have recouped much of their losses from lows reached early this year.  Nevertheless, almost all are still lower than they were in 2008.
• Other researchers are getting on the robotics bandwagon in addition to The Robot Report.  Three new players offered pay-for material about the industry in 2009. The Robot Report, of course, is free.
  

Thus 2009 was a year of retrenchment for industrial robotic suppliers - product improvements and movement toward new products in the service robotics sector.  Industrial orders may have been down, but companies making the move to the service sector are hiring and marketing.  One exception to this has been in defense, space and surveillance where orders and sales are up.  Although news reports make it appear to be an American thing, it really is a worldwide phenomenon.  Countries from Israel to South Africa, from Brazil to China, are all developing security and defense bots of one type or another.

For me, 2009 was a year of research, database development and learning.  As the year progressed I began to focus on areas of particular appeal: rehabilitative robotics, agricultural robots, and medium-priced robotic toys to name a few.  People and companies began to discuss their financial needs with me and my collection of NDA's is growing.  Hopefully 2010 will be the year where everything robotic gels and we all have an exiting and prosperous robotics New Year.  One can only hope!

PS: 'Christmas Fun with Electronic Robots' was the cover story on the now-defunct Popular Electronics magazine back in December, 1958 - 51 years ago.  The issue sold for 35 cents!  I scanned and Photoshopped the cover into the graphic shown above.