Blogging from RoboBusiness in Pittsburgh this week. Much to my disappointment, the Convention Center does not have wireless access, so blog postings are coming out when possible.
Colin Angle, Co Founder and CEO of iRobot spent 45 minutes romping through robotics market business concepts. He presented 21 (I only captured 20 for some reason) – with a detailed to very quick take on each as to its viability.
He ranked each of his concepts on a 2 by 2 chart with the horizontal access representing Revenue Potential (can you see the concept), and the vertical access representing Margin Opportunity (can you make money at the concept?)
Case 1: Industrial cleaning machines
$80B in 2000 in North America cleaning tile (hard floors)
It’s hard to beat the labor costs. You need huge space to be cost effective. Colin spent a year on this space and documented a 42% savings over conventional labor, but business models around replacing human labor are fraught with risk. There is huge gaming by cleaning companies, and lack of objectivity by building supervisors. iRobot is not involved in this market, but Intellibot is working in it.
Case 2: Aggressively priced home cleaning robots
The Roomba and it’s kin dominate this market. The price point anchored to price of vacuum. There are lots of iRobot copies – especially in Korea. The marketplace is competitive and margin challenged.
Total 2007 domestic vacuum market – $2.4 B. Robots have captured 5%. (Homeworld business review)
Case 3: Expensive home robots
Popular in Korea. Much skepticism. In some markets, consumers enter with a base model (Cars, watches, grills etc) and over time some upgrade to a premium product. This has not yet been demonstrated in robot vacuums.
Case 4: Robot Pets
American consumers spend billions on their pets. Is there a market for expensive robot replacements? Furby (cheap) sold 40 million units. 20M of which were sold to adults for adult use. However the expensive Quiro and Aibo were not successful, and Pleo just out.
[As an aside, Bob Christopher, the CEO of Ugobe – maker of Pleo – scratched his appearance at RoboBusiness. And thank goodness as I was up against him in the same time slot ?]
Case 5: Robot Toys
Treat robot like toy industry. You do not have special treatment because you are a robot. New companies succeed by pushing costs to the factory. If you can show up at the factory in China with a design on the back of a napkin, and convince them to build it for you and you will buy it from them if they are successful, you might be able to be profitable. The average cost to develop a new toy is less than $40,000, and 85% don’t make it past their first anniversary.
Case 6: Above Ground Oil Storage Tank Inspection
Here is another area where Colin claims to have spent way too much time. He built a product that should have been successful. After all, regulates mandate regular self-inspection. However he discovered that the regulations are not taken seriously. Companies that operate Above oil tanks rely on “self insurance”. They build in safety berms if there is a tank rupture, and decommission the tank prior to the end of it’s known good lifespan. If there is a rupture, they pay the fine.
Case 7: Military UAV
Unmanned aerial vehicles is a growing market. It has a high price point expectation and over 100 companies involved.
Case 8: Unmanned Underwater Vehicle
Also a high price point expectation, this market is small but growing. A key is the relative lack of obstacles to run into. There are less than 10 companies in this market.
Case 9: Military UGV
The military unmanned ground vehicle market is a key market for iRobot. There are moderate barriers to entry and a relatively low price point compared to UAV and UUV. Challenges exist in both ruggedness and obstacle avoidance. This market has moderate growth opportunities according to Colin.
Case 10: Knock off Military robots
Not a good strategy. Colin had to vent about the RFx controversy. His observations: Steal iRobot IP, get sued, RIP.
Case 11: Oil Well bore robots
Colin was very excited about this market. The biggest, oil reserves are in deep water and Robot boring and exploring robots enable something new. I’d expect to see iRobot make a play in this market.
[I missed case 12]
Case 13: Vending machines
The most successful robots of all time.
Case 14: Material Handling
Material Handling robots are making a comeback. The offer concrete measures of performance. Very interesting implementations by KIVA systems, Seegrid, and Atheon.
Case 15 – Virtual presence robots
An emerging market. Builds on the notion of personal video conferencing. Can be applied to both home (jump into your kids robot to talk to them) and business (doctor interviews a patient and checks vitals from 1000 miles away).
[Aside – I saw a presentation later in the day about TraumaPod – the operating room of the future. It had a heavy telepresence capability. I’d look for Intuitive Surgical to make noise here.]
Case 16: Animatronics robots
Disney themeparks have it as a central theme. How about blending animatronics and vending?
Case 17: Medical Robots
A growing market. Look at the success of Intuitive Surgical and others.
Case 18: Exploration and Recovery robots
A fun concept, but not much money in it for the hobby or academic explorer market. But…
Case 19: Commercial Exploration and Recovery
Has been very lucrative for the few teams that have deployed robots to go after ship wrecks. But definitely not a commercial market.
Case 20: Audio / Video robot
Do you want your ipod and speakers rolling around after you? [Aside – perhaps it as a role in LifeLogging?]
Case 21: Asteroid mining robots
A scifi vision. But Google is on the way to the moon.
Conclusions and a couple of prescient comments from the man who co-founded the personal and military robotics industries:
• Don’t be seduced by the cool side of Robotics? Who gets paid more, the salesman or the janitor? Value tied to what they produce. (Sex robots).
• There are very interesting things happening in the manufacturing space, and iRobot will be talking about that in the future.
• Medical / Vending / UAV highest current revenue vs. margin opportunity.
• Is your goal to create a robot that does new things or does things differently?
• Incrementalism leads to very slow adoption.
• Is it an industry? Seems like a technology enabler for existing and new industries.
I think it’s worth noting the absence of autonomous consumer transportation in Colin’s list. SciVestor agrees and makes a similar assertion with an explanation as to why this is predicted to be the case.
–Ray