InvestmentsDec 14 2015

Picking winners in the robotics age

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Have you considered the fact that children born today may never drive cars, or that as we all reach that ‘silver generation’ age we will be cared for in part by robots?

Robotics and automation is a theme running through almost every industry and practice and now is the time for advisers and their clients to start allocating to this fast-growing market.

It can be difficult to appreciate the rapid development and deployment of technologies such as high-fidelity sensor processing, computer vision, force sensing, machine learning, speech recognition, real-time control and intelligent navigation. But these and other related technologies are a commercial reality today.

The smartphone, for example, has nine built-in sensors. Coupled with increased processing power at dramatically lower costs, this technology has created the foundation for explosive growth within the robotics and automation industry.

Perhaps unsurprisingly, the demand for robotics within healthcare, particularly in surgical procedures, is rising. If you are having prostate surgery in the US, for example, it is highly probable your procedure will be carried out by a robot.

Intuitive Surgical’s Da Vinci Robot dominates the keyhole surgical market. With more than 3,000 installations worldwide, this technology assists in routine surgeries, simplifies incisions and speeds up the process, reducing recovery time and ultimately allowing doctors to spend more time on complex operations.

Even outside of the operating theatre, robots are being used to facilitate care. Paro, Pearl and Pepper are types of robots already being used, and they create a sense of stability and calmness for the elderly.

This area within healthcare will grow exponentially. Take Japan as an example. It is expected that by 2025, a third of its population will be over the national retirement age, but there is already a shortage of care workers in the market.

Meanwhile, agriculture is the world’s oldest and most important economic activity, but it is challenged by the fact that productivity must increase 25 per cent by 2050. Robotics will play a key role to bridge this gap, driven by companies such as John Deere, Arco, ATC and Blue River.

For six decades robots have played a fundamental role in improving the efficiency and reducing the cost of industrial production. In the past 20 years, a similar trend has taken place in agriculture, with GPS and vision-based, self-guided tractors and harvesters becoming available commercially.

A recent report by Tactica forecasted the overall agricultural robotic market will reach $3bn (£2bn) by the end of 2015, and this is likely to increase fivefold to $16.8bn by 2020 and to $73.9bn within the next 10 years.

We have already seen inventions such as robotic vacuum cleaners increase in popularity in the home. Even robot companions such as SoftBank’s Pepper are already a home reality.

Dyson, Jibo, Samsung and iRobot are a few of the major players and the advent of the ‘smart home’ will drive this consumer sector forward faster.

In a recent assessment of the market, BI Intelligence suggested that by 2019 the market for consumer and business robots will be $1.5bn.

The consumer robot market is the fastest growing, with expected compound annual growth rates of 17 per cent between 2014 and 2019.

The opportunities for investors are endless, and looking forward there is an ocean of market applications that we have yet to imagine. Picking the winners will be a challenge, but the industry as a whole is already taking giant leaps forward.

Richard Lightbound is partner and chief executive for Europe/Asia at Robo Global

INVESTING IN ROBOTICS: KEY FACTS

$1bn

The largest manufacturer of drones had 2014 sales of more than $1bn versus $130m in 2013

25

Approximate number of new self-driving cars that have been sent on to the streets of Mountain View, California

€40bn

Germany will invest €40bn (£29bn) in Industry 4.0 (the fourth industrial revolution) every year by 2020

Fine dining

A robotic chef is now able to cook Michelin-starred food in your kitchen by mimicking the world’s best cooks

Source: Robo Global