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In Late December 2016 Rethink Robotics, supplier of Co-Bots secured an additional US$ 18 million investment. The new round, despite being somewhat short of the US$ 33 million sought as indicated by their SEC filing, included funding from the Swiss headquartered private equity investment firm, Adveq, as well as contributions from all previous investors, including Bezos Expeditions, CRV, Highland Capital Partners, Sigma Partners, DFJ, Two Sigma Ventures, GE Ventures and Goldman Sachs.
I think that Rethink’s Baxter and Sawyer robots are setting a new standard in advanced robotics for businesses of all sizes – the only downside is that Rethink sub contract the manufacturing of their robots which gives them less control of delivery scheduling and has possibly considerably hindered their over all growth, cash flow outlays and profitably. This could reflect, in a very hot growth market, the less than enthusiastic take up by new investors and indeed appetite for considerably increasing investment from existing investors. However in the coming months I would expect Rethink would secure the additional US$ 15 million they seek, maybe via Asian manufacturing partners, a region that is becoming increasingly important for Rethink as they endeavor to capture a larger share of the co-bot market.
In addition to Rethink’s new investment – a very interesting, relative, new comer to the industrial robotic manufacturing scene, the Advanced Robotics Manufacturing (ARM) Institute, a U.S. national, public-private partnership, has announced funding of US$ 250 million.
The U.S. Department of Defense awarded the public-private Manufacturing USA institute to American Robotics, a nonprofit venture led by Carnegie Mellon, with more than 230 partners in industry, academia, government and the nonprofit sector across the U.S. The institute will receive $80 million from the DOD, and an additional $173 million from the partner organizations.
Based in Pittsburgh, ARM is led by a newly established national nonprofit called American Robotics, which was founded by Carnegie Mellon University and includes a national network of 231 stakeholders from industry, academia, local governments and nonprofits.
The mission of ARM is essentially four-pronged. To 1) empower American workers to compete with low-wage workers abroad; 2) create and sustain new jobs to secure U.S. national prosperity; 3) lower the technical, operational, and economic barriers for small- and medium- sized enterprises as well as large companies to adopt robotics technologies; and 4) assert U.S. leadership in advanced manufacturing.
ARM’s 10-year goals include increasing worker productivity by 30 percent, creating 510,000 new manufacturing jobs in the U.S., ensuring that 30 percent of SMEs adopt robotics technology, and providing the ecosystem where major industrial robotics manufacturers will emerge.
These investments keep robotics on course to be one of the main investment areas for improving manufacturing productivity and indeed increasing jobs and corporate profitability.
The ARM investment sounds very similar to those of the EU’s public / private initiative announced in June 2014, albeit that is a Euro 2.8 billion initiative and less ambitious, but very worthy, target of adding 240,000 new jobs.
Photo: ARM Institute impact
Findings – It may be a good time to be a manufacturer of Co-Bots, one manufacturer sold for up to 100 times profit, whilst another Co-Bot manufacturer attracted significant equity investment. Research indicates that sales of Co-Bots are set to increase significantly over the coming decade, causing productivity and profit gains for manufacturers but mass disruption for factory workers.
As sales of larger ‘caged’ industrial robots show signs of slowing down (according to the latest filed annual reports of industrial robot manufacturers), sales of Collaborative Robots, or Co-Bots, smaller, more agile industrial robots have been proclaimed as ‘booming,’ with headlines such as Agile Robots Will Rule and claims that demand for collaborative robots is growing exponentially:
“We see this market exploding right now,” says Henrik Christensen, chair of Robotics at Georgia Institute of Technology and executive director of the Institute for Robotics and Intelligent Machines.
Whilst Frost & Sullivan’s membership-driven’ Manufacturing Leadership Council indicates adoption of Co-Bots is ‘unstoppable:
More affordable robots that can work safely alongside human employees in collaborative ways will begin to transform many plant floor working environments in the year ahead…” and “the overall adoption trend will be unstoppable.
During more than two years of detailed research, interviewing hundreds of executives and reading over 1500 corporate filings, to ascertain the impact of robots on jobs, production and profitability at the companies who have installed industrial robots, I consistently heard the claim that as industrial robots progress they take on tasks that previously only humans could – but with each new robotic capability a new opportunity for humans presents itself, although many of these opportunities are away from the factory floor.
It was also clear during my discussions that many of the manufacturers researched intended to increase their number of robots with the evolution of the smaller more agile Co-Bots.
Co-Bots are linked to accuracy, repeatability, quality of service, and further well-defined, quantifiable metrics. “These low-cost robots have the potential to increase precision and raise productivity by reducing the number of workers required.”
Leaving aside the potential impact on jobs, productivity and profitability through installations of Co-Bots, and believe me it will be significant, let’s take a look at the predictions and numbers driving Co-Bot growth.
It is easy to imagine that co-bots could be on track to sell hundreds of thousands of units beginning as early as 2018.
Another prediction of the Collaborative Robot market prospects, by Barclays Equity Research analysts, estimates that global sales of Co-Bots reached approximately “US$ 120 million at the end of 2015;” and that the Barclays Analysts:
Expect this market to grow to $3.1bn by 2020 and $12bn by 2025.
Barclays base their forecasts on current (2015) global sales of 4,100 units and an average selling price of $28,177 per unit; declining to a forecast $21,000 per unit in 2020, with annual unit sales of 150,000, thereby estimating a global market of $3.1 billion in that year.
They further estimate unit prices continuing to decline by 3-5% per annum through 2025 to circa $17,500 per unit, and global sales of a staggering 701,000 Co-Bot robot units in 2025 when they forecast a market size of around $12 billion.
The Barclays predictions are based on current manufacturing headcount in the 5 core robotics markets (China, South Korea, Japan, US and Germany), using statistics from the International Labour Organization (ILO) and China’s National Bureau of Statistics. Factoring in conservative estimates of GDP growth and productivity the Barclays analysts then estimated a potential robot penetration versus current manufacturing headcount as below:
Note by Barclays analysts for ‘Other markets: We forecast 2020 sales of 30,000 units, rising to 70,000 in 2025, using the same growth and adoption rates as we do for Germany.’
Current Co-Bot sales – Reality versus hype
The most successful Co-Bot manufacturer by far is Universal Robots (UR) of Denmark. Founded in 2005, UR shipped their first robot in December 2008. By the end of 2014 they had installed a total of 3,800 Co-Bots worldwide and added an additional 2,200 units in 2015.
During 2014 UR moved into a new 12,000 square meter Headquarters and factory, seven times bigger than their former production facility, enabling them to increase robot production capacity to 150 robots per day as demand increases.
Between 2013 and 2014 Universal Robots sold 2,200 robot units at an average selling price of US$ 23,627.
According to Universal Robots Annual Report for year ended 2014, UR had annual sales of US$ 33 million and recorded net profits of US$ 3,25 million.
During 2015 Universal Robots was acquired by Teradyne, Inc. for an initial cash payment of US$ 285 Million plus an additional US$ 65 million against performance related targets (total US$ 350 million).
According to the Form 8K filing by Teradyne on 14th May 2015 “up to $15 million would be payable upon the achievement of certain EBITDA-based performance targets through 2015 and up to $50 million would be payable upon the achievement of certain revenue-based performance targets through 2018.” Barclays Research analysts indicate that the performance related targets include “50% annual organic sales growth.” 
In 2015 they are estimated to have installed 2,200 robot units, bringing UR’s total worldwide installed units to 6,000.
If headlines counted then Rethink Robotics of Boston certainly gained most traction, much of it due to the perceived ‘attractiveness’ of Baxter their two-armed robot with an animated face. However headlines do not always translate into sales.
Rethink Robotics have raised US$ 113.5 million in venture capital and equity investment since being founded in 2008, having completed a US$ 40 million series D round in March 2015, (although their SEC filing omits the first round and confirmation of share allocation in the last round). The press around Baxter and capital injections, together with a stellar management team may be one reason the New York Times listed Rethink as one of the next billion dollar valued Unicorn companies.
However Rethink have lagged behind in sales compared to Universal Robots, with Rethink recording estimated 2015 annual sales below US$ 10 million and less than 400 Baxter robots shipped in 2015.
Since the company began shipping Baxter in 2012 a cumulative number of between 850 and 900 Baxter robots have been installed worldwide.
Average selling prices are a little under US$ 24,000 including warranties, pedestal, grippers and Rethink’s Intera software subscription. Rethink may have booked a little over cumulative recorded revenue of US$ 20 million which would indicate the company has been burning through much of the investors capital.
At least 40% of Rethink’s sales of Baxter have been to research labs and universities with the rest to industry. About one third have been overseas with customers in France, UK, Japan, Australia and Hong Kong being the main recipients and the balance in the United States.
Whilst sales of Baxter may have been below market expectations given the media attention, sales of Rethink’s new one-armed little brother to Baxter, named Sawyer have certainly been brisk. Our market research indications are that the company shipped a nominal number of Sawyer to date (less than 50), however it is expected that, based on current orders received, sales and shipments in the first quarter of 2016 for Sawyer will exceed the total recorded bookings in 2015 for Baxter and Sawyer combined.
The four main Industrial robot manufacturers ABB, Fanuc, Yaskawa and Kuka have all announced their own Co-Bot robots over the last few years, however many of these only began increasing the market awareness and delivery of their Co-Bots in 2015. The most prominent being General Motors use of Fanuc’s CR351 for stacking tires. Other manufacturers such as Kawasaki and Nachi and new entrants from China will come on stream strong within the next few years,
As the numbers in the tables below show, based on our research, annual sales of Co-Bots reached 3,670 units in 2015 with a market value of US$ 104 million. Unit prices differed considerably with target prices of US$ 100,000 at the top end of the ‘established’ robot manufacturers and special prices by the new entrants including special offers of buy 1 robot and receive a 50% discount on a second. Plus very attractive bonus structures to resellers for stocking Co-Bot units.
To date there are a little over 7,800 Co-Bots installed worldwide. However order books at current manufacturers together with prospects, sales leads and feedback from resellers indicate that 2016 will see more than 15,000 Co-Bots installed.
Note: ABB’s sales include those by Gomtec a company ABB acquired in 2015.
Based on current manufacturing capabilities, network and demand it is not too difficult to conceive that Universal Robots will achieve annual sales of 50,000 units and revenue of US$ 1 billion within five years. It is also highly probable that Rethink Robotics will catch up to UR and also achieve annual sales of 50,000 units by 2020, however to do that they will need to establish the vital manufacturing capacity. Rethink’s current order book for Sawyer would indicate that they are on track to achieve considerable growth in 2016 with revenue of US$ 8 to US$ 10 million in Q1/2016 and revenue of between US$ 36 and US$ 40 million with sales of up to 2,000 units by the end of the year.
In part two of this special report on Co-Bots I will outline, with examples, the industries and companies that are using Co-Bots, the return on investments that Co-Bot manufacturers claim, the future projections for productivity and profitability gains by manufacturers and impact on jobs.
Whilst I do not expect hundreds of thousands of Co-Bot units to be installed by 2018 — one thing is clear; Co-Bots are living up to the hype with tasks they can take on. Indeed there are claims that up to 90% of manufacturing processes are still to be automated – I expect Co-Bots will be a major driver in that automation.
 Baily and Bosworth. US Manufacturing: Understanding Its Past and Its Potential Future. Journal of Economic Perspectives Volume 28, Number 1—Winter 2014—Pages 3–26
 Barclays Equity Research – The rise of co-bots: Sizing the market. Barclays European Capital Goods Analysts Brorson, Maidi, Stettler, and Vos
 Analysis based on UR accumulated revenues between 2013 and 2014 (approximately US$ 52 million divided by 2,200 robots sold in the same period according to UR press kit, facts and figures. The company also declared sales of 1,800 robots from inception through to end of 2012)
 Barclays Equity Research – The rise of co-bots: Sizing the market. Barclays European Capital Goods Analysts Brorson, Maidi, Stettler, and Vos