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Rise of the Machines: Don’t Ignore Robotics

Rise of the Machines: Don’t Ignore Robotics

When you’re thinking about new, emerging technologies, robotics probably isn’t one of the first things that comes to mind. After all, industrial robots have been used to improve factory efficiencies for decades. The fact that automation in the U.S. has been primarily geared around factory applications like building cars is one of the reasons that a lot of investors might be tempted to dismiss this as a useful area to look for growth opportunities. That would be a mistake; a report in 2016 projected that spending worldwide on robotics, automation and related services would increase from around $70 billion in 2015 to more than $135.4 billion in 2019. That’s worldwide growth of nearly 23% each year. That total number is also expected to increase to nearly $220 billion worldwide by 2021, which means that adoption of this technology throughout the business world is accelerating.

How do you as an investor find ways to participate in this growth market? The first step is to start recognizing the different ways that the technology is being used. And keep in mind, we’re not just talking about robots; artificial intelligence is one of the things that is making this segment more and more attractive all the time. Let’s take a look at some of the different ways A.I., automation and robotics are gaining more and more traction in the business world.



Oil and Gas

Beyond manufacturing processes, businesses are finding new, creative ways to use robots and automation to streamline and reduce costs while also improving quality and worker safety. One recent example is a French oil company that is deploying autonomous robots on an oil platform in the North Sea to test their ability to automate operational inspections. Offshore oil platforms are often a hazardous place for people to work, and so using these robots gives the company a way to read metrics on dials and gauges and even to take environmental readings like temperature and gas concentration remotely.

The oil and gas industry is an interesting place where adoption of robots and automation is increasing. National Oilwell Varco (NOV) makes perhaps the most well-known robots used in this industry, the Iron Roughneck. This is a robot that takes one of the most repetitive and dangerous tasks, connecting drill pipes through miles of ocean water and oil-bearing rock, out of the hands of humans. It improves efficiency of this task and improves safety for workers on a rig. Remotely-operated aerial drones, automated underwater vehicles, and robotic drills are all examples of other ways that oil and gas companies are implementing robots. Most experts, including oil and gas executives, expect the price of oil to remain far below the historical highs it last saw in 2014 around $100 per barrel, which means that companies who want to remain profitable will continue looking for ways to trim their operational costs. Robotics should continue to play a big role in that effort.

Telecommunications and Utilities

Drone technology is useful in the field of telecommunications for similar reasons as oil and gas; there are many tasks, inherently dangerous for human workers that can be made much, much safer with drones and robots. Maintenance of cell towers, electrical grids, and power and supply lines is an ongoing concern, and aerial drones, or UAVs, can simplify the process of inspection. As drone technology has improved, including the use of high-resolution onboard cameras and thermal sensors and transmitters, they become more and more attractive. They can be used to inspect telephone lines, line-of-sight testing between towers, and identify obstructions. Instead of sending a human worker climbing to the top of a tower to inspect communications parts, for example, a drone can do the same task and send back images of parts that need to be replaced with all of the data needed including part and serial numbers.



In an earlier post, I wrote about 5G spectrum and the race to build the next generation of telecommunications networks. That means not only building the equipment to facilitate that next phase, but also to make sure that existing 3G and 4G infrastructure is properly maintained to provide a reliable backup system. Drones are expected to be involved in multiple aspects of that ongoing project.

Healthcare

Healthcare is one of the top two fastest-growing industries for robotics, and the dollars spent on robotics purchases in this industry is expected to keep growing. One of the areas that robotics is already showing some of the greatest promise is in surgical precision. Intuitive Surgical Inc.’s (ISRG) da Vinci robot is already being used in a variety of surgical settings, from head and neck to urologic surgery. The advantage of this robot is that it keeps the surgeon in compete control of the procedure at all times while also providing the ability to make smaller, more precise incisions that reduce the potential for complications and speed healing and recovery.

Robots can be used in a number of other settings too. Many of the repetitive, tiring and daunting tasks performed primarily by nurses, like drawing blood and checking vital signs can be handled by a robot, which frees up nurses and other hospital staff to deal with issues that require human judgement and actual caregiving. Another really interesting area that could see significant growth is infection. Among the leading causes of death int he United States is hospital-acquired infections. CDC statistics indicate that 1 in every 25 patients will contract some type of infections while in the hospital, and of those, 1 in every 9 will die. Robots are already being developed to address this problem. One, called the Xenex Robot, uses high intensity ultraviolet light to disinfect any space in a healthcare facility. This is a great example of using a robot to address an important safety issue, for patients and staff, and that decreases staff workload so they can focus on providing the most effective care possible.

Consumers

Of course, what is the fun of talking about robotics if we can’t think about a Jetsons-inspired future? While we’re not there yet (and truthfully, do you really want to be?), the cool thing is that there are already plenty of interesting applications of robotics that are consumer-ready and immediately available. Aerial drones with cameras aren’t just great tools for industrial applications or innovative filmmakers; you can pick one up from your local Costco, Sam’s Club or Best Buy store to fly with your kid on a clear spring day. And don’t forget the Roomba, the vacuuming robot that is helping iRobot (IRBT) dominate the consumer robotics market in the same way Microsoft (MSFT) dominated the PC operating system market in the 1990’s and early 2000’s. The really interesting thing about consumer robotics is that it remains a largely untapped market; iRobot estimates U.S. household penetration of robotic vacuums is less than 10%, with international penetration much lower.

All told, the future for robotics looks bright in multiple different areas. Rise of the Machines? Maybe – but it probably isn’t the dark and foreboding future portrayed in the movies. I think the greatest growth will come from areas that help, not hinder business profitability and that provide important, useful ways to improve human life.



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