robotics business review Fourth Quarter TRANSACTIONS REPORT 2016 and Annual Review RoboticsBusinessReview.com Q4 2016 / Year-End Financial to increase production efficiencies, ABI estimates annual revenue will exceed $30 Robotics Industry Round-Up billion by 2020 and nearly $45 billion in 2025. The end of Q4 2016 marked a tremendous year for the robotics industry. Within the Takeaways from Q4 and 2017 quarter, transactions including direct • From a global perspective, China will investments, M&A, government funding continue to forge ahead and be a mega driver and IPOs, reached well over $60 billion. A of growth. It’s expected that by 2019, almost substantial portion of transactional value was 40% of the global supply will be installed in derived from healthy acquisition activity led China. by enterprises seeking to disrupt or further gain a competitive advantage. Of the 40 • The competitive landscape of industrial plus acquisitions that occurred in 2016, the robots is becoming more fragmented, with industry experienced a phenomenal $105 the big four industrial automation players – billion in $1 billion-plus acquisitions. KUKA, ABB, Fanuc and Yaskawa Motoman- taking upwards to 50% of the global industrial The robotics market made noteworthy market. The number of small and mid-sized advances in performance, including players battling to for the remaining market developments around AI and machine share continues to increase. intelligence which signaled a point of inflection. Increased utilization and adoption • The increased level of connectivity of robots for non-industrial applications (e.g. and cloud-based AI and machine learning service, retail, hospitality, in-home assistance) applications will increase investments in IOT/ began to blossom. As the tech industry IIOT and the factory of the future movement. continued to hone in on developing connected environments and AI seeped deeper into • Increased deal flow is expected to the creation of robot solutions, the industry be further pushed along by companies moved closer to providing multiple solutions leveraging a collection of technologies to capable of engaging with humans on a advance competitively or create disruption. level supporting viable commercial service • Robotic solution providers are moving applications and even companionship. toward pricing levels and models that support Depending on which research numbers increased adoption by global small and are referenced for benchmarking industry medium-sized enterprises (SMEs). growth, stats suggest industrial applications • SMEs looking to adopt or scale must have traditionally accounted for upwards be actively investigating their options now to an estimated 70% of overall robotics and can’t hold out for the right economic market revenue. However, in 2016 there conditions if they wish to achieve a was signification recognition and usage of substantial completive advantage with non-industrial applications, especially in the robotics. service category. This trend will prompt a shift in investment focus, as indicated by market • As is the case in the warehouse logistics intelligence firm Tractica, which estimates segment, quality improvement requirements “industrial robots will only see 41% of total will prompt increased adoption while pushing robotics revenue with the remaining 59% solution providers to further advance their belonging to non-industrial robotics” in the systems. near future. • Original equipment manufacturers (OEMs) Although emerging markets are starting to are currently “front runners” in the investment show promise, industrial robot applications arena due to deep ties to the research remain strong, as can be seen in the community and regular monitoring of end- number of units shipped for that segment user service requirements, according to some (see shipment section). ABI research firm analysts. estimates that industrial robot shipments will exhibit an average year-over-year (YOY) • Robotics remains a technology seeking growth rate of 16% by 2021. As industrial a place in many markets with a need for robots continue to scale within the workforce broader traction. This will not occur until RoboticsBusinessReview.com 3 business models are further developed • There is no clear market leader defining the and R&D and installation cost become less direction of the industry – or specific vertical prohibitive. - and there is no clear definable investment trend to point to when evaluating 2016 financial result. Robot Shipments: The North American industrial automation On the buy side of the equation, more than market continues to show steady growth with 6,320 robotic units (exceeding $243 million) the total number of units shipped growing were sold to Mexico to help the country 10.2% from 28,000 at $1.6 billion in 2015 support its leading growth engine. This to 30,875 at $1.8 billion in 2016, according positions Mexico as seventh in global auto to the Robotic Industries Association (RIA). production and inches country closer to larger The association notes that since 2011, when players such as U.S., Japan, and China. 18,000 units were shipped at $1.1 billion, the number of units shipped has almost doubled. Globally, shipments of industrial robots remain solid, buts it’s Asia – driven by China - that Of the shipments in 2016, automotive continues to take a strong lead in automation carmakers and component manufacturers and robotic shipments. The Asia-Pacific region accounted for the largest percentage with a currently leads in shipments of industrial combined 22,743 shipments. robots, accounting for approximately 65% of the global market, with China responsible for Worth noting, is that as robots become more roughly one-third of worldwide shipments, affordable and flexible, significant growth according to data by ABI Research. is occurring in other areas of industrial production including plastics, rubber, food and China is in the process of revegetating beverage, consumer goods, electronics, and its manufacturing sector and the Chinese pharmaceuticals. governments’ automation 2025 initiative aims to make China a leader in automation Of the more than 30,000 robots that shipped globally. By 2019, it’s forecasted that almost last year, 90% were articulated robotic arms. 40% of the global supply will be installed in SMEs are a particularly bright spot, noted the China. Continued growth in robot installations RIA. is predicted for all major Asian robot markets: Korea, Japan, Taiwan and other Southeast Bordering US countries Mexico and Canada, Asian countries, based on a forecast by the also saw stable growth. In Mexico, shipments International Federation of Robotics. went from 4,632 at $182 billion to 4,984 at $218 billion, most of which was significantly driven by its growing footprint in automotive. RoboticsBusinessReview.com 4 imaging software targeted at construction SEGMENT companies. DEVELOPMENTS Deals on non-delivery drones involved Drone market tightens in various tasks such as field surveys, surveillance, mapping, and monitoring nearly Significant attention is being given to the use doubled in 2016 from 2015. According to CB of drones for commercial applications. Due to Insights industrial drones (non-delivery) raised their popularity and assumed flexibility, supply at least 27 deals – what CB Insights says is the chain businesses have begun to consider largest number of deals among the enterprise using drones in warehouses. In fact, a Frost robotics categories. and Sullivan report states that drones are one of the few radical technologies that industry Healthcare is a hot robotics sector participants will cautiously adopt over the next 15 years. Last-mile delivery drones have come In 2016, while major advances and investment in favor, which is exemplified by Zipline, which were made in the areas of logistics and is backed by Google Ventures and Sequoia service robots, healthcare robotics also made Capital, and Dispatch, which is backed by headway. Although the medical robotics sector Andreessen Horowitz. saw fewer deals compared with consumer and enterprise robots, there were some well-funded There’s a better understanding of the rounds, said CB Insights’ Varadharajan. opportunity presented by robotics today than in previous years, said Sam Korus, an analyst Restoration Robotics raised $45 million in at ARK Invest and an expert in industrial Series D the first quarter, and Auris Surgical innovation. Robots raised $49 million in growth equity in the third quarter. The robotics industry has “People are beginning to recognize that gained traction in most end-user segments easily reprogrammable robots can enter new over the past four years, noted Bharath markets and make a needle-moving difference Kanniappan, a senior industry analyst at for companies,” he said. “It is still at an early research and advisory firm Technavio. This stage, but more and more case studies are is mainly the result of increased automation emerging proving the value proposition.” requirements to optimize workflow, increased data interpretation, and analysis, and Dominance in the consumer drones category adherence to quality schedules. by established businesses such as DJI may make it harder for newer startups to break into “Entry of new market participants both in the the market, warned Deepashri Varadharajan, a product-development and software solution tech industry analyst at CB Insights. However, streams has paved way for venture capitalists a reduction in consumer demand coupled [VCs] to focus on extending their support in with