In March 2012, in an effort to make their distribution centers (DCs) as efficient as possible, Amazon acquired Kiva Systems for $775 million and almost immediately took them in house.
There was confusion after the acquisition whether Kiva would continue providing DCs with Kiva robots. Although Kiva said that they would continue selling their technology to other retailers it soon became clear that Amazon was taking all Kiva’s production and that, at some future date, Kiva would stop supporting their existing client base and focus entirely on Amazon – which happened in April 2015 when Amazon renamed Kiva to Amazon Robotics and encouraged prospective users of Kiva technology to let Amazon Robotics and Amazon Services provide fulfillment within Amazon warehouses using Amazon robots.
There’s been a lot of talk about package delivery via flying drones. While this is an interesting vision of the future, current economics make this an unlikely substitute for base-load ground delivery for the next 5–10 years. Flying delivery drones can make a compelling marketing tool or ultra-premium feature, but their current hype doesn’t mesh with immediate reality.
Amazon announced that at the end of September they had 30,000 Kiva robots at work in 13 fulfillment centers, effectively doubling the number of Kiva bots that it had in 2014. But they aren’t the only e-commerce warehouse operator adding robots to their automation arsenal. UPDATE 11-1-2015: Adding Grenzebach’s G-Com storage and picking system to the list of vendors offering competing systems to Kiva’s.
In this 4th interview of our four-part ECHORD series, conducted last June, Sascha Griffiths from TUM talks to Raffaello D’Andrea, Professor of Dynamic Systems and Control at ETH Zurich and technical co-founder of Kiva Systems. The series explores success stories and common obstacles in industry-academia collaborations in the field of robotics, and examines the differences between these collaborations in the US, Europe and Asia.
At last weekend’s Engadget Expand event in Fort Mason, San Francisco, Kickstarter‘s co-founder Yancey Strickler started off the show with a presentation of many of Kickstarter’s crowd-funding success stories. 17 projects raised $1 million+ in 2012 including Pebble, the customizable watch, Oculus Rift, a virtual reality headset for video games, SmartThings, a platform and hub that connect household things to the Internet and your smartphone, and Form 1, an affordable plug and play high-res 3D printer. [As an aside, Stanford now teaches a for-credit course on Kickstarter.]
Henrik Christensen, the KUKA Chair of Robotics at GA Tech and Chairman of the Roadmap project, Rodney Brooks, CEO of Rethink Robotics, Pete Wurman, CTO of Kiva Systems, and Russ Angold, CTO of Ekso Bionics all presented the new Roadmap to a packed gallery of the Robotics Caucus of the US Congress.
The past year was a watershed moment for robotics. From defense to exploration, startups to legislation, we saw products, laws, and investments that have shifted robotics out of the lab and into our lives. They have built on decades of basic and applied research, taking advantage of plummeting component costs and maturing core technologies such as batteries and communications. Below are the top 10 stories of 2012. And choosing only 10 from so many successes, research, and new products was extremely difficult. Perhaps that’s really the best story of the year.
Distribution centers (DCs) are massive warehouses that receive, inspect and store goods for later picking, packing and shipping to end-users, re-distributors or retail outlets. Products can be everything from books, pharmacy goods, clothing, office goods, food, drinks, shoes, produce, household items and pet supplies to diapers. And quantities can be one or two individual units to 20-100+ cases.
What is it about automated robotic warehousing? Amazon just acquired Kiva Systems for $775 million and now Permira, a European private equity firm, announced that it was acquiring Intelligrated for an amount in excess of $500 million! The deal is expected to close after the summer. Intelligrated designs, manufactures, and/or integrates and installs complete material handling solutions for warehouses, distribution centers and consumer product manufacturing operations and includes a line of palletizing robots along with more conventional conveyor systems.
A positive indicator for robotics startups is the improving financial climate. There are signs that the US housing market is stabilizing. Fannie Mae, the government backed mortgage company, has posted a profit for the first time since 2007 without needing a government bailout. The decline in home prices is slowing, as are mortgage delinquency rates and the rate of American home purchasing is on the rise again.
“We expect our financial results for 2012 to be significantly better than 2011,” Susan R. McFarland, Fannie Mae’s chief financial officer, said in a statement. “As our serious delinquency rate declines and home prices stabilize, we expect to reduce our reserves, which combined with revenue from our high-quality new book of business will drive our future results.” 
While not everyone is getting rich yet, the overall financial indicators show that the U.S. economy has rebounded faster than predicted. The stock market has doubled since 2009, corporate profits are surging and the U.S. economy is growing at 3% pa. As financial journalist Daniel Gross puts it:
“Like the world’s first bionic man, the U.S. economy has come back—better, stronger, and faster than most analysts expected, and than most of its peers.” 
While this is a U.S. centric view and some of Europe is still in financial crisis, nonetheless China and S.E.Asia are surging and many African economies are showing very promising proportional growth rates. There are other sources that describe the current world economic status but it’s no longer a bad time for a capital intensive industry like robotics to grow. Particularly if business models lower the risk by utilizing lease models or the rapid cheap trial and error methods of startups.
Where Defense budgets are tightening on traditional robotics, like unmanned systems, the Whitehouse is committing spending towards other newer robotics growth areas. All this indicates that robotics is ready to support itself as an industry, rather than be supported as a research project. Legislation is being passed allowing the introduction of driverless cars and by 2015 we may see changes permitting the commercial use of small drones in U.S. airspace.
3. Maturity of Robotics Technology
Rodney Brooks, founder of iRobot and current CEO of Heartland Robotics, is one of many expressing the view that robotics has progressed beyond a cool new research area and into the world of robot products. While making new discoveries is exciting, there isn’t enough effort going in to using those same exciting new technologies in everyday applications.
”Users just want to get a task done. They don’t care if it’s a cool robot. You may, but they may not care if it’s a robot at all,” 
So, the question now isn’t what robots can we build, it’s what can we do with the ones we’ve built already. The robots that are successful products seem simple and boring, eg. industrial arms, vacuum cleaners, cars. But when applied to the right problem, even simple robots are transformative. The first successful consumer robot was of course iRobot’s Roomba vacuum cleaner with more than 7 million sold worldwide. But the biggest acquisition of a robotics company was Amazon buying Kiva in March 2012 for $775 million.
Kiva’s system relies on small orange turtle like robots that move shelves around in warehouses. The brains are largely on servers. The robots aren’t ‘cool or exciting’. They are barely even robots. But they solve the problem that sank WebVan, one of the most spectacular e-commerce failures. You can only do half your e-commerce in the cloud. Somewhere real products have to be shipped to real places.
Kiva founder Mick Mountz is an MIT engineer who worked at WebVan. “We decided products that could walk and talk on their own would be the best way to solve the problem,” he laughs. 
Think of Kiva bots as the hands and feet of the Cloud. They are not autonomous Star-Trek-like agents, but are wirelessly connected to and controlled by the Cloud in real-time. 
Amazon, like WebVan, has to ship product. Reportedly, phsyical order fulfilment cost nearly 9 percent of Amazon’s $40 billion global revenues. This is a big enough pain point for some companies to be willing to trial the Kiva System in a few locations, especially smaller retailers, like Staples in 2004, who faced increasing competition in cloud commerce.
Kiva’s robots today are processing millions of orders a year in retailers’ warehouses across the United States, the UK, and Europe, quietly driving Kiva’s startling 80 percent annual growth. On the distant horizon is a plan to bring Kiva’s approach to the manufacturing sector. 
Jeff Bezos from Amazon is also investing heavily in Heartland Robotics. Brooks has a vision of transforming the workplace by making robots that can be safely worked with, shifting robots out of sterile, safe factory environments and bringing them alongside people. His analogy is with mainframe computer systems in the 1960s to the personal computer of the 1980s.
“Originally ordinary people couldn’t touch computers. Now they can. What if ordinary people could touch robots?” 
The future of robotics is exciting, but we’ve barely begun to fully explore the potential of the simple robots we already have.
next post: Increasing modularity & commonality plus decreasing component costs
Amazon (NASDAQ:AMZN) will acquire privately-held Kiva Systems for approximately $775 million!
Kiva’s novel warehousing system uses robots to bring the shelves to the picker and packer instead of vice versa.
The acquisition is expected to close next quarter.
At the recent Modex 2012 in Atlanta, Kiva Systems’ booth featured a fully-functioning warehouse operation where attendees walked up and placed their orders on an iPad and then picked their order right from the Kiva system just seconds later.
It even validated the product was as called for and that the picker took only the number he ordered. Supplychain magazine did a cover story special report about new-tech warehousing methods and featured Kiva as the disruptive player in the crowd.
In the emerging world of service robotics, many markets are opening to robotics that were once only handled by industrial robot manufacturers. Safely unmanned, or working alongside human workers, in a show focused on handling materials in the factory and also in the warehouse, Modex 2012, held in Atlanta (after 16 years in Cleveland), displayed the wares and solutions offered by 560 vendors and covered all aspects of picking, packing, handling and transporting material. Unlike industrial robots from the past, the newer robots displayed at Modex are able to adapt, easy to use and intuitive to operate.