Photo courtesy: Fellow Robots, Inc.

Robotics today is a fast growing industry with applications in myriad markets, including retail, transportation, manufacturing, and even as personal assistants. Fellow Robots is at the forefront of reimagining these uses for the best retail experience – to improve your experience when shopping and to help employees with the most up to date product information and location of goods and services.

Fellow Robots is a multidisciplinary young team from different backgrounds, ranging from robotic, software wizards and data scientists to designers and business experts. We have built many platforms including telepresence robots, humanoid robots, sensors, cloud computing and more cutting edge technology platforms. We came out of SU Labs at Singularity University at NASA Research Park in Silicon Valley. SU Labs connects corporate innovation teams with startups and other organizations to explore exponentially accelerating technologies and create new sustainable business solutions. What distinguishes Fellow Robots is the ability to partner and work shoulder to shoulder with customers to learn how robotics can improve their retail needs.

Interview with Marco Mascorro, CEO and Co-Founder, Fellow Robots
edited for clarity

Source: Silicon Valley Robotics

I’m Marco Mascorro, CEO and co-founder of Fellow Robots. Fellow Robots came out of Singularity University. Singularity University focuses on exponential technologies, with robotics being one of them. We started with a team of very passionate robotics engineers looking into industries that have not changed a great deal. We quickly honed in on the retail industry; specifically offline retail. For all the accomplishments of ecommerce and online retail in recent decades, about 90% of retail purchases still take place in store. This is clearly an industry overdue for a big step into technology, and we saw that robotics could be a great fit there.

We began by meeting with retailers and listening to them discuss the problems they are facing today, and have probably been facing for a long time. One of those early conversations was with Lowe’s. That conversation very quickly led us down the path toward a customer service robot.

I think that was a really interesting way to hear our customers, to see what kind of problems they were facing and how robotics technology could fit. Today, we have a partnership with Lowe’s to launch OSHbot, which is a customer service robot that helps customers find things in the stores. When the robot is navigating in the store, it knows where all the products are located. When a customer comes into the store they can just talk to the robot, in multiple languages. We can add up to twenty-five languages right now. We have English and Spanish working in the Orchard Supply Hardware store, owned by Lowe’s.

When a customer comes in and says, “Hey, I’m looking for nails and paint” then the robot can tell that customer where to find those items. It shows customers that it understands what is said. It displays on-screen the products that the store has in stock. It has a touch screen so customers can just navigate on the screen and see the pictures of the products and then click on the one that they actually want to see. OSHbot then tells the customer that the product is located in Aisle 15, for example, whether it’s in stock and some more information about the item. Customers can click on a button and follow OSHbot to the location of the item in the store.

The robot actually guides customers by its own fully autonomous navigation to the product location. Meanwhile customers are following OSHbot, there’s a screen on the back and that’s for engagement. It’s not very often we see robots talking to humans on a daily basis but I think that we are starting to see that now, and Fellow Robots and our customers are pretty happy about that.

The robot takes you to the product and then it gives you some extra options. If someone is buying paint, then it’s pretty common that they will also buy a brush. OSHbot can provide that information, and take the customer to the brushes as well. It’s a really interesting experience that the customer has now. It’s a whole new experience. Customers are going to stores and getting really accurate information about products, about what is in stock and where to find it.

If customers don’t want to follow the robot, OSHbot can just show them the product location on the map. The customer can decide to go on their own. One of the most interesting things we’ve seen so far is how quickly the adoption of new technologies is happening right now. Of course when we launched the robot in November last year, there was a “wow” factor. “But today if you go into the store it’s become so common, there’s no more “wow.” And we’re exactly seeing that path with OSHbot, as we saw with the smartphone industry.

So far you’ve described really successful interactions with OSHbot? Have there been difficulties?

There were a lot of unknowns when we first launched OSHbot, because hardly anyone has done this before. This is a customer service robot that’s actually working in the front of the store, helping customers and guiding them to specific locations. It’s very complicated to know how a robot is going to interact with people in stores, and how people and workers will respond to that robot.

Our primary realization was that customers interact with the robot almost exactly the same way that they interact with humans. The questions asked of OSHbot were questions they would ask a person.In the first month of deployment, we had someone right next to the robot collecting feedback, seeing how people interacted with the robot and where we could improve. That person was there taking notes on how customers were acting around and interaction with OSHbot.

Source: Fellow Robots

What’s complicated is that people ask questions in very different ways. So if someone says “Hi OSHbot, I’m looking for a quarter inch screw for my door.” The robot needs to be intelligent enough to know what product they are looking for: Is it the door? Is it the screw? So speech recognition was one of the things we needed to improve on, and we have. To make the interaction with the customer as smooth as possible we focus a great deal on natural language processing,

Another priority is our focus on is the customer interface. When you open an app, for example, you need to understand what the app does and how naturally to proceed to the next step. We have a very similar challenge with the robot UI. That’s why we have people on the Fellow Robots team whose sole focus is on the screen Interface and these interactions. How many clicks? Are they clear? Are they sufficient? Too many?

We have come to realize that what’s best is a combination of speech and screen interface. When the screen shows off the product, the robot tells you at the same time, “Here are the products available, click on the one you’re looking for.” People know what to do, and when they click on the product, they can choose to get taken there. So you provide a full interaction with the customer, where there is some speech and some visual interaction. Those were the big lessons learned from the first month of working with OSHbot in the store.

Will you be adding a product scanner to the OSHbot experience?

We have some of the things working along these lines but haven’t deployed them in the store just yet. One of the reasons is that there are a lot of factors not under our control. For example, we need to have a full 3D database of the products to be able to match those scans. That’s one of the reasons we decided to wait a little bit to deploy that functionality.

Probably about 20 or 30% of people that come to hardware stores have an object with them that they’d like to buy or that they have a question about. When a customer has a very specific question that the robot can’t answer, like “My pipe broke. What should I use to fix it? or “What glue should I use?” we have a store representative available at any time for that customer.

We added a small button on the screen that says, “Talk to an expert.” If a customer has a complicated question then the robot will tell you to click on that button and it connects you remotely to a store associate. That store associate can be located somewhere else, just as in a normal telepresence video conference call. That person can also be an expert in plumbing, in electricity, or any other field. This way the customer gets the ideal mix of automation and high touch service that retailers typically struggle with. That’s actually what’s happening right now.

So customers can have a mixed physical and virtual shopping experience?

Exactly. They could be talking to someone who’s an expert in paint, or electricity, or design, depending on what they need. This enables a really interesting way of interacting with store associates that’s very valuable.

What is the staff response to OSHbot?

It’s been really positive so far. I think one of the most interesting things we’ve seen is how fast OSHbot’s colleagues got used to working alongside a robot. I think we’re lucky that everyone had a very positive response. People like it, people use it.

How many OSHbots are in stores so far?

We currently have two robots located at the OSH in San Jose, CA.

What is involved logistically in rolling out the robots? Are you getting close to rolling out more OSHbots?

We need to integrate the robots with the product database, but one of the nice things is that the robots have everything built in, so we don’t need to add any major additional infrastructure or sensors in the store to make the robot operate and navigate.

We are in conversations with customers about rolling out robots elsewhere.

How does OSHbot map the store and identify product locations?

Without going into too much detail, we can say that mapping is one of the robot’s core functionalities. The robot knows precisely where it is located at all times. We integrate that with the planogram, so this way OSHbot knows exactly where these objects are located on the shelves.

What other retail experiences would OSHbot apply to?

At the moment, our primary focus is in-store retail, but what’s key here is the level of premium customer service that the robot can provide. A robot can maintain accurate information of about 100,000 different products or more.

I think this capability can apply to different industries that also require customer service. When we talk to retailers, customer service is one of the biggest challenges, and one of the biggest opportunities. Therefore customer service functionality in the robot is vital, as is the speech recognition and the human interaction—to make it as natural as possible to provide a really nice experience.

So in the future you see robots greeting people when they walk into bricks and mortar shops?

That’s the plan. The idea is to rethink how retail is done in terms of customer service and the experience you actually have when you go and purchase items in a store. You normally come with the idea that you’re going to buy a product, but you often ending up buying more. We want to help businesses make the process as smooth as possible, so that their customers find everything they need, everything they’re looking for, and have a great experience. That scenario is a win/win for both the retailer and the customer.

That’s a clear value proposition for the front of store. Does it extend into the back of store – doing inventory etc.?

There’s lots of potential there. For example, when the robot navigates the store it creates a map in order to know where products are located. But if a store associate moves products from one location to another, it’s challenging to inform everyone in the store. The robot can then can provide that information to the store associates.

So OSHbot will be providing customer service to the associates too?

Yes, right now we’re talking about how we can make this experience even richer for employees.

We feel that we’re at the very beginning of a trend where robots are gaining traction with industries that haven’t traditionally looked to robotics.

Do you have anything to add? What makes a robotics company like Fellow Robots possible now that wasn’t possible five years ago?

This is a really interesting time in robotics because so many forces are coming together. The price of sensors is coming down, because the need is growing. The price of computing is also dropping. The price of software development is much less expensive than in the past.

We’re also getting more powerful technologies at the same time that can be combined with robotics, such as natural language processing. That’s a technology that has been around for years and years but is getting better and better. Many other industries are benefiting from this, not just the mobile and smartphone industry, and robotics is clearly benefiting.

So all these advances are merging now into robotics and the timing is perfect. All these robotic platforms are coming out of the labs and really going to market.

We are also learning a great deal about the customers as they arrive at OSH. For example, OSH now knows the most common questions that customers ask, so they can factor that information into their store planning. OSHbot already offers service in English and Spanish, but as we grow to include more languages stores will be able to better understand the languages spoken by their customers. All of this information has previously been unavailable.

Do you have any advice for a robotics startup, coming out of the lab and trying to turn into a business?

Everything works fine in the lab, but when you put it out in the real world, interacting with people in a real space in a busy environment, then it’s a very different story. You need to be prepared for the unknown and be in a position to quickly adjust.

In most cases we need to go back to the lab to figure out what is happening, why the robot is not working as well as it did in the confines of our lab.

One of the amazing things our customers allowed us to do was come and test in their facilities and see how the robot behaved. We learned a lot from that. It’s a different environment, it’s a totally different interaction and that really helped a lot for us—testing in the real world.

Read all the latest emerging robotics trends in the Silicon Valley Robotics  online magazine or you can download the rest of the Silicon Valley Robotics free report on service robotics here.

OATV

Interview with former OATV Principal Roger Chen

Edited for clarity

What’s OATV’s investment thesis and how does that make you look at robotics companies?

Roger Chen, former OATV Principal

We like to look on the edge. If you take a look at our portfolio, there’s a wide array of companies in different categories. You have anything from consumer internet companies like Foursquare to satellite companies like Planet Labs to drone companies like 3D Robotics and logistics companies like Fetch Robotics. We made each investment when we sensed the emergence of a new category. When we think a “thing” is going to become a “thing,” we try to find companies and entrepreneurs in those categories very early on and back them just before the categories are really created. Before 3D Robotics, drones wasn’t really much of a category. And neither was space before Planet Labs and other pioneering companies like SkyBox.

Our focus has been on that strategy applied at the seed stage. We’re a little bit different than other seed firms in that we invest in fewer companies, about six a year. We concentrate more capital into those companies and take more of an all-in approach. Our personal philosophy and style is to try to work more closely with the companies we invest in, and it becomes hard and unwieldy to do that if you invest in too many companies within one year.

When it comes to robotics, we are seeing a lot of interesting things happen. There has been a confluence of technologies enabling new forms of robotics, from innovations in actuators enabling compliance and collaborative robotics to innovations in sensors and software.

ROS, or Robot Operating System, only emerged these last few years, and before that, software development for robotics was exceedingly difficult. The advent of open source communities and platforms like ROS has really catalyzed the field. So those are some of the enablers on the technology side.

There’s also a lot happening on the market side, and market pull is just as important as technology. Just to give one example, let’s take a look at e-commerce and what’s happening with consumers. They want things faster, cheaper, and personalized, and this just creates so much pressure on a lot of these manufacturing, supply chain, and logistics companies.

At the same time, there are macro trends within the labor economy, as baby boomers start getting older and labor supply is expected to drop significantly. The confluence of all these factors puts logistics companies in a tough spot. People tend to forget that someone somewhere still needs to make, package, and ship things as part of e-commerce’s backend. Suddenly, automation and robots make a lot of sense and are economical.

That’s how we see the robotics industry, and while that example is specific to the logistics industry, I think there are a lot of industries where automation and robotics are going to come into play in similar ways. It’s going to be a collision between technology enablers on one side and intense emerging market demand on the other.

Could you expand on some of the trends enabling robotics and automation in logistics?

I’ll talk a little more about market pull. Depending on country, online sales make up somewhere around 10% of overall retail. You can see how massive companies like Amazon and Alibaba are, and that 10% online share of retail will only continue to grow. It speaks to the growing volume of work that has to be fulfilled on the backend of e-commerce.

I think a lot of people, especially consumers, don’t see how much work has to go into fulfilling those online orders. There is a box that has to be moved. There is something that has to be packed. There is something that has to shipped and transported. That’s kind of shielded away from consumers’ eyes. But it all has to be done, and it’s becoming more and more challenging for logistics companies to fulfill all these operations economically.

I can give you another statistic on the labor side. A lot of people have concerns about how robotics and automation will disrupt labor, which I think is valid and true to a certain extent. But I think you also have to be nuanced about it because if you actually look at the manufacturing and materials handling industry, particularly in the US, there is a huge job gap of 600,000 people because there is not enough sufficiently skilled labor to execute on the work to be done. That then presents an opportunity for robotics and automation to come in and fill that gap.

These are the powerful forces we see driving robotics: the really intense demand for logistics fulfillment, and simultaneously a lack of people to do all the work at an economical cost.

What other areas of the commerce value chain can robotics, smart automation and AI potentially improve?

There’s a ton of room for cost reduction via automation, but it’s not necessarily with just physical automation. There are software solutions as well that can make supply chains a lot more productive. For example, our portfolio company Fetch Robotics is tackling the logistics problem by streamlining operations in factories and warehouses with a mobile robotics platform. However, Fetch will be just as much about its future operations management software and application data as its material handling robots.

At some point, all the goods that a company like Fetch moves around will need to be packaged into containers to be shipped all around the world. Another OATV company called Haven is creating a marketplace for streamlining how container shipping is booked. If you think about it, it’s rather ridiculous that people still have to call one another and use manual paper-based processes to mix and match which containers should go on which ship. It’s just very inefficient, and it hurts business by not maximizing fulfillment of shipping capacity. This is a case where relatively simple automation through purely software and a web application can go a very long way in driving up productivity in the supply chain.

The take home message here is that when I think about automation for improving supply chains, it’s not necessarily just robots with arms that move around and pick things up. It’s as much about the software as it is about the hardware.

What are some examples of OATV portfolio companies, perhaps not robotics companies but where the lessons can be applied to robotics?

I just talked about Haven a little bit – it’s essentially an online marketplace for more efficiently filling capacity on ships for shipping things.

There are a couple other OATV companies that come to mind. One is Sight Machine. It’s
a data platform company. They aggregate data streams across the manufacturing floor, perform analytics on them, and offer a frontend dashboard for customers to understand exactly what’s happening along their manufacturing lines. That has a ton of value because that kind of intelligence is what will allow decision makers overseeing operations to keep things up and running efficiently.

https://www.youtube.com/watch?v=x8hOqzBFkRk

Another example is Riffyn. They are similar to Sight Machine in that they are also a data platform that aggregates data streams, but their focus is on the R&D lab for life science companies. Currently 70-90% of R&D results in the life sciences are not reproducible. If you are a pharma company, imagine the egregious amounts of R&D money wasted due to poor process control. Companies like Riffyn perform data automation to give science-driven enterprises control of their processes again. They automate data collection, root cause analysis and continuous deployment of improved process designs to drive up productivity for the R&D pipeline.

Both Sight Machine and Riffyn automate workflows to enable superior operational intelligence, flexibility, and performance to drive up productivity. While neither company is a robotics company in the traditional sense, that exact value proposition very much applies to robotics as well.

How is robotics today different from robotics in the past?

Once upon a time, robotics was about stationary, highly repetitive, high performance, and generally expensive automation. Industrial robot arms would repeat the same action again and again with extreme precision. We’re not as excited about those applications. We think a lot more about flexible robotics. We think about programmable robotics.

It’s no longer just about robotics automating specific human tasks. It’s more about how flexible robotics will enable superior operations overall. I would actually draw a parallel with what’s happening in the software world with the DevOps movement, which I think we’re shortly going to see in the physical world. With DevOps, the idea is to leverage a closed feedback loop to quickly iterate on software development, deployment and operations in a continuous fashion. I think this concept of continuous development and deployment will extend beyond virtual environments to optimize physical operations as well.

Companies like Fetch Robotics have a physical hardware platform that automates some process, which it will do well, but probably not perfectly at first. However, it will continuously improve and learn about the process because of all the operational data and analytics that result from prior deployments. That data will come back to decision makers and engineers and inform them how to redesign and improve process. Now, imagine a simple firmware or a software push that instantly reorganizes and improves operations

That’s the sort of robotics we’re seeing these days, and I think that’s what makes these companies really exciting. Robots are no longer one-trick ponies that just automate a single task.

Do you think these trends are leading to a change in the business model away from robots as capital expenditure? Will we see robots as a service? Or robots as a delivery mechanism for sensors and analytics?

At the end of the day, the decision to use robotics is still at its core a question of ROI. For some companies the ROI math doesn’t add up, but for an increasing number of companies, I think it does.

I do think though that there will be some interesting and innovative business models for robotics. How will future robotics products be priced? Some companies will make money selling hardware like more traditional industrial robotics companies. A company like Fetch Robotics makes a physical product that it will sell, but at the same time, there are potential SaaS-like revenue streams through the data applications and operations software that the company will offer. I’m definitely excited to see what new business models come out of all this.

And in conclusion?

I’m excited about this new wave of robotics companies evolving from traditional robotics that have primarily been about static, repetitive processes. We are witnessing the emergence of the first platforms to offer flexible and programmable robotics that we haven’t seen before.

I’m also really excited about learning what other verticals robotics will address. Most of the conversation about robotics has been centered on logistics and e-commerce, but there will be several other verticals as well. Applications like exploration, search and rescue, caregiving and more. I can’t wait.

The rest of our free report is available here — or in installments at Silicon Valley Robotics — featuring case studies and analysis from industry experts and investors.

If you enjoyed reading this post, you may also like..

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BCG predicts the fastest growing segment in robotics will be those designed for “personal” uses like education, cleaning, and entertainment.

by Ekta Sahasi, Vice President at Konica Minolta Business Innovation Center
and Greg Lok, Business Strategy Lead at Konica Minolta Business Innovation Center

After years of flying under the venture capital (VC) radar, the robotic industry is finally starting to see a remarkable growth in funding traction. In 2014, VC investments in robotics rose 36% to $341.3 million up from $250.7 million in 2013, according to Travis Deyle’s annual robotics review. [1] The spike in 2014 investments follows what Deyle believes was a “frothy” funding environment, influx of drone startups, and later-stage medical robots. As a whole, the robotic industry continues to be dominated by industrial and manufacturing products. While this will continue to be the most prominent application, BCG predicts the fastest growing segment in robotics will be those designed for “personal” uses like education, cleaning, and entertainment.[2]

Source: svrobo.org

Although robotic VC funding is growing annually, these investments must be viewed in greater context. The increase in robotic funding follows the general venture trend of increasing investments in hardware startups, which have increased more than 30x from 2010-2014 (See Figure 1, Hardware Startups by Year).[3]

For hardware, theories on the increase in investments include strong hardware exits and the rise of crowd-funding platforms, such as Kickstarter and Indigogo, which lead to the $2.3 million backing of Jibo.[4]

While few robotics companies reach this level of crowd-funding success, successful campaigns appear to have a positive correlation to increased funding.[5] Additional investments from the corporate sphere and their associated high-publicity announcements have also served to increase awareness among general public, investors, and entrepreneurs that robotics is a growing and worthwhile industry.[6]

Source: svrobo.org

While both hardware and robotic investments are growing each year, they still lag behind the percent of investments in less-risky segments of internet- specific (25% in 2014) and software companies (41% in 2014) according to PwC 2014 venture capital data.[7] In stark contrast to these high percentages, only .07% of the $48.3 billion VC funding went to robotics.

Comparing the hardware- based robotic companies to those in software and internet-services, the investments in the latter are less risky and have the ability to grow and scale quickly with less upfront investment. Although some investors are willing to take risks and bet on the future of robotics, the funding of millions of dollars pales in comparison to the billions being poured into other sectors.

With less than 1% of VC going into the robotics industry, it begs the question: Why are venture capitalists skittish when it comes to robots? It boils down to perceived risk. William Santana Li, CEO of Knightscope, observes that most VCs believe “Hardware is too hard.” It requires expensive investments that appear risky when you consider that many emerging startups run on the fuel of hungry, yet relatively inexperienced entrepreneurs. And those who do have experience are unlikely to have developed the expertise needed to build a sustainable and scalable manufacturing operation.

Source: svrobo.org

For entrepreneurs and visionaries who see the possibilities of robotics, the constant struggle to receive funding can discourage the development of disruptive robotic solutions. Ironically, the challenge of receiving VC backing can encourage the best and brightest to shy away from the funding struggle: Peter Thiel observes, “We wanted flying cars, instead we got 140 characters.” The perseverant founder William Santana continues to motivate entrepreneurs, “Tune out the naysayers who will just keep talking because building something is “too hard.” Ignore the noise, focus on your mission and deliver results.”

While hardware may be hard, there is a way to play it smart. The value of strategic investors and partners should not be underestimated. In what many consider to be an overly risky environment, strategics can provide the expertise needed to help accelerate robotics companies.

Strategics with strong legacies in hardware bring operations infrastructure, knowledge, and foresight to help emerging startups commercialize. Furthermore, these strategics can de-risk the most challenging components of starting a hardware company, including the servicing, deployment, design for servicing, maintenance, manufacturing, and distribution. With Konica Minolta Business Innovation Center (BIC) as a strategic partner, Steve Cousins, CEO of Savioke, notes that they “gain a strong services infrastructure, capabilities, global reach, and scale.” Having a strong strategic investor or partner allows the Savioke team to focus on putting more Relay robots into the world without having to worry about scaling to support their growing customer base.

Like any true partnership, the benefits flow both ways. Corporate strategics understand the necessity of staying innovative in today’s competitive market. At the Konica Minolta Business Innovation Center, “We are transforming Konica Minolta’s core business by focusing on industries that provide our customers the tools they need to stay ahead of the curve” says Ekta Sahasi, VP Konica Minolta BIC.

Source: svrobo.org

The desire to access these disruptive industries like robotics, offers a strong incentive to ensure the investment companies become best-in-class. Unlike some venture capitalist firms, corporate strategics are investing in products that align with both the strategy of their business and are poised to produce financial returns. By aligning the success of the emerging companies with the strategy of the business, corporate strategics are especially invested in the success of the emerging company.

There are many ways to connect with strategic investors. At Konica Minolta Business Innovation Center, we partner with emerging startups through investments, partnerships, co-development, and mentorships. We have invested in Knightscope, an autonomous crime-detecting robot that aims to reduce crime by empowering the community with data and security. Through our partnership with Savioke, an autonomous robot for the services industry, we have installed robots in hotels and created a service model to help scale.

We also co-develop with our robotic industry companies to integrate complementary technology from our platform. For instance, we are working to have Sigsense, a maintenance-detecting software, to integrate their product into robots in order to predict maintenance needs. Finally, we have worked with accelerators such as Plug and Play to identify and mentor the emerging robotic startups.

Konica Minolta is supporting the development of the robotic solutions that will transform the future. If you are an entrepreneur, investor, accelerator, or enthusiast, say hello and join our journey!

Konica Minolta’s Business Innovation Centers (BIC) are established in five major regions around the world as a core engine of business transformation. The BIC mission is to gain a deeper understanding of customers’ needs and deliver the greatest value to the world. BIC North America fosters a portfolio of solutions in the areas of robotics, healthcare, connected intelligent ecosystems, workplace and enterprise solutions. BIC manages the entire lifecycle of new business development from ideation to creation of actual business lines.

The rest of the Silicon Valley Robotics free report on service robotics is AVAILABLE HERE — or in instalments at Silicon Valley Robotics — featuring case studies and analysis from industry experts and investors.

1. Venture Capital (VC) Funding for Robotics in 2014 | Hizook. (n.d.). Retrieved November 2, 2015.
2. Deyle, T. (2015, January 20). Venture Capital (VC) Funding for Robotics in 2014 | Hizook.
3. Quintero, C. (2015, September 14). Who Invests in Hardware Startups? – Bolt Blog. Retrieved November 2, 2015.
4. Crowe, S. (2015, February 13). 10 Most Funded Kickstarter Robots Ever – Robotics Trends. Retrieved November 2, 2015.
5. Witheiler, M. (2014, December 14). Raising More Than $750K In Hardware Crowdfunding. Retrieved November 2, 2015.
6. Keay, A., & Komissarova, V. (2014, February 26). Valery Komissarova on when investing in robots is the right move. Retrieved November 2, 2015.
7. Kokalitcheva, K. (2015, January 17). VCs invested $48.3B in 2014, highest level since 2000. Retrieved November 2, 2015.
8. Quintero, C. (2015, September 14). Who Invests in Hardware Startups? – Bolt Blog. Retrieved November 2, 2015.

Many advances in our technologies occur through borrowing capabilities from one field to progress another. Our technological universe is built from a web of interrelated advances that push one another forward.

The practice of Enterprise IT is being transformed by a variety of innovations that emerged in the last decade. Vendors who have traditionally sold into this space are struggling to adapt. They are facing the Innovators Dilemma,[1] largely captive to their traditional business models.

We can expect a similar dynamic of disruption for the field of service robotics. Cloud computing, Software as a Service, and mobile connectivity represent an important competitive opportunity for every robotics-focused company, and the future of the service robotics industry is inevitably one of Robotics as a Service.

With each new generation, the weight of innovation and market momentum shifts. The latest generation is wrought from a mix of technologies that include cloud computing, Software as a Service, ubiquitous wireless connectivity, and universal end points.

Cloud computing is the notion that computer hardware is no longer something that everyone needs to purchase. Instead, compute cycles can be purchased from a centralized resource. One example of this is Amazon’s Elastic Compute Cloud (EC2) which in 2014 had more than one million customers and was growing at 99% year on year.[2] EC2 is a type of “Infrastructure as a Service” (IaaS).

Software as a Service (SaaS) leverages the centralization of Cloud Computing with a targeted application offering, generally solving the whole of a business problem, whereby a company or individual can purchase a complete solution without needing to deal with servers, with installation, nor maintenance. This approach is increasing in popularity with IDC estimating $50.8B in revenue by 2018 up from $22.6B in 2013 on Enterprise SaaS applications.[3] SaaS ranges from collaboration technology like Citrix Gotomeeting to CRMs like SalesForce.

Ubiquitous wireless connectivity is about the degree to which every new device is connected wirelessly to the internet and is a significant shift in comparison to only a few years back. While wireless connectivity has been possible for a long while, smartphone adoption is now at over 64% of the US population,[4] assisted by massive increases in wireless data reliability, coverage, and speed.

Smartphones have taken over as the primary Internet connection point for most people, and even most businesses. Whereas connected end-points had for several decades been mainly desktop PCs, the emergence of Wi-Fi brought Laptops into dominance, and smartphones have since taken over. The expectation is that Internet Connected devices (the Internet of Things) will dwarf even the number of smartphones with 50 billion connected objects estimated by 2020.[5]

The combination of cloud computing, mobility, and ubiquitous connectivity is transforming Enterprise IT, and will impact a huge number of other industries. One symptom of this is the unprecedented number of startups emerging to reform almost every industry.[6]

Robotics is undergoing a similar transition, but from a different base. In this case, it’s enabled
by rapid reductions in the cost of components, innovation in physical artifacts, and all of the shifts in the cost and availability of compute cycles. Some of this has been explored over recent years as “cloud-robotics” for shared learning and offload of compute intensive tasks, and is now seeing practical implementation.

Imagine…

• Device 27 is two feet tall, and specialized for leather cutting. It’s a core component in a production line in ShoesRUs, a small shoe factory in Portland, Oregon. After several months of unimpaired operation, Device 27 identifies early signs of a burn out in its motor three.
• Device 27 is part of a whole of life service offering from FactoryRobotsCo, designed to address all the needs of a small local factory in the new “on demand” world of retail. The factory has no margin for downtime, and needs the service to “just work.”
• Device 27 coordinates it’s own preemptive replacement and Device 27a arrives by self driving Uber or Amazon drone delivery and slots into Device 27’s role while Device 27 returns to base for maintenance.

This is not realistic in the near term, but consider the following elements.

1. In this world, winning players will be those who can offer a complete service
2. Big data and forecasting are used to optimize the service
3. All devices are continually connected back to base
4. The Service company integrates with other service offerings, such as Uber and Amazon, all with the goal of providing a seamless experience

As with today’s Software as a Service offerings, this solution can now integrate global best practices. In this case for running local robots. Local installation and maintenance are controlled by FactoryRobotsCo, and the owner of ShoesRUs need not maintain a large technical staff, nor incur large consulting fees.

Let’s consider some parallels between the changes in how we use computers in business with similar changes in robotics.

In the same way that every business is now leveraging SaaS and cloud for IT, every business will be able to leverage SaaS and cloud as part of service robotics solutions. The first steps toward this future are already visible – some have been around for a while, some are emerging today – such as Rolls Royce and Tesla.

Once upon a time, Rolls Royce was famous just for their engines. Now Rolls Royce sells “propulsion” or “power by the hour” not engines.

Rolls Royce claim to have real time connectivity to every one of their engines as they fly around the globe, to collect a huge amount of performance and maintenance data and to ensure that maintenance is driven on an “as needed” basis rather than merely to a schedule. They also charge by the mile.

Tesla is another great example of putting service in the driver’s seat of their business. These cars are sold as a whole of life experience, with a focus on “ongoing delight.” Many argue that the rest of the industry will need to follow.

It’s been a perfect storm for Enterprise IT, and the accumulated capability represents a perfect storm for Robotics. This is a shift of power from local technologists calling the shots in the factory/workplace, to a world where capabilities are much more available: in the cloud, on demand, as a service.

1. Clayton Christensen, 1997, The Innovators Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business Review Press
2. AWS re:Invent 2014 | (SPOT 301) AWS Innovation at Scale, Nov 17, 2014, https://www.youtube.com/ watch?v=JIQETrFC_SQ
3. Worldwide SaaS Enterprise Applications 2014-2018 Forecast and 2013 Vendor Shares, Dec 2014, http:// www.idc.com/getdoc.jsp?containerId=252568
4. Chapter One: A Portrait of Smartphone Ownership, April 1, 2015, http://www.pewinternet.org/2015/04/01/ chapter-one-a-portrait-of-smartphone-ownership/

The rest of our free report is available here — or in installments at Silicon Valley Robotics — featuring case studies and analysis from industry experts and investors.

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