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Why Should You Invest In Robotics?

It is no secret that the global robotics market is growing. Automation is the word on everyone’s lips, and not without good reason. It is anticipated that growth in the global installed base of advanced robotics is set to accelerate from around 2-3% annually to around 10% annually over the next decade.

Reason #1: The Stats Are Positive

Prices of hardware and enabling software are projected to drop by over 20% during the same period, drawing parallels between the drop in price of computers and peripherals which preceded the 1997 to 2005 boom - which recorded a GDP of 2.9%.

Along with the exploding market growth, investment in all forms of automation is anticipated to escalate from $11bn in 2015 to $185bn in 2025 ( ARK Invest). As another key figure, the International Federation of Robotics has outlined the projected growth to the end of 2018 in three specific areas:

- The global industrial robotics market will see a 15% level of growth, professional service robots - 11%, and, crucially, the market for service robots will leap up 35%.

- This staggering figure for service robots comprises 934 million units, with an estimated value of $19.6bn between 2015 and 2018.

So what is driving these tremendous figures?

Reason #2: User Acceptance

At the centre of the boom is the fact that robots are going mainstream. Acceptance at both consumer and industrial level is growing massively. Businesses begin to recognise the cost- and labour-saving efficiencies that automation will bring, whilst consumers are steadily waking up to the ways in which automating certain jobs within both customer service and in the home will free up their time and make their lives generally easier.

Reason #3: The Tech Is Here!

The technology is improving fast, with robots now able to demonstrate significantly more advanced skills and capabilities from one month to the next. These are perfect conditions for lucrative, early-stage investment. It’s a case of striking while the iron is hot, and taking the opportunity to capitalise on the positive forecasts for high yield investment.

A recent Bank of America/Merrill Lynch report predicts that robots will be performing 45 percent of manufacturing tasks by 2025, compared to just 10 percent today. As the report puts it:

“We estimate the current robots and the AI solutions market at $153 billion by 2020, including $83 billion for robots, and $70 billion for AI-based analytics. Disruptive technologies will yield $14 to $33 trillion in annual economic impact by 2025 through cost reductions and efficiency gains. Early adoption will be a key comparative advantage, while those that lag in investment will see their competitiveness slip.”

Reason #4: Abundant Investment Entry Points

The aforementioned report by the Bank of America and Merrill Lynch outlines eight key areas for investment in robotics and automation:

- Services;

- Agriculture & Mining;

- AI;

- Aerospace & Defence (incl. drones);

- Autos & Transport;

- Financials;

- Healthcare;

- Industrials.

The report anticipates fast growth for service robots, as well as agribots, AI, automation, care-bots, cobots, commercial and military drones, fintech, industrial robots, medical robots and computer-assisted surgery, self-driving cars, software and telehealth.

Reason #5: Global Market

When considering investment in robotics and automation, it is crucial to determine conditions both in the industry and geographical area you propose to target. Uptake varies by both these factors, so in order to maximise yield, intelligent targeting - as with any investment - is key.

High-cost nations, such as France, Canada, Japan, the UK, and the US are at the forefront, whilst some European countries are lagging behind: Spain, Italy, Austria, and Belgium, for example, are not quite there yet. Far Eastern economies, particularly Thailand and China, are adopting at an aggressive rate despite labour costs in those nations.

Conclusion

The robots are coming, and they are coming fast. However, we are still at an early enough stage for investment to be highly lucrative. With projected growth set to soar, as prices fall and adoption grows, those parallels between the 1990s computing boom are ringing ever-truer. Whilst industrial applications for robotics are hitting the headlines most, figures for the consumer-facing market are the most impressive.

Whilst domestic adoption is on a strong upward trajectory, the catalyst will be the increased appearance of robots in the public realm, in customer service and other consumer-facing roles. It is these robots which will fuel domestic adoption, bridging the gap between their use in professional service and domestic service. It is these consumer-facing robots that we anticipate to have the strongest effect in driving widescale adoption, currently an under-tapped resource of strong yields that could compellingly rival any other application.

(See: “Productivity in the Slow Lane: The Role of Information and Communications Technology,”analysis by Federal Reserve’s J. Christina Wang and Alison Pearson.)

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