Trade Alert and Robots
Review of the Robot Search
In this post, I am confirming the Trade Alert sent yesterday and explaining my ongoing search in the Robot market.
Introduction
The Robot sector is an emerging technology I am keen to get exposure to and expect to make 2 or 3 investments over the summer, with at least one being made this month.
The market is forecasted to grow at a CAGR of 20%. The six forecasters I use suggest a total market size ranging from $179 billion to $375 billion by 2034.
That is a vast market and one I want to get a piece of.
This post will examine my thought process and how I will identify my target companies.
Robot Use Cases
A key decision is choosing the role robots will perform. Dr Nicholas Nadeau, a leader in this field, suggests the 4-D framework for analysing use cases. It suggests robots will be successfully integrated where they perform tasks that are either Dull, Dangerous, Dirty or Difficult. Tasks that humans don't want to do or aren't able to do to a good enough standard.
We have seen this with the deployment of robots in repetitive manufacturing industries and bomb disposal.
Dr. Nadeau also notes that our world is designed for the human form; our cities and towns are designed for two-legged bodies that range from 1 meter to 2 meters in height. Getting around in a wheelchair remains difficult, very tall people have to duck to get through doors, and children have trouble reaching doorbells. If a robot does not fit that basic form, it will have limited applications in our world.
Currently, Humanoid robots are in the early stages of testing and are not investment suitable. Amazon has established a testing area for the humanoid robots it purchased from Unitree, a private Chinese manufacturer. Astonishingly, Unitree sells its latest Humanoid robot for $20k, but it has many technical problems to overcome, not least of which is battery life. $20k sounds cheap, but it only lasts for an hour before it needs recharging, so for the time being, its use cases will be limited.
SERV
SERV was one of the first companies I looked at in detail. They are developing wheeled delivery robots and have signed a deal with Uber Eats. They are already operating in two cities and have garnered a significant amount of attention from Wall Street and the press.
This is a picture of a Serv Robotics device delivering a Burrito.
It is essential to form your own opinion when looking at these new devices and not rely on experts or be swayed by hype. In my opinion, SERV will not succeed. It is not satisfying a use case in the 4-D framework, and I do not believe it has a viable business model.
SERV intends to deploy 2,000 robots this year that cost more than Unitree’s humanoid. SERV claims a 2-4 year lifespan. I think they will be lucky to get 3 -12 months. These devices will be vandalised and stolen. The touchscreens will not last a year, nor will the exposed sensors, and I have little hope for those wheels; SERV does not provide information about the required maintenance to extend the machine's lifespan beyond one year.
I also think the 4-wheeled robots will get stuck too often to make them viable; they cannot negotiate stairs, get through crowds, avoid cars parked on the sidewalk, bollards placed by workers, or obstacles placed by children. Inevitably, people will fall over them and crash into them. They are a square peg in a round hole, the plan is not going to scale, and that is before we consider the regulatory hurdles.
Every city will have a different set of regulations regarding where they can travel, the speed at which they can travel, and the type of alerts they must have.
The wheeled robot will not work in an open environment.
Many experts and companies are investing heavily in this, and while they may know more than I do, and I could be mistaken, I am unwilling to risk my capital on it.
When I make statements like this, people often tell me I don't understand. The truth is I understand, but I don't believe, every technology and every company has experts who say it will work and an army of followers who truly believe. As my father said, “A fool is easily parted from his money”.
Having discounted SERV and all other wheeled delivery robots I continue to look at use cases and have chosen the first one I will invest in.
AI and Robot Security
The robot security market is experiencing significant growth, driven by technological advancements, labor shortages, and the increasing need for automated security solutions.
The Market is forecast to grow with a CAGR of 14%, reaching $76 billion in 2024; The autonomous patrolling robot sector is forecast to grow with a CAGR of 11%, reaching $483 million.
The job of a security guard meets two of the D's. It is Dull for most of the time and Dangerous for the rest. Quality security guards are in short supply, the hours are difficult and the pay low.
Driven by underlying secular trends, including crime rates, terrorist attacks, geopolitical tensions, and even labor shortages, the adoption of security robots continues to increase.
The demand for autonomous security robots comes from multiple sectors, including healthcare, corporate campuses, casinos, commercial real estate, and manufacturing.
One notable difference between this and the delivery market of SERV is these robots are operating on private land (no regulatory concerns) and they operate in a controlled environment. A large parking lot, commercial premises, or storage yards are custom-made for wheels; there are no people to avoid and nowhere to get stuck. The environment never changes and there is an immediate unfulfilled demand.
Within this sector, I have identified three subsectors and seven potential target companies.
The subsectors are
1 Autonomous Security guards
2 Autonomous Security drones
3 AI security cameras and software
The key drivers for the growth of this market will be: Ongoing labor cost pressure and labor shortages. The growing demand for 24/7 surveillance, the increasing need for monitoring in public and private spaces, and technological advancements, including improvements in AI, sensors, and mobility, make today's robots a viable solution.
The seven companies I am looking at are gaining traction, sales are growing, and acceptance are increasing.
All seven companies have orders from Fortune 100 companies, government, and defence forces.
This week will likely see the first investment, but I anticipate making two or three more over the summer. The detailed review of each company will be sent to paid subscribers, and today's trade alert is reserved for them.