Ash has spent close to 20 years in technology research on several sectors, including industrial automation and smart manufacturing, smart home, solar power and energy storage, drones and robotics, medical technology and building automation. Ash is Senior Research Director for our robotics & warehouse automation research, amongst other topics.
The investment-potential of AMRs has been recognised
“We have always envisioned a world where robots make the lives of people safer, easier, and more productive,” Brain Corp. CEO Eugene Izhikevich said in a recent press release. He was talking about Brain Corp’s role in helping businesses through the COVID-19 crisis. The San Diego-based company specialises in autonomy solutions for commercial robots. But Izhikevich’s aspirations for his company are gaining traction across the business world, and investors are taking notice. AMR companies, notably those producing robots for use in e-commerce fulfillment, factories and warehousing, are experiencing a boom in investment. There was a strong growth driver even before coronavirus: AMR technology has come of age. It’s advanced enough and matured (to some extent) to be applicable to a much wider range of functions than in the past, improving the cost and efficiency of product handling, and, as Brain Corp’s CEO said, improving the quality of life of the workforce. Now, COVID-19, which has ravaged so many business sectors, is set to be a new major driver. Widespread use of mobile robots on the factory floor or in the warehouse will help enable the effective social-distancing of a workforce, and will make companies more resilient to future, similar shocks by being less reliant on human labor.
Rather than replacing workers, the introduction of AMRs in the fast-growing warehouse and fulfilment centre sector is often driven by the fact that there is a shortage of workers. Amazon tells an instructive story: in the past 5 years the company has rolled out 200,000 mobile robots in its warehouses but has seen a similar increase in size of its workforce.
The age of the autonomous mobile robot has arrived, and investors are seizing the day.
Exponential growth in the AMR sector is already happening
In 2019, I reported on Shopify’s $450m acquisition of 6 River Systems, manufacturers of Chuck robots (Person-to-goods AMRs for use largely in ecommerce fulfillment). At the time I reported that, whilst the acquisition was not surprising, the eye-watering price paid was, given that it was 60 times the amount that 6 River Systems generated in revenue in 2018. What the price actually reflected, though, was the exponential growth predicted for the company in the next few years, as the potential of the Chuck robot is recognised, rising from a deployment of 200 robots in 2018 to an expected 2000 in 2020.
The high purchase price of 6 River Systems reflects a pattern. Valuations of AMR companies appear to be hugely inflated when compared to their current earnings, but massive growth is expected (and very likely) so investors are coughing up. The revenues of many of these companies are expected to increase 10-fold in the next few years.
The image below illustrates some recent investments in the sector:
Ramping up. An overview of the investment pattern in AMRs.
Companies purchasing AMRs typically have two options for payment: Outright purchasing, or leasing. Most manufacturers and logistics companies go for the outright purchasing option, as they expect to hold on to the equipment for some time, thereby reducing the total cost of ownership of the kit. The rapid development in smart technology is, however, having a bearing on the choice of purchasing or leasing, with some companies preferring the flexibility that a lease arrangement will bring.
As seen in the image below, new investment by a company in AMRs follows a simple trajectory, starting with a small number of pilot machines in a single warehouse, and expanding to nationwide or global application of the technology.
Where is the funding going, and which AMR technologies benefit most?
The four main mobile robot approaches are conveying, goods-to-person, person-to-goods, and mobile picking. Goods to Person technology has attracted by far the most investment. Admittedly this is partly because it is typically the most expensive of the four solutions: it is the most capital intense, requires more infrastructure changes, and demands major investment, usually a minimum of $5m. But the other side of the coin is that it is also the most proven technology; in part simply because Amazon has invested such a significant amount in it that it has driven the entire market on by leaps and bounds. The chart below compares investment figures for the four main AMR technologies over the past four and half years.
$m investment in each AMR type, 2015 – 2020.
The AMR market: likely next developments.
All sectors of the autonomous mobile robot market are likely to benefit from the significant growth that is forecast. The expectation is that the larger AMR companies will continue to attract investment and grow and potentially file for an IPO. Smaller companies, however, will not struggle. They will most likely be bought by big manufacturers or logistics companies. Both Amazon and rival Shopify, have gobbled up AMR companies (at a combined cost of over $1bn), albeit taking quite different strategies; how other ecommerce companies will respond will be interesting to observe. Given the vast number of AMR companies now in existence, acquisition offers little competitive advantage. Amazon and Shopify aside, companies that could buy smaller mobile robot enterprises include major automation conglomerates such as Siemens or ABB; companies such as Dematic or Honeywell, that are in the business of automating warehouses for other customers.
All in all, the AMR market is a chink of light in relatively dark economic times, and one likely to see further influx of funding capital in the near future.
Interact Analysis will be releasing the 2020 edition of its report on Mobile Robots shortly. This is the 3rd annual edition of this report and is built from a bottom-up analysis of the mobile robot market by surveying 50+ vendors globally. Two experienced research directors have spent 4-5 months researching and analyzing the industry, using primary research to build an updated assessment of the industry. For more information on our mobile robots research and to speak with one of our analysts, please contact us on email@example.com.