Wednesday, January 13, 2010

2010 Robotics Predictions; Reality Check for 2009

Trick math question: If you have $100 and lose 50% and then gain back 50% of that, how much do you have?
  1. $100
  2. $50
  3. $75
  4. None of the above.
Stock markets around the world rose dramatically in 2009. Robotic stocks did as well or better than the major tracking indexes, particularly service robotic stocks. But the real story isn't the gains of 2009 but the lack of recovery from 2007.

An example: U.S. publicly-traded industrial robotic companies saw their stocks rise 40% in 2009. But those same stocks lost 53% in 2008. Thus their year-to-date rise in 2009 of 40% really only recovered 16 points of the 53 lost the year before. U.S. industrial robotic stocks are still down 37% from their close at the end of 2007 as are almost all robotic stocks worldwide. That is what these Robo-Stox™ charts - one for industrial robotic companies and another for service companies - attempt to show. Click to enlarge.

Most countries' robotics stocks didn't fare as well as the American NASDAQ Index with the exception of Canada, India, Israel, Taiwan and a very few individual stocks. Thus although 2009 was a significant up year for stocks, and robotic stocks in particular, robotic stocks have yet to recover their highs of 2007 and have a long way to go to do so.

The seriousness of the recent worldwide stock market and economy crash - of the drop in market value of the companies - of the loss of jobs and orders, and revenue and profits - is a long way from recovery. Although jobs in the robotics sector are available for qualified takers, particularly in the service sector, unemployment in general is dramatically high and most economists are predicting that it will be well into 2012 before any real gains occur.

That is not to say that all is pessimistic, particularly for robotic businesses. 2010 looks to be a good year with definite "drivers" effecting selected marketplaces.

Worldwide military, police and security agencies are continuing to purchase and invest in R&D for all types of unmanned, remote-operated aerial, underwater and ground robotic devices. More jobs - with the likelihood of continued growth over the next few years. There will be some budget cutbacks. EG; the US Army just announced cancellation of an autonomous ground vehicle (Lockheed Martin's MULE) and a pilotless helicopter (Northrop Grumman's FireScout) - both are being replaced by upgrading existing equipment to provide the new functionalities.

Medical robotics (included in the services sector) are poised for many years of rapid growth propelled by:
  1. Growing patient demand for non-invasive surgery,
  2. The current effort to reduce hospital costs by increasing productivity through a variety of robotic activities (non-invasive surgery, pill dispensing, materials transfer, lab assistance, etc.),
  3. Hospitals, which have held back capital purchases (such as Intuitive Surgical's million dollar da Vinci devices) for the past two years, are beginning to reinvest in these types of equipment.

With the return of small amounts of discretionary income back into the economy, consumers are once again interested in robotic toys and kits as can be seen by 2009's Christmas rush to buy millions of robotic hamsters (Zhu Zhu) and thousands robotic penguins. And the hit of CES was an indoor-flying iPhone controlled quad copter by Parrot that will sell for $129.

For industrial robot manufacturers, orders will stay down for quite a while (photo: used robots for sale from closed Chrysler plant). For those vendors that have switched or are making inroads into the services sector, the horrendous spate of bankruptcies and buy-outs has stopped and the future is looking brighter especially in new markets including the SME market.

Small and Medium-sized Enterprises (SMEs) are now being offered affordable robotic products that haven't been available to them before, first in Europe and Asia, and later in the U.S. Lightweight and easily trainable, these flexible robots are enabling these smaller manufacturers to increase productivity and not have to go off-shore to produce their products.