Despite Considerable Investment, The Personal Robot Market is Struggling

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3Q 2018 | IN-5209

Robotics is one of the fastest growing industries on the planet. No vertical is being left untouched by the deployment of unmanned systems that utilize the benefits of improved Artificial Intelligence (AI), proliferating sensors, and ubiquitous connectivity. Yet at least one part of the market is not reaping the benefits. The personal robot market is beset both by the failures of some significant startups, and by more significant questions about the value proposition of social robots in a world where Amazon and Google dominate the smart home, and numerous studies suggest many people are ambivalent or even hostile to them.

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Startup Pains


After winning admirers and accolades in 2017, Boston-based personal robot manufacturer Jibo, developer of the eponymous robot, has announced a series of layoffs as of June 2018, less than a year after the platform was released to market. The layoffs, seeing the workforce diminish from 100 to less than 10, are part of a restructuring process while Jibo tries to accrue more funding, even though the company has already been the target of US$72 million worth of investment.

Mayfield Robotics, a California-based startup, has also struggled, recently announcing that it will pause operations indefinitely, leading to cessation of manufacturing its Kuri product, and the refunding of all preorders. Mayfield Robotics had been connected to Bosch’s startup programs.

These were not marginal names on the burgeoning roster of social robot startups, but were highly touted companies that had won numerous accolades and were some of the most well-known robotics companies. That they have fallen to a near defunct state in less than a year is symbolic of the challenge facing the social robot industry.

Among the reasons for failure were parochial issues of overdelivering on a product, shipping delays, and the proliferation of “copycat” devices that amount to rudimentary electronic toys. International orders were also cancelled as exporting a product globally leads to problems of localization and regulatory harmonization: electrical certifications, language, speech recognition, and facial recognition.

Longer Term Problems


However, the failure of social robot companies to execute their ambitions goes deeper than the rights and wrongs of specific companies.

On one level, there is the issue of competition from smart home devices like Amazon Echo, which provides many, if not most, of the key functionalities of personal robots, and costs significantly less, with some Echo products costing under US$100 dollars. By contrast, Jibo was initially sold at a price of US$899 dollars. The lack of a unique value proposition, aside from being an Echo on wheels, is hindering the ability of social robots to find a significant market share.

A key advantage of Amazon Echo and competitors like Google Home is that they collect data from users to better understand human-machine interaction. On the other hand, Jibo only did beta tests with very small groups prior to the robots shipping and crucially does not possess large-scale cloud computing infrastructure, while the breadth of software services and investment in deep learning by Amazon and Google allow them to integrate more services and create better user experience for their users.

Another issue is the length of the development cycle. While Jibo’s project began in 2014, Amazon was able to launch its Echo product and evolve it on a yearly basis. In similar robotics markets, shorter development cycles are the key to success. The best example is DJI, the Shenzhen-based Unmanned Aerial Vehicle (UAV) manufacturer that has as much as 80% of the drone hardware market.

With rumors of Amazon’s plan to develop a home robot, there will be increased pressure on startups to deliver. Overall, Amazon’s robot strategy of gradually adding mobility, manipulation, and dexterity to its core smart home products (in line with hardware innovation) appears a more likely route to success than developing a robotic product with a few specific applications.

Consumer robots that have succeeded have been marketed as purely instrumental and have generally focused on one task. For example, from 2016 to 2017, iRobot’s yearly revenue jumped from US$2.93 billion to US$3.69 billion, a major increase on returns from previous years. Meanwhile Maytronics and Husqvarna show there is a market for robotic pool cleaners and lawn mowers.

Polling the general public generally finds there is a disconnect between the enthusiasm roboticists and tech aficionados have for home robotics and the general public at large. In a recent poll, the Brookings Institution found that, while 20% of respondents would be interested in a robot that cleans their home, only 9% would be interested in a platform that cares for a child or an aging relative

Reasons for Optimism (For Chinese Vendors Mainly)


Despite these ominous signs within the social robot sector, there is reason to be optimistic.

Consumer robotics saw significant investment, with over US$800 million worth of funds directed to companies designing products for the home. Of these, 75% were directed to toy robots and personal “smart” robots. This was impacted heavily by a choice number of significant investments in Chinese consumer robotics companies such as UBTECH Robotics.

China is well placed to succeed in the personal robot space, given its ability to manufacture high-quality products with a competitive price point. Most of the investment into Chinese personal robot companies went to Shenzhen, where the concentration of management, design, and manufacturing assets allows Chinese companies to dominate entire industries. This was precisely the case with DJI, which conquered the drone market through competitive price points, shorter development cycles, and the proximity between design and manufacturing.

There are now a range of Chinese companies trying to do the same in a range of home robotics verticals: Ecovacs is challenging iRobot for floorcare; Padbot is impacting the mobile robotic telepresence market; and UB Tech is pushing to develop humanoid robots. It is increasingly likely that the market share for the consumer robotics market, including social robots, will be contested by established players that can afford loss, such as Softbank Robotics, Google, Amazon, and Chinese newcomers that hope to emulate the success of DJI within another market.

Where does this leave small startups that are developing novel social robots? This is a particularly difficult question as the events at Jibo and Mayfield Robotics will undoubtedly affect confidence in the wider community.  However, investment remains high and enthusiasm continues. Intuition Robotics, whose ElliQ platform is dedicated to the elderly market, has begun beta testing of its product and is laying the groundwork for more detailed research into the mass-market appeal of social robots. Aside from that, it is developing its cloud platform and AI capabilities to partner with prospective robot and smart device companies that need it. This is a more likely road to success: identifying a value proposition, focusing on one thing, and developing as a third-party solution provider.

As stated in ABI Research’s recent market data forecast on consumer robotics, personal robots are predicted to be shipped in the millions by 2026, and from 2017 to 2026, revenue for the market will grow from US$68 million to US$4.96 billion. This remains a conservative estimation of the market potential, but from the first half of 2018, onlookers can bet that Jibo and Mayfield Robotics will be the first of many casualties in what is a rapidly changing and uncertain space.


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