In early February of 2018, US Based robotics firm Boston Dynamics released a video of a robot opening a door for another robot. This act of robo-chivalry went viral around the internet, but for parent company SoftBank Group Corp. (SFTBF), it's a sign of their continued investment in the robotics space. In 2017 Softbank announced the acquisition of robotics companies Boston Dynamics and Schaft from Google parent company Alphabet Inc. (GOOG). Reports that Alphabet was looking to sell Boston Dynamics had been doing the rounds in the media since 2016, with Bloomberg reporting in 2016 that Alphabet executives were worried about the robotics company’s chances of generating any real revenue.
Neither SoftBank nor Alphabet disclosed terms of the deal, but the nature of the deal brings a bit of worry with it. Typically, this sort of acquisition takes place between a growing company that’s either leading or could potentially occupy the leading spot in its industry and a larger company that’s looking to ramp up presence in the industry of the acquisition target. In contrast, this deal is between two large companies. Both had made the acquisitions to ramp up its presence in the robotics space. Why is SoftBank interested in robotics? Here are a number of possible reasons.
Tremendous Market Potential
First, Alphabet's decision to sell its two robotics companies does not mean that robots aren't the future of tech. Alphabet's problem could have been that robots, for the most part, are not a practical solution for the problems that the company is looking to solve. The market potential for robots remains huge. (For more, see also: SoftBank Buys Google's Boston Dynamics.)
Boston Consulting Group, in a 2017 report titled “Gaining Robotics Advantage,” predicted that the global market for robotics would reach $87 billion by 2025. That’s about a $20 billion addition to the management consulting firm’s prediction for the robotics markets in 2014. The improved optimism about the robotics market stems from the increasing demand for robotics in the consumer market.
Still, Boston Consulting’s forecast is conservative considering that Dublin-based market research firm Research and Markets forecast in March of 2017 year that the global robotics market would grow to $226.2 billion by 2021 from $34.1 billion in 2016.
What’s more, the personal robot market, which includes humanoid robots – the area that SoftBank is mostly interested in at the moment – could be worth over $34 billion by 2022, according to a report from Research and Market.
Robotics Is Huge in Japan
in 2016, Bank of America Merrill Lynch released a report that looked into global economic trends using a number of different maps. One of the maps featured the countries with the highest number of working robots. Japan occupied the top spot with 310,508 working robots, according to data from 2012.
Just before the end of May, 2017, the Japanese government released economic data that showed that the labor shortage in the country had reached its highest level in over 40 years. It was estimated that, for every job applicant in Japan, there are 1.48 jobs, compared to 1.53 jobs per applicant in 1974 when the country was experiencing rapid growth. To help curb the growing labor shortage, the Japanese government has been taking measures to improve the adoption of robots in the country.
According to a CNBC report, the Japanese government hopes that the robot market in the country would hit $21 billion by 2020. Robotics companies, SoftBank included, would be looking to help abate the labor shortage to some extent with robotics. For instance, SoftBank’s humanoid robot Pepper – designed by SoftBank’s subsidiary Aldebaran – is used at various commercial centers in Japan, including retail stores.
SoftBank is also eyeing markets around the world with its robotics innovations. Pepper is already being tested for use at retail stores across the U.S. and has brought improved sales at the pilot locations, according to SoftBank
With the retail landscape seeing a significant transformation due to e-commerce, humanoid robots such as SoftBank’s Pepper, and Boston Dynamics' bevy of physical 'bots could play a huge part in helping retail locations merge their e-commerce and physical operations seamlessly.