Latest Research
Apple Will Become The Leading AR Platform Over Night

Apple Will Become The Leading AR Platform Over Night

Here’s our take on the most important announcements from Apple’s WWDC 2017 keynote event:

    • New AR Developer Tools. ARKit is the single most important announcement from today’s keynote, enhancing iOS 11 devices for augmented reality. ARKit instantly creates a multi-100m user base for AR developers over night, which compares to Google’s Tango platform which we believe has well under 10 million users. We believe AR will be the core technology that eventually replaces the smartphone. Today’s announcement lays the groundwork for Apple to succeed in that future as ARKit represents the first tangible commitment from Apple to establish itself as the leader in the race to build a dominant AR-driven OS. The company will build AR-enhanced iPhones that include depth cameras and other additional hardware in the future, but they will also bring along the existing iOS device base to bring AR to all sooner than later.
  • New VR Developer Tools. Apple also dedicated a meaningful chunk of the keynote to introduce new technology, announcing support for SteamVR, Unity and Unreal. The company also announced Metal for VR, which supports VR content creation.  These announcements show that Apple views VR as an important computing paradigm in the future, a market they have been shut out of to date because of their focus on integrated graphics and downplaying the powering of external hardware. We believe that today’s announcements represent a small step toward eventually launching a VR platform for iPhone.
  • New AI Developer Tools. Apple showed an increasing focus on artificial intelligence across its product line. The company announced Core ML, a new machine learning API to make AI faster on mobile devices. Ultimately, this will enable on-device processing for AI with data privacy across iOS, macOS, watchOS, and tvOS. Robust AI requires: 1) broad understanding and learning across devices, 2) advanced natural language processing, and 3) advanced computer vision. Apple highlighted its strengths across all three of those requirements throughout today’s keynote.
  • HomePod. Natural language will be a key user interface in the future of computing and Apple is playing catchup today with HomePod. Based on the product demo at WWDC, HomePod clearly offers a premium audio experience. The company is differentiating the device from other home assistants by focusing on music, but make no mistake: Siri is the killer app on HomePod. Apple fully understands the importance of Siri for HomePod and we expect updates to Siri when HomePod ships in December. We expect Apple to gradually open Siri up to developers and create an Alexa Skills-like offering for voice based apps. Today, developers are only able to integrate Siri skills if their apps fall within nine app domains (ride booking, restaurant reservations, etc.), but that won’t cut it in the future.

And here’s our take on the rest of the announcements from WWDC:

  • ApplePay for person-to-person transactions. Apple is now the only company to integrate a comprehensive payments platform directly into the OS. The significance of OS integration will only increase as computing becomes more immersive in the screenless future. A clear negative for PayPal’s Venmo.
  • macOS High Sierra. Support for VR will excite some developers and Mac gamers who have avoided the Mac.
  • watchOS 4. We’re looking forward to the Siri watch face.
  • iOS 11. Classic Apple software updates to keep iOS ahead of the pack. New iPad features for iOS show that Apple is trying to push the limits of the iPad as a productivity device. We think it might be enough to bend the growth curve from negative to flat.
  • New iMacs and MacBook Pros. An unexpected price cut on the most popular MacBook Pro.
  • New 10.5″ iPad Pro. Makes sense given that Apple’s getting rid of the 9.7″ iPad Pro. Generally, the iPad line makes more sense now.
  • Amazon Prime Video on Apple TV. More of a negative for Netflix than a positive for Apple or Amazon.
  • Redesigned App Store. Unifying the UI across iOS.

Hinting Towards an AR-enhanced iPhone.

Today’s announcement of ARKit leaves us incrementally more confident that an AR-enhanced iPhone is coming this fall. The software groundwork has been laid for Apple to unveil new iPhones with dual cameras across all models (regardless of screen size), a new 3D mapping chip, and perhaps an edge-to-edge display with no hardware home button. Apple’s new Siri UI showed a Siri button that looks like it could be a Siri-specific home button on a home button-less iPhone. And the new design of the dock, which is now self-contained in iOS 11 (as opposed to the edge-to-edge dock design in iOS 10), makes more sense in a UI with display area below the button. The next iPhone continues to look like it will be the most important update to the device since iPhone 6.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Apple, Artificial Intelligence, Augmented Reality, Virtual Reality
3 min. read Show less
Industrial: Robotics Outlook 2025

Industrial: Robotics Outlook 2025

This is the second in a six-part series we’re publishing on the future of robotics. Every day this week, we’re publishing a detailed outlook on a category within the robotics market including details on our thesis, outlook and market size for each category. Read the intro here.

Over the last 20 years, the industrial market has been the primary adopter of robotics technology and accounted for the majority of all robot spend. We characterize the industrial robot market as robots used in manufacturing or assembly applications within automotive, electronic or other machining industries. Largely due to the size and power of most industrial robots in use today, these systems are typically installed in caged environments with minimal human contact for various safety reasons. However, due to advancements in computer vision and motion sensing capabilities, a new type of industrial robot has emerged known as collaborative robots, or co-bots. While the co-bot market is small today, we believe this sub-category of the industrial market will see extraordinary growth over the next 10 years. Our model for the industrial market is broken down into two sub-categories: traditional and collaborative robots.

  • Traditional Industrial Robots: Most traditional robots are installed in caged environments away from people allowing them to handle heavy payloads and operate at fast speeds. However, the high integration costs associated with industrial robots limits the flexibility of these machines. In addition, traditional robots typically require programming from advanced software engineers, which can drive total cost of ownership well over $100K per system.
  • Collaborative Industrial Robots (Co-bots): Co-bots are built with multiple motion and force detecting sensors, which makes it safer for these systems to collaborate alongside humans. Programming co-bots is also less sophisticated than traditional robots, which lowers overall cost and improves flexibility. With the average selling price on co-bots ranging from $25 – 45k, robot automation is now accessible outside of large industrial manufacturing. That said, limited payload capacity and a slower operating speed are two drawbacks to co-bots in the market today.

Industrial Robot Market to Grow to $33.8B By 2025

According to the International Federation of Robotics (IFR), a total of 253,748 industrial robots were delivered in 2015, and the total market value grew 9.0% y/y to $11.1B. Of all the industrial units shipped, we believe 250,073 of industrial robots were in the form of traditional systems, while the remaining 3,675 units were collaborative machines. Over the next 10 years, we anticipate the traditional industrial market to see healthy growth, but due to lower costs and higher flexibility we anticipate the co-bot market seeing much faster adoption. We expect total co-bot units shipped will increase from 8,950 in 2016 to 434,404 by 2025, representing a 61.2% CAGR. Over this time frame we anticipate costs to continue to come down, but believe the total co-bot market value will exceed $9.0B by 2025. While we expect, co-bots will drive overall industrial growth, we anticipate the traditional market to also see steady adoption. We believe the traditional market alone will represent a $24.0B market by 2025. In total, we believe the industrial robotics market will grow 11.8% on an annual basis to over $33.0B in the next 10 years.

China and US To See Strongest Industrial Robot Adoption

From a geographic perspective, Asia and specifically China has historically been the largest buyers of industrial robot technology. According to the International Federation of Robotics, China consumed 68,556 industrial robots in 2015, which represented 27.0% of all robots sold. Meanwhile, the Republic of Korea, North America, Japan and Germany rounded out the top five, respectively. Over the next 10 years, we anticipate the install base of industrial robots to increase in almost every single country, but believe China and North America will see the fastest adoption of industrial robots. As shown in the exhibit below, we expect annual units shipped to China and North America to grow 22.1% and 20.4%, respectively on a CAGR basis through 2025. We believe rising labor costs will be a lead catalyst to robot adoption in both regions, but see the theme of bringing manufacturing back to the United States as potential driver in North America.

Automotive and Electronic Verticals to Drive Demand

From a vertical standpoint, the automotive and electronics industries have been the largest integrators of industrial robots. According to the IFR, 97,500 and 64,600 industrial robots were sold to automotive and electronic in 2015, respectively. Metal and Machinery as well as the Plastics and Rubber industries are also large buyers of industrial robots. As displayed in the exhibit below, we see robot adoption growing in all 4 verticals over the next 10 years, but due to the high demand for new electronic products (e.g. smartphones, wearables, medical devices, etc.), robot adoption in the electronic manufacturing space will experience above average growth. That said, we believe the rise of the low-cost collaborative robot movement will access automation technology to a handful of new applications, which will drive adoption across a handful of new verticals.

Bottom Line:

Today, the industrial robot market accounts for the highest percentage of all robot spend (61%), and by 2025 we anticipate industrial will remain the largest robotics category. However, due to advancements in computer vision, AI and motion sensing capabilities, collaborative robots are beginning to take center stage. In the manufacturing sector robots and humans are beginning to work together side-by-side; as a result the co-bot industrial market will likely be one of the fastest growing markets in the robotics space. That said, we believe co-bots will remain limited to certain applications given payload and speed constraints, and we anticipate demand for traditional robots will remain strong. Note that we do not view traditional robots as competitive to collaborative systems, but rather view the two as complementary; together the will enable new automation techniques and a wide array of new applications. Key drivers to growth in the industrial sector will include lower costs, improved robot functionalities, rising labor costs, and manufacturing insourcing.

 

Next: Commercial Robots

In our next piece, we look at the fastest growing category in robotics, commercial robots, and how automation is affecting jobs outside of the manufacturing sector.

Austin Bohlig contributed to this note. 

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Robotics
4 min. read Show less
Intro: Robotics Outlook 2025

Intro: Robotics Outlook 2025

This is the first of a six-part series we’re publishing on the future of robotics. Every day next week, we’ll publish a detailed outlook on a category within the robotics market including details on our thesis, outlook and market size for each category.

See other notes in our Robotics Outlook 2025 series here:IndustrialCommercialDomesticMilitary, Entertainment

A cultural shift is underway and robots are playing an increasingly crucial role in our everyday lives at work and at home. Due to advances in computer vision, artificial intelligence and cloud computing, robots are now capable of performing advanced tasks and operating in challenging environments.  Robotics will be one of the core drivers creating the next wave of technology. In this six-part series we take an in-depth look at the global robotics market and identify specific catalysts that will drive growth through 2025. We look at the robotics market in 5 distinct categories:  

  • Industrial: Robots used in manufacturing applications in verticals such as automotive, electronics, metals and machinery, and plastics and rubber.
  • Commercial: Robots used in all commercial applications outside of manufacturing including warehousing, healthcare, agriculture, construction, security and public safety.
  • Domestic: Robots used to perform household chores; for example, vacuuming, mopping and mowing.
  • Military: Aerial, ground and marine robots used in intelligence surveillance and reconnaissance (ISR) applications, bomb disposable and cargo transportation.
  • Social and Entertainment: Robots used as toys or personal companions.

Robotics Market to Grow to $73B By 2025

Based on International Federal of Robotics (IFR) data and Loup Ventures estimates, we believe the aggregate robotics market grew 15.4% in 2016 to $20.9B. In the coming years we anticipate growth to accelerate and believe the robotics market can grow to $73.0B by 2025, representing a 14.9% CAGR. Note that our forecasts only factor in hardware sales and do not account for software or other supporting services. When factoring in these additional costs, we believe the market value could be about 3x larger. Within the five categories outlined above, we believe 7.6M robots were shipped in 2016 and believe over 33.0M units will be shipped in the year 2025, which represents a 18.5% CAGR. While most of the units shipped will be in the form of domestic, social and entertainment robots, we anticipate at least high-teen unit growth throughout all five categories.

Investing in the Theme

Unmanned vehicle traffic control systems for air, sea and ground will be an important element to widespread adoption of robotics that function without human supervision.  While the drone market is fragmented, an air traffic management program will need to have a single or at least very few winners for it to be effective.  Similar tracking systems should also be in place for marine and ground based vehicles.  We see this as the biggest opportunity in the unmanned vehicle space.  In fact, a system that works for land, sea and air vehicles in conjunction may be the ultimate future to enable real-time, in transit delivery for a just-in-time world.

Bottom line: We believe growth in robotics will be driven by broad adoption across all five categories and the fastest growing markets will include commercial, domestic and industrial robots. That said, many robotics markets are still in the early innings and we expect multiple investable markets to emerge in the years to come. We’ll dive deeper into the specific forces driving demand in these five categories throughout this series, but we believe the common denominator driving growth in each category will include rising market awareness, cultural acceptance, favorable regulation, lower robot costs, and improved functionality. We believe that improving robot functionality – including rapid advancements in robot control software – will be one of the leading catalysts, which is going to be dependent on advancements in artificial intelligence, computer vision and cloud computing.

 

Next: Industrial Robots

In our next piece, we’ll dive deeper into the industrial market where the rise of collaboration robots (co-bots) is already underway.

Austin Bohlig contributed to this note. 

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Robotics
3 min. read Show less