The Tipping Point
5 driving forces in the age of automation:
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Advancing technology. The transition from stationary manipulators to mobile, perceptive and intelligent robots has created an entirely new platform for growth.
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Emerging market wages are increasing and demand for higher quality is rising. Capital + Labor = Productivity. Capital, in the form of automation, will continue to replace labor as it becomes more expensive. The transition to automation also satisfies demand for consistency and higher quality products.
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Technology costs are decreasing. The computing power you can buy for a dollar has doubled for decades. The $300 Sony PlayStation today has the same power of a military supercomputer in 1997, which cost millions.
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Aging Population. Demographic trends are predictable. As the population ages in most developed nations, a labor substitute is mandatory to maintain GDP growth. Additionally, an aging population will benefit from service robotics to improve quality of life and independence.
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External funding for robotics is rapidly increasing. Venture capital, private equity, government and corporate ventures are accelerating investments. This is perhaps the most important trend as it signifies the recognition, acceptance and action of the marketplace.
Tracking the Next Megatrend:
The goal of ROBO is to provide an accessible, intelligent, and diversified way to track the next megatrend. Our management team and strategic advisory board provide years of combined investment and robotics experience.
This index is built for the long term. The best approach for an industry in its early stages is to be as inclusive as possible. There will be tremendous creative destruction to come. Including all players in a proportionate and equally weighted fashion ensures that we capture the overall growth trend while minimizing company-specific risk.
The universe of robotics, automation and enabling technologies can be easily bifurcated into either Technology or Applications.
Technology captures all index companies that manufacture or provide services related to any machinery, equipment, devices or sensors supporting a robot performing its task. It also includes those companies that provide key-enabling software and processing technologies used to advance the conversion to autonomous systems. Essentially, we are looking at the companies that enable robots to sense, process and act.
Applications highlights all index companies that incorporate multiple robotic and automation technologies into their product or manufacturing process to improve efficiency in traditional business lines as well as the development of entirely new business propositions.
A Deep Dive into the Index
Our approach is straightforward: own a representative portfolio of bellwether and non-bellwether companies across the entire robotics value chain, globe and market capitalization range.
Bellwether Holdings:
The bellwether component of the index was constructed to place a higher index weight on the unmistakable pure plays in the robotics and automation industry. Each bellwether holding carries an approximate 2% weight in the index.
In order to qualify as a bellwether index member, the company must either derive approximately 40% or more of its sales from robotics, automation, and/or key enabling technology OR be an undisputed leader in a major robotics category. Secondary consideration is also paid to the relative size and liquidity of the index member given the higher weight of bellwether members.
Non-Bellwether Holdings:
While Robo-stox gives greater emphasis to pure play companies, non-bellwether companies account for a huge part of the global robotics and automation market. Each non-bellwether holding carries an approximate 1% weight in the index. Given the projected long-term growth rate of robotics and automation, these companies will evolve to purer and purer plays as the market matures.
Understanding the Value Chain
The Robo-Stox index is currently categorized into 13 sub-sectors, which fall under either Technology or Applications.
Technology: enables robots to sense, process and act:
Sensing
In order for a system to exhibit autonomy, it must be able to sense its environment, in addition to determining its own internal state. For human beings, these are called exteroception and proprioception. Sensing is important for the same reasons that our exteroceptive senses (sight, sound, etc.), and our proprioceptive senses (ability to know where our limbs are and what they are doing without directly observing them) are important for human beings. For robotic systems, however, we are not limited to the standard senses. Almost anything that can be measured can be made into a sensor. Processing
Autonomous systems must make decisions at various levels ranging from basic motion control to determining the state of the environment they are operating in and optimally planning actions. Part of this processing is not only making sense of the information received from sensors, but also planning actions in order to achieve a desired objective. Actuation
Actuation is the means by which machines interact with the physical world. For human beings, this mainly refers to our limbs, and in particular, our hands. However, machines are not limited to manipulation. Almost anything that has an effect on the physical world can be made into an actuator. Actuation techniques include electric, hydraulic (compressed fluid), mechanical, and pneumatic (compressed air). Computing
The path from sensing, to processing, to actuation, requires computation. It is analogous to our brain, and is what allows the processing of information to produce actuation. Computing can vary from embedded systems smaller than a fingernail to server-farms implementing sophisticated algorithms. Integration
An autonomous system is made up of many components (sensors, actuators, and computational units), which can be distributed over large spaces. Integration consists of architecting a system – figuring out how to put all of these components together – to achieve the desired objective in a robust, high performance, and cost-efficient way. Applications: highlights the different industries embracing robotics and automation technologies:
Manufacturing & Industrial Automation
Broadly speaking, this is the main way in which companies take raw materials through a manufacturing process to create products. It is also the earliest successful application for robotics and automation – for example, automobile assembly - and continues to be one of its largest growth areas. 3D Printing
Traditionally, products are built either by assembling separate parts, or by removing material from a larger work-piece. 3D printing, also called additive manufacturing, adds yet another capability by depositing different types of materials where they are needed. One of its main benefits is the potential for customization that is not economically feasible with traditional techniques. Logistics Automation
The manufacturing of items is incomplete without the material handling and distribution channels that bring the objects to their intended users. The many economic advantages to speedy and error-free distribution, such as operating with low-inventory and being responsive to customer demands, is a significant growth area for robotics and automation. This is continually reducing the costs for end-users, both businesses and consumers. Agriculture
Feeding and sustaining the world continues to be one of our most important economic activities. A new generation of autonomous systems is bringing precision and the elimination of rote labor to this domain. For example, precision agriculture offers to greatly reduce costs and our environmental footprint by applying water and fertilizer on an as-needed basis. Military / Security
Removing people from harm’s way has always been a main driver for robotics research. Up until recently, it has been difficult for machines to duplicate a human’s flexibility and cognitive skills. However, with today’s technologies, unmanned aircraft and ground vehicles are now capable of detecting hazardous materials, disposing of bombs, operating in space and performing critical national defense functions (surveillance). Energy
Exploration, extraction, and the maintenance of the energy infrastructure require extensive and growing resources. Robotics and automation continues to expand from structured environments, such as warehouses and factories, to unstructured ones, such as outdoors, underground, and underwater. The energy sector will reap the rewards of this transition with lower operational costs. Healthcare As global healthcare costs continue to rise, robotics and automation is poised to provide a countering force to this trend. Through rehabilitation, diagnostics, exoskeletons and elderly care, using robotics and autonomous systems promises to drastically reduce costs, while improving quality of life. In addition, robotics and automation can transcend cost-cutting by using robots for difficult surgeries and neurological treatments that were previously unfeasible. Consumer Products
From interactive robots for entertainment to automating household chores, consumer companies work to make everyday lives easier and more enjoyable. The Internet of Things promises to usher in a new era of interconnectivity. By communicating through the existing internet infrastructure, devices will no longer be isolated islands of limited capabilities. This impact will be particularly pronounced for these types of consumer products, which need to be inexpensive for wide adoption. Through the internet, consumer robotics will finally become broadly affordable to individuals. |