Robots won’t kill us or take our jobs, says Eoin Treacy, investment director of Frontier Tech Investor. Rapid advances in robotics are set to make the world a better place.
Mention robots and most people today will probably imagine one of two things. If you’re a fan of films such as The Terminator, it’ll be a terrifying martial machine with a grudge against humanity. If you’re more concerned about social issues, it’ll be the equally frightening prospect of automation putting hundreds of millions of people out of work.
The first nightmare is obviously a creation of science fiction. Few people would view it as a reason to worry about the development of robots in the real world. But the second is taken surprisingly seriously: many commentators view advances in robotics as a threat to jobs. They believe that many roles currently filled by people will be taken over by robots that can do the same job cheaper, for longer and without complaining. The result, they say, will be rising unemployment, lower wages and social unrest.
This can be a persuasive argument – but it’s entirely wrong and it’s rooted in a misunderstanding of what robotic technology can do. Robots are far more useful when they’re working in combination with people than when working alone. For instance, a computer can beat a grand master at chess. But pair a machine and human together on the same team and they’ll beat a computer operating alone.
In this respect, robots are tools, not much different to a vacuum cleaner or a car. They can help to do things that are too dangerous for people to do, to be more productive in our jobs and pick up some of the mundane tasks we’re too busy to do. So don’t think of robots as replacements for humans – think of them as things that will help make us better at tackling many of the problems we face.
To see the future, look to Japan
Japan was among the first countries to automate manufacturing – a move that led to cheaper, yet more reliable, cars and electronics. So it’s no surprise that Japan has been at the forefront of embracing robotics. More than half of all the industrial robots in the world are installed in Japanese factories. But Japan is also likely to be one of the first countries where robotics move out of industry and into the home in large numbers. Japan has huge demographic problems. To put it simply, there aren’t enough young people to care for the elderly. And that problem is only getting worse. By 2020, 29% of Japan’s population will be 65 or older. By 2050, the figure will be 39%.
That kind of demographic mismatch creates a huge number of problems for society. For example, who will look after all those over-65s when they need medical care? Japan is unwilling to accept the legions of immigrants that would be required to solve this issue through manpower, so it has pinned its hopes on developing robots to take their place. That’s why Japanese firms, such as Honda and Toyota, are in the forefront of developing robots to help in the home.
Help around the home
So how exactly will these robots improve our lives? One example is helping disabled people walk. We tend to think about this in the context of people who are victims of a serious accident. But this is only a small part of a wider problem. It overlooks the many people suffering from diabetes (who may lose the use of their legs as their illness progresses), multiple sclerosis (which results in muscle degeneration), Parkinson’s (difficulty controlling tremors) and other progressive conditions. The number of people suffering from these conditions is daunting enough and is only likely to get worse in future.
Enter Cyberdyne, a company whose founders may have a dry sense of humour. In the Terminator films, Cyberdyne is the company that developed the Skynet software, which initiated a war between humans and robots. What’s more, its main product, the Human Assistive Limb (HAL-5), shares its acronym with the insane artificial intelligence in 2001: A Space Odyssey. But before you panic, Cyberdyne’s creations will not be destroying cities nor commandeering spacecraft. The HAL-5 is a powered exoskeleton – essentially a suit you wear to help with the issues you encounter on a daily basis when your legs don’t work anymore. It’s being used in 130 Japanese hospitals, has been accepted into the German public healthcare system and the firm has applied to have its products licensed for use in America.
“Robots are far more useful when working in combination with people than when working alone“
But it’s not only people who have lost all mobility who will benefit from robotics. Many elderly people have some difficulty getting around: walking around the shops, taking the stairs, or just getting up to make a cup of tea becomes a challenge. They might not need or want a suit such as HAL-5, but they could do with a robot butler to help them out. This is where a tool such as Honda’s Asimo humanoid robot could eventually come in useful. This is still a work in progress: right now it would cost $150,000 per month to lease one from Honda and it will still be years before it can be programmed to do the household chores. But it’s easy to see where the ambition for this little helper is going. In the meantime, simpler robots that can do individual tasks are already on the market. Asimo might not be able to do the vacuuming yet, but iRobot’s Roomba can. The latest version can mop the floor as well. If you had to bet on one business model prevailing in the mass market, these types of single-purpose machines seem more likely to become a standard feature of our homes than all-encompassing companion robots.
Trust me, I’m a (robot) doctor
The types of robots we’ve mentioned so far are intended to replace abilities we’ve lost (such as mobility), or do tasks that are simple but tedious (cleaning). But there are other areas in which robots, working with people, may be able to help us do better than before. Health care is a great example.
Take Intuitive Surgical. This evolved from a US army-funded project in the 1980s to develop surgical robots capable of performing on the battlefield. Its da Vinci system is designed to help conduct complex surgeries in a minimally invasive way. It is the only robot system licensed in America for soft tissue surgeries. The da Vinci system is currently controlled by a surgeon operating from a console. However, research is under way right now to automate tasks where a robot may be able to deliver better, more consistent results than a human. These include stitching, which is routine, tedious and fatiguing for the surgeon.
Robots on the battlefield
The vast majority of uses for robots are peaceful and mundane. But there’s no getting away from the fact that robots have military potential. The US Defence Advanced Research Projects Agency (DARPA) has a number of projects it is working on. You may have seen videos of the BigDog quadruped robot, developed by Boston Dynamics, which is an example of a companion robot that could help carry heavy loads while covering the same rough terrain as a soldier on foot. This particular prototype was eventually turned down because it was too loud, but it’s a clear indication of the kind of technology the military would like to develop. The types of assistive suits being developed by Cyberdyne and others could also have military value, by allowing soldiers to carry more, walk further and arrive at their destination less fatigued.
“The majority of uses for robots are peaceful and mundane“
Robots could also take more offensive roles. For example, UK-listed QinetiQ has developed the Modular Advanced Armed Robotic System (MAARS), a tracked robot that can be remote controlled and which carries an array of weaponry. It’s a successor to smaller robots already deployed in Iraq, mostly for bomb disposal. Then there are the MQ-9 Reaper unmanned aerial vehicles, developed by General Atomics, used for both attack and reconnaissance by the US air force. These are currently controlled by pilots, but within a relatively short time developments in artificial intelligence and obstacle avoidance software are likely to mean that they won’t require constant oversight by a dedicated operator. Obviously, military applications of robots are controversial, but there’s no ignoring the speed with which the area is developing.
Finally, let’s not forget that the vast majority of robots in the future will work in industry. While industrial robots have existed for decades, they are continuing to evolve. For example, ABB’s YuMi collaborative robot was designed to work side-by-side with people on the production line. The aim is to marry its agility and speed with the dexterity of humans, leading to higher overall productivity.
At present, robots are mostly used in factories producing high-value goods. The other end of the scale is still the preserve of humans. For example, the garment industry has remained labour intensive for centuries, because we could not build machines with the sensitivity of the human touch. Cloth is so flimsy that hands were always needed to guide it through the sewing machine. If we were to create a machine with hands possessing the same number of sensors as we have nerve endings in just one finger, the processing power required would be enormous. Yet people with very little education can sew efficiently and reliably and have being doing it for thousands of years. This means every single piece of clothing you own has passed through someone’s hands.
However, this is about to change. In March, SoftWear Automation, a US-based company, released a robot that can sew just about anything, using high-definition cameras to identify textures. SoftWear’s chief executive KP Reddy says the firm is already getting orders from major garment factories in Asia that anticipate being fully automated within a decade. While sewing may not be as exciting as robot butlers, it’s a fine example of how advances in robotics are shaking up sectors that have remained little changed for decades. In short, it’s going to be an enormously eventful time as more of these types of products hit the market. I’ll be writing about these and other developments every month in Frontier Tech Investor.
How to invest in robots
The companies mentioned in this story that are set to bring about the robotic revolution fall into two main types. The first group of innovators are firms such as Honda (Tokyo: 7267) and Toyota (Tokyo: 7203), whose robotics divisions are only a small part of a wider business (manufacturing cars and power equipment, in the case of these two firms). It’s possible that one day their names will be as synonymous with robotics as they are today with cars, but in the short term their robotics research is unlikely to have much impact on their earnings and share prices.
This means that if you are interested in investing directly in robotics, you should focus on firms such as Cyberdyne (Tokyo: 7779) and Intuitive Surgical (Nasdaq: ISRG). These are much smaller companies whose fortunes will rest on the long-term success or failure of their technologies (and are hence more risky). Cyberdyne is currently lossmaking, but is forecast to move into profit in 2017. Intuitive Surgical is profitable: it trades on a price/earnings ratio of almost 42, but has been growing fast. Both have attractive long-term prospects.
However, there is one firm that bridges the gap more than others. That’s Alphabet (Nasdaq: GOOGL), the parent company of Google. While it’s obviously known for web search technology – and makes 90% of its income from advertising related to that – it has research projects in a number of fast-growing areas, including robotics.
There’s little doubt about its ambitions here: if robotics turns out to be as big as expected, Alphabet wants to own the industry. I mean that very literally – the company purchased eight robotics companies in 2013 alone and it hasn’t stopped since. If you compete in the annual DARPA robotics challenge and your robot does reasonably well, you can expect a bid from Alphabet.
The DARPA challenge is aimed at developed robots to replace human beings in extremely dangerous scenarios, such as bomb disposal, radiation hot spots and burning buildings. However, Alphabet is a mass-market firm and it also wants robots for more everyday functions. We got some idea of what those applications might be in December when it announced a joint venture with Johnson & Johnson (Nasdaq: JNJ) to form a new company dealing in surgical robots.
You probably know Johnson & Johnson for consumer products such as baby oil and powder, and perhaps for pharmaceuticals. However, it makes a large part of its revenues from medical devices. If you’ve had a hip replaced, there’s a good chance Johnson & Johnson manufactured it, as well as the tools the surgeon used. Add this expertise to Google’s machine learning and robotics research, and the joint venture holds a great deal of promise.