The Future is HERE: How Apple Will Profit from Robotics in 2012-2013

By BA McKenna - August 20, 2012 | Tickers: AAPL, GOOG, IBM, ISRG, IRBT | 0 Comments

• Email
• Print

I'm relatively well read on All Things Apple (NASDAQ: AAPL) and have fairly recently been devouring All Things Robotics. It's a fascinating field that I believe will be The Next Big Thing. I steer clear of using that four-word phrase other than in mock jest, as it's so over-used it should be outlawed, except when talking about something that will rank up there with the invention of the car, TV, computer, and Internet. And that I am.

Concepts Smoncepts -- Show Me the Here & Now!

I'm excited about the Apple-robotics intersection story I'm about to tell you. Not because it's huge, but because it is in the here and NOW. I enjoy 'concepts' -- cars, robots, whatever -- as much as the next person. However, it's hard to get too enthused about concepts, as they're plentiful on the drawing boards, but rarely make the leap to commercialization.

Google's (NASDAQ: GOOG) working on driver-less cars, and that's exciting, but it's still in the testing stage. Yes, there are robotic applications that are commercially available now. In fact, several have been been around for awhile, performing basic drudgery through to dangerous and highly skilled work. 

For instance, there's iRobot (NASDAQ: IRBT) -- or "the Roomba company," as some may think of it. While its vacuum-cleaning Roomba is its best-known product, iRobot also produces a wide array of other products. Its consumer products also include washing robots and pool and gutter cleaning robots. The company also makes products that have military, scientific research, and various industrial applications.

And in the highly skilled work arena, there's Intuitive Surgical (NASDAQ: ISRG), an early Motley Fool stock recommendation that began trading in June 2000 for $20.75 (split-adjusted) and closed at over $511 on Aug. 17. The company's da Vinci surgical systems work by translating a surgeon's natural hand movements on instrument controls at a console into corresponding movements of instruments positioned inside patients.

There's also IBM's (NYSE: IBM) Watson, better described as an artificial intelligence computer system than a robot (as it doesn't move), though artificial intelligence is sometimes grouped in the broad robotics category. Watson, capable of 'thinking' and answering questions posed in natural language, is best-known for its 2011 win on Jeopardy! It has medical diagnostic and a host of other applications.  

These applications and others are wonderful, but most don't directly involve you as a consumer. Even those that do aren't controlled by you, and if they are -- like the cleaning robots -- they have extremely specific and limited uses.

Enter Personal Robotics...and the Apple connection... 

Your Body 'Double' Available Now -- For $2,000

I'm sure your significant other/best friend/mother -- dog? -- thinks you're akin to The Six Million Dollar Man (or Woman). However, your Body 'Double' can be had for a mere $2,000 if you pre-order now ($2,500 if you wait until 2013). 'You' might not be able to join Steve Austin or Jaime Sommers, AKA the Bionic Woman, on 60 MPH jaunts or hurl bad guys through the air, but you'll be able to do some pretty nifty things.  

The 'Double,' invented by Mountain View, Calif.-based Double Robotics, is a simple telepresence robot that is aptly described as "half robot, half iPad." A telepresence robot, as the name suggests, is a personal robot that can navigate a far-off place making you feel as if you are actually there. In the case of the Double, there are two iPads -- one acts as the robot’s eyes and ears, so you can see and hear what your robot does, while you use the other to control your robot through an iPad application. Pretty cool, huh?

Can't make a work meeting? Send your Double.

Have a book club discussion, but no babysitter? Send your Double and sit back and enjoy taking everything in. You won't be able to talk -- yet -- but that's surely in the near-future. 

Planning on catching your child's sporting event or dance recital, but stuck in an airport terminal because your flight was delayed? Have someone take your Double along.

Want your students to tour a museum, but logistics won't permit a visit? Send the school's Double.

Those are just a few of the potential uses that come to mind.  

I learned about the Double in Nick Bilton's Aug. 18 piece in The New York Times, "Double’ Turns the iPad Into a Telepresence Robot." 

Apple's Profit 'Double' Dipping

So for every Double ordered, Apple will sell two iPads. I'd imagine there could be some additional money in upgrades and apps, too. 

Let's look at a key point and then a couple scenarios.

Key Point: Dominant Ecosystems or Products Benefit from Snowball Effect 

There is a universal point here. A company unrelated to Apple, as far as I know, chose to incorporate two iPads -- not another tablet -- into its product. It was a natural move given the iPad has captured the bulk of the tablet market. More people know how to use it, more people like it. It's as close to a no-brainer as you can get to assume more people would buy a personal robot that incorporates a product they know and enjoy into it over one that incorporates an unfamiliar product.  

Scenario 1: Double is Successful = Apple Not Only Makes More Money, Market for iPad Expands

This isn't a product that's likely to be an instant hit. First, there's the familiarity issue -- people aren't familiar with personal robots, though incorporating the iPad does help. Secondly, they're relatively pricey. So gaining traction could take time.

That said, let's say it's a slow but steady seller. Apple will sell two iPads for every Double sold. It's likely that some people's love of their iPads will make them consider buying a Double because of the iPad connection. A portion of those will likely buy -- if not now, then down the road. So, we're talking three iPads for one person here. See how the potential market for iPads just got bigger? 

And let's consider people who don't already own a tablet, still a fairly sizable market. The reverse scenario could happen here. People who don't own a tablet could use a Double -- perhaps at school or work -- and enjoy it. So, if and when they decide to get a tablet, which tablet do you think they'll buy? 

Scenario 2: Double Flops = Apple Still Wins

Even if this product flops, it's still a win for Apple. The mere fact the product incorporated two iPads (reportedly) seamlessly into it is meaningful. Other companies wanting to get into the personal robotics market are more likely to follow suit. Apple even could decide to develop its own personal robot -- "iRobot" is taken, "iSiri," perhaps?

Bottom Line

Personal robots are here. And whether directly and/or indirectly, Apple will profit from this now-nascent, but soon-to-be huge market. Yet another reason Apple's stock is a Buy.

Gotta go...my robot is here with my coffee...ah, this future can't arrive too soon.



• Email
• Print
• Feedback