Rise of Consumer Robots: Google’s Driverless Car and iRobot

Alvin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The potential of robotics is immense. Robots can be mass produced, operate in environments too harsh for humans, and complete repetitive tasks quickly and accurately. Robots have already become common in industries where they perform tasks such as welding, assembly, disassembly, and processing. According to a research report by MarketsandMarkets, the global industrial robotics market is expected to grow to $32.8 billion by 2017.

In addition to the industrial robotics market, robots are edging into the consumer market. The potential of consumer robotics is huge. With a global population of around 7 billion people, companies that build the right consumer robot will make a ton of money. iRobot (NASDAQ: IRBT), which generates more than half of its revenue from home robots, states in its 2011 annual report, “Robots represent a new and emerging market.”

There are many impressive robots that have been or are currently being developed. Two examples are ASIMO and TOPIO. ASIMO and TOPIO, designed by Honda Motor (NYSE: HMC) and TOSY Robotics, respectively, are humanoid and have 34 and 39 degrees of freedom, respectively.  ASIMO is capable of walking, climbing and descending stairs, avoiding obstacles, responding to basic human commands, and carrying objects. TOPIO is designed to play table tennis. Another impressive design comes from China's Zhejiang University. The university has also built robots capable of playing table tennis. Two of the university’s robots are demonstrated here rallying for a long period of time.

While there are many companies and research labs all working on amazing consumer robots, the best investments, currently, are tech giant Google (NASDAQ: GOOG) and iRobot. Google and iRobot are building practical robots. While Google’s driverless car is still a few years away from being ready, it is truly an engineering wonder and has the potential to revolutionize the world. A demonstration of the technology can be seen here.

The potential of the technology to make driving safer is huge. The computer driver reacts faster than a human driver, has 360 degrees field of view, does not get tired, does not get distracted, and does not get intoxicated. As of August, Google’s driverless cars have driven a total of 300,000 autonomous accident-free miles.

The closest competitors to Google are probably Ford Motor (NYSE: F) and Volkswagen. Traffic Jam Assist and Temporary Auto Pilot, designed by Ford and Volkswagen, respectively, allow a car to drive itself on a highway. The two technologies rely on adaptive cruise control and sensors. General Motors (NYSE: GM) is also researching autonomous cars. GM plans to wirelessly link cars that have its driverless technology together. However, GM only expects to start testing its technology in 2015. Currently, Google’s driverless car is far superior to its competitors. In addition, Google’s driverless cars are the first autonomous cars to be issued a driver’s license in the US.

On the other hand, iRobot has been quietly growing with its home cleaning robots. The company has several home robots currently in the market. Its most famous home robot is the Roomba, which provides autonomous vacuuming. iRobot’s other robots Scooba, Verro, and Looj provide autonomous floor washing, pool cleaning, and gutter cleaning, respectively. The following table sums up iRobot’s business.

  2007 2008 2009 2010 2011
Total Revenue (thousands) 249,081 307,621 298,617 400,952 465,500
Home Robots Revenue (thousands) 144,483 173,602 165,860 229,348 278,551
Home Robots Units Shipped 899,000 1,054,000 988,000 1,269,000 1,371,000
Total Net Income (thousands) 9,060 756 3,330 25,514 40,191

As shown, iRobot’s home robot division accounts for over half of the company’s revenue. The rest of the company’s revenue comes from US government contracts. Besides 2009, when the global economy went into deep recession, iRobot’s shipments of home robots have been steadily climbing. In the foreseeable future, this growth will likely continue because the market is new and iRobot has a head start and a stronger brand name than its competitors. In addition, the robots save people time. Why waste time vacuuming when a robot can do it? iRobot does have competitors such as Evolution Robotics and Neato, but the market has so many potential customers that competition is not a big problem at the moment. Also, iRobot has the option to expand its current designs and add functionalities beyond cleaning.

In summary, iRobot and Google are a good investment combination into the consumer robotics market. Google has a revolutionary technology and iRobot is a leader with a strong growing foothold. While Google’s driverless car is not yet ready, Google’s current business is strong enough to get the project into the market. In addition, Google’s large amounts of capital, strong background in programming, and large data processing centers give the company a huge advantage over its competitors. Finally, even if Google’s driverless car fails, Google’s core business of internet search is a good business to fall back into.

On the other hand, iRobot has robots that are already in the market. The robots are practical and help people maintain their homes. In a recent press release, iRobot stated that it has sold more than 8 million home robots worldwide. Basically, the company is in good position to ride the growth of consumer robots. Although the market for consumer robotics is still developing, it is in similar position to where the PC was during the 1980s. It should not be ignored. Investors who want to profit from this emerging market should go with a market leader and a company with a game changing technology. iRobot and Google are the way to go.


Alvin has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford and Google. Motley Fool newsletter services recommend Ford, General Motors Company, Google, and iRobot . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.

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