64 – Robotics… are our new overlords coming?

Robotics is a field that seemingly hasn’t really delivered on its promises. Sure, plenty of robot arms and other robotic solutions in logistics and industrial spaces, but what about the rest… including, Consumer?! 

Navigation:

1. Intro (01:34)
2. B2B Robotics
3. Consumer Robotics
4. Looking Ahead
5. Conclusion

Our co-hosts:

• Bertrand Schmitt, Entrepreneur in Residence at Red River West, co-founder of App Annie / Data.ai, business angel, advisor to startups and VC funds, @bschmitt
• Nuno Goncalves Pedro, Investor, Managing Partner, Founder at Chamaeleon, @ngpedro

Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

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Nuno Goncalves Pedro

Welcome to Episode 64 of Tech DECIPHERED. Today, we will discuss robotics. Our new overlords are coming. Robotics is a field that seemingly hasn’t really delivered on its promise. Sure, plenty of robot arms and other robotic solutions are out there. But somehow it feels like we should be actually already controlled and dominated by our robotic overlords.

Today, we will discuss B2B Robotics, their growth, adoption, industry use cases, the drivers of innovation in that space, players in that space, challenges. We will also talk about consumer robotics, talking about also robots that have gone mainstream, personal and social robots, emerging trends that are happening in the home, market dynamics.

Then we’ll look ahead to the future of B2B, the future of consumer, and the societal and workforce impact, which obviously is going to be the last but not the least topic that we will address today. Let’s start with B2B. B2B Robotics.

Bertrand Schmitt

Yes, thank you, Nuno. It’s certainly a growing space. As you say, it might not feel like it, but at the end of the day, we already have quite a few millions robots in B2B. It’s estimated that the stock of your operational robots, industrial robots, is around 4.28 million units in 2023, which was a 10% increase year-on-year.

If we look at China, and I think we talk about the fact that we are installing around 400,000 robots a year. China alone by itself has been installing 276,000 units in 2023. China is definitely a leader in that space and that might come as a surprise to some. That number, to put it into perspective, is five times higher than the second place, Japan.

Nuno Goncalves Pedro

I think China has recognized a long time ago that because of its population composition, that they’re going to have a lack of people to produce, to be in factories, et cetera, so they actually have been adopting robots now for many, many years. I think now, you were joking with me just before we recorded this, but now that we’re having trade tariffs and all that stuff, it might make sense to have a broad discussion around why robotics in an industrial environment are key.

Bertrand Schmitt

Definitely. I think that actually I was surprised to hear that, when we’re making this recording on April 15, I was surprised to hear in the Trump administration, quite a lot of very positive support regarding AI and robotics. It looks like part of the plan is already acknowledging this is not like the old-school jobs that we are going to bring back. It would be a different type of jobs. There will be way more robotics than before. Obviously, more robotics is possible thanks to the latest advanced in AI.

There is some consensus that, yeah, it’s not just bring back the old jobs as they were, but it would be a new type of jobs. It would be a new type of industrial revolution and acknowledgment that robotics are here to make all of this not just more efficient, but even possible. Because it’s clear that if you take the US, for instance, there is actually not so much unemployment in the US. For an industrial revolution to happen, we need to bring our new friends, the robots.

Nuno Goncalves Pedro

If we go through the use cases where we see robots coming in, obviously manufacturing, automotive and electronics will probably come to people’s mind. A lot of robot arms are being used there. More than serve your classic solutions, et cetera. But it’s a lot of robot arms using on specific pieces on the line, a lot of pieces of robotics that we don’t recognize necessarily as robotics, but are actually roboticized systems used, in particular on automotive, again, in consumer electronics.

Basically, it has to do with the fact that there’s a tremendous lack of… One, there’s going to be, at some point, the limitation on how fast you can produce, so that’s very obvious. Two, there’s actually even lack of people that can do some of these roles. Some of it is actually high precision work.

In most of these environments, there are environments where humans need to coexist with the robots that are on the line, and that has led to the creation of this movement of cobots. Robots that are able to basically interact with the environment that they’re in, obviously be very careful around safety procedures that they don’t kill a human being that is around them. There’s been a lot of innovation around that using computer vision, using sensors, and using a variety of other elements around that.

That cobot segment in particular is growing quite rapidly, estimated to be 14.7 billion market by 2031. But obviously, we all recognize manufacturing, there’s robots being used, so no shocks there. One of the largest markets by far.

Bertrand Schmitt

Definitely. Collaborative robots are a recent phenomenon made possible thanks to better activation of motors, electric motors possible thanks to new AI, vision AI. There is a lot of the latest technologies that makes this possible versus your big, bulky, robotic arms that used to be encaged. It’s not to kill anyone. Yeah, it’s a change from bigger to smaller. I mean, we can even say step by step, and we’ll talk more about it, but more humanlike in terms of how it looks.

Here we have around 113,000 professional services’ robot for transportation and logistics sold in 2023 alone. That was a big increase of 35% year-on-year. I think we have all seen how Amazon is doing with some robots in their warehouse, logistics systems. What some might not have seen is as impressive in China. If you look at the efficiency of some of these warehouse in China, it can be very impressive. I don’t think they’re holding anything back actually in China.

Nuno Goncalves Pedro

Yeah, definitely not. There’s a lot of amazing things happening on the logistics side. Obviously, Amazon bought one of the early granddaddies, which was Kiva Systems, which was bought by Amazon, and now it’s Amazon Robotics. There’s a lot of stuff happening on the lines, autonomous mobile robots for the transport of materials, robot extruders, mobile picking robots, automated forklifts, and a bunch of other things.

It’s also an environment where I know Amazon is obviously using a lot of co-robots, and there’s a lot of people around as well still. Very interesting environment. I’d say probably Amazon has been the company on the logistics side that innovated the most, the earliest, certainly in the US.

I still remember the Ocado ads where they use robots. In the UK, there’s always been a lot of this debate whether that was actually very useful, very impactful in Ocado’s operations or not. Also, retailer there. But definitely, I think we would recognize probably Amazon has been one of the players that has innovated the most in this space for a couple of decades now.

Bertrand Schmitt

Yes, it’s definitely I mean, that has been key for them to grow, to expand their network. As you know, I mean, Amazon has a lot of people working in their warehouse, but they were still able to manage to grow so fast while not growing proportionally the number of people working there. It’s thanks to advance in robotics.

Nuno Goncalves Pedro

Indeed. One other area, obviously, of use has been in the healthcare and medical space, and particularly in high precision need environments. Surgical robots like Intuitive Surgical, their Da Vinci system, does provide the precision that you need for procedures that require minimally invasive play with high precision. Basically, things that you can’t really… The human hand actually might not be precise enough for it, even if you’re an amazing surgeon.

Beyond that, medical robots have grown quite significantly. It’s grown to the thousands units, which might not seem a lot compared to the hundreds of thousands that Bertrand, you were just mentioning. But obviously this is a much more specialized space, less mainstream in some ways of robotics. A lot of these devices are incredibly expensive, and then we’ve seen a lot of innovation around that.

There’s obviously the old-school players that are on the market, Johnson & Johnson’s of the world, Medtronic, that have also entered that arena, the surgical robot arena. Then there’s a bunch of other applications for robots that I would highlight. Hospitality or hospital delivery robots, so robots in hospitals that do deliveries.

Rehabilitation exoskeletons, which is really, really cool. If you guys remember Aliens, the second exoskeleton that she has and stuff like that. Obviously this is for recovery for people that are rehabilitating. It supports them in their rehabilitation without having necessarily to have a human there all the time doing that. Then obviously diagnostic robots. A lot of players in this space, CMR surgical as well, Ethon, Exobionics, Cyberdine. There’s a bunch of things happening right now that are quite cool.

Bertrand Schmitt

Yeah. If you look at rehabilitation robots, the growth was pretty amazing at more than 128%. You can call it a surge. Some of these metrics are pretty amazing. As you said in rehabilitation, for sure, if you need a human by the side all the time, it will be way more expensive, and you might not have the staff to just do that. It seems like a very, very obvious option.

Going back to medical robots used for surgery, for instance, as you say, I mean, robots can do stuff that humans cannot. You can have a very small robot moving your own body in some ways, coming from places that would be impossible to operate. It also could end up being more safe. Ultimately, you decrease the need for specialized surgeons. You might need less of them, or you might simply do more with less.

Nuno Goncalves Pedro

Correct. Next, we go to agriculture and farming, AgTech. Actually, the name probably comes from use of robots in agriculture and drones, et cetera. We have some big numbers, basically according to our research, 20,000 units in 2023 that were used. There’s high precision agriculture that, again, requires things that are very, very precise. There’s also the base equipment that are used by humans that are being repurposed to become equipments for agricultural activities.

Autonomous tractors and sprayers would be a great example of that. Milking robots, the robots that do the milking of cows, et cetera, also makes a lot of sense. Again, replacing human in an activity that probably can be more easily replaced. Then you have, obviously, the drone space with a lot of things around field scouting, the surveillance, the pieces around how to create new ecosystems around the fields.

Last but not the least, obviously, we have picking robots, the robots that pick up stuff. Those robots are particularly complex. Obviously, some fruits, some vegetables, et cetera, need to be picked in a way that is more complex because they require either cutting or something like that. Its identification is pretty critical because you don’t go through the whole process of actually growing the stuff and then have the robots destroy it.

But yes, and there obviously there’s a lot of players, mostly the old guys, or the guys that have been around for a while, obviously DGI on the drone side, Yamaha, a motor, John Deere, then there’s a couple of startups as well. He’s emerging in this space, Farmwise and a few others that are doing a lot of activity. I’ve looked at this space quite a lot.

Just as a disclaimer, I spent a significant amount of years in a VC fund as a venture partner that was really very focused on Deep Tech, Frontier Tech, in particular, robotics. It was actually in the name of the firm. As part of that, ended up interacting with a lot of the B2B applications of it. AgTech seems like an obvious use for it because there’s searches of people. It’s been a huge debate around immigration and illegal immigration in particular.

The reality is agriculture has very, very thin margins in general. It’s maybe a broader point we can make at this point in the episode, but the problem with robotics is systematically, is this a big enough issue that you should solve it with a very complex solution. Because normally, robotics, even if it’s a verticalized solution, require complex elements, not just on the hardware side with sensors and a bunch of other things, but also on the software side.

I think AgTech is one of those areas where there’s been a couple of companies, there’s been one or two interesting exits with Blue River going to John Deere, et cetera. But still feels like it’s an area that we haven’t figured it out yet. Either we fully roboticized a facility or do something else, but we haven’t really figured it out yet. My theory is it’s just the margins are just too thin, and it’s too complex.

It’s also a space where the owners and the people that operate the fields are actually not necessarily people that have any technical knowledge of any kind. The solutions do need to be really, really simplified to that level.

Bertrand Schmitt

That’s a good point. I have also seen quite a lot of startups in that space. At Red River, we invested in a startup called Robovision in Belgium. Some of what they do is definitely to serve agriculture needs. It’s not easy, as you say. First, it’s not like the car market, for instance, where you make millions and millions of cars every year, where you have a clear market and buyers are ready to buy.

In agriculture, there is tractors and stuff, but the competition is very different. The volumes are not the same, and there are always, as you say, questions about how do you deal with a space that is not actually so human-friendly. It’s not a road. It has not been designed for it. It’s a field. Two, the people around are not experts, are not technical, so the smallest issue can be a problem.

It’s really a big question. At the same time, I must say I’m quite and optimistic that robotics have definitely the ability to transform agriculture. If you look back, the story of agriculture is just a question of improving the methods, the tools and you increase the yield. That’s how we managed to move from 95, 99% working in agriculture and the fields to 1% today.

I’m still a believer. As you say, there is a big question around immigration, especially legal immigration in the US, probably quite a lot is happening to serve agriculture needs. Given that push, that might create some new incentives in order to stay competitive.

Nuno Goncalves Pedro

Yeah. I mentioned Blue River before, which was a company acquired by John Deere, apparently for $284 million or so. The company raised in total $30 million, so it feels actually like a decent exit. But it’s one of the very few plays in this space that has really gone to a fruitful exit. Also, important to magnify that a lot of the AgTech stuff for example, that’s been happening in vertical farming, for example, is around robotics.

It’s around almost managing vertical farming a little bit like a manufacturing facility with its own complexities, but a bit like a manufacturing facility. There we really haven’t seen a runaway winner. I mean, plenty raise a ton of money. From my knowledge, they haven’t done necessarily great. I’m not sure how roboticized they were. There’s a bunch of other companies in the market that we know well, like 1.1, et cetera. There’s definitely a lot of plays going on that depend fully on robotics around the AgTech that we see today.

Bertrand Schmitt

Yes. You talk about a specific type of agriculture. I mean, the ones they try to do in some convert some old factory, for instance, do it even in the cities, urban farming. I think this stuff by definition, I’m not super optimistic that the yields can work. We’ll see, obviously, maybe if you control well water space, automation, but it looks like yields are definitely a big issue in this space. At some point, size and scale matter.

Nuno Goncalves Pedro

It becomes a unit economics issue at the end. I was very involved in one of the plays that I mentioned before, and it is clear to me that we will get there, but to your point, there is a need for scale that needs to happen. These guys need to get big contracts. They need to get really, really big contracts in terms of what they need to put in the market.

It’s also very clear to me, it’s a very difficult market for you to do stuff that goes one hop from consumer. Let me do a vertical farm and sell to supermarkets, and they’ll get fresh, produced from me and whatever. It’s very tough. There’s a lot of intermediaries in the middle, distributors, et cetera. A value chain that is much more complex than we think it is.

I think if you’re someone who’s not spent a lot of time around agriculture, you think, “Oh, there’s people in the fields that produce stuff. They sell it maybe to markets or someone in the middle, and that person in the middle somehow sells it to supermarkets and whatever and what we get.” No, there’s a lot more players in the middle that get involved for all of the stuff. There’s brokers and the wholesale players, and then there’s even in retail, there’s different types of players as well. It’s like, it’s my God.

Bertrand Schmitt

There’s a whole communities feature market.

Nuno Goncalves Pedro

Yes, it’s an ecosystem that’s extremely, extremely complex. Maybe moving to construction, I think it’s probably an industry that, as promised a lot, that we would have construction robots replacing people. It’s a particular hazardous role. In construction, there’s accidents, people get hurt, and they might even get killed. Obviously, it’s an area where it’s high risk, high rewards. Robots, you would assume, would be great for this.

Honestly, I personally have seen some interesting innovation around 3D printing, which I would argue is it robots or not? Drones for surveying and for looking at buildings and a variety of other things. We’ve had this huge promise, I think, in construction of prefab, of the ability to do prefab buildings and prefab homes and all that stuff. There’s a lot of interesting players out there, so I’m not disrespecting them necessarily, but it hasn’t really scaled. Again, we haven’t seen a player that has really won that market. We saw a player that failed miserably, which was Katerra, which wanted to use stuff like that. I’m not sure they ever got to that level.

Bertrand Schmitt

Yeah, I was going to say it’s been a decade we talk about prefab and stuff, and for some reason it has not taken off at all.

Nuno Goncalves Pedro

It’s not. I’ve seen amazing things, in particular around single-family homes and things like that. ADUs, right?

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

In particular, California with a change in less installation, et cetera, and certain markets, in particular, like LA County being super aggressive on opening up the ADU market, et cetera. Nothing dramatic. In this space, we see autonomous construction machinery, which in some ways could be used for what we were just talking about, the prefab market, robotic bricklaying, 3D printing robots, site inspection drones.

I think we are seeing more and more site inspection stuff. I think we are seeing more and more stuff around 3D printing. I don’t see this industry being disrupted by construction in the next couple of years, by robots, rather, in the next couple of years. I think that will be very optimistic.

Bertrand Schmitt

Yes, it seems like it will take a while. Not saying it might not come, but it’s not as if we were at a tipping point at this stage. Going into retail, hospitality, we’ve seen a lot of robots that try to come to some sort of, I would say, awkward space, trying to welcome you SoftBank at some robots. Robots are acquired from a French company, actually, maybe at least a decade ago. It’s 54,000 units sold in 2023, so a pretty good increase, 30% plus. That also includes hotel delivery robots, restaurant food runners, concierge info robots. I think it’s a mix of everything, to be frank.

Nuno Goncalves Pedro

There’s a mix of things going on. Again, it’s a space that everyone’s like, “Obviously, this is going to be delivery robots and all sorts of things.” This is just going to scale very, very rapidly just if you think about the use cases. Inventory scanning, customer service, restaurant service robots, floor cleaning robots, delivery robots, all this stuff. It’s obvious.

Again, we haven’t had amazing winners in this space. There’s a bunch of players, question mark on when we’re going to get them. I think some of the problematics of this, I think in closed environments, I’m very surprised that we haven’t figured out closed environments. Why are robots not able to do inventory scanning at scale? Why are robots not able to deliver food to me in a restaurant?

That part seems like a problem that’s eminently solvable because floor plan is more controlled. I know there’s people, so that’s the cobot dimension to it. In some ways, the more the food delivery things, which seem to have taken off in some places, actually. Seemed like a more complex issue, but somehow I guess there’s more activity in that space. We’ll see.

Bertrand Schmitt

If you remember for hotels, you had these delivery robots bringing your food potentially and not much happened to be frank. I remember seeing some startups trying to do robots for universities, colleges, and the same thing. I don’t think much happened. I think in many situation, it’s an awkward space because you’re like, “Okay, so I’m delivering because people don’t want to just go downstairs and buy at the counter or just buy an automated machine that is just delivering food.”

We know the machine to get your bottle of drinks, your snacks, it’s pretty straightforward. The robots providing not the last mile, but the last few feet. It’s a tough value proposition and it has so many constraints. For robots in restaurant… There is one chain that you probably know where I go once in a while, where you have these delivery robots directly to your table. It’s Haidilao.

Nuno Goncalves Pedro

Of course.

Bertrand Schmitt

I’m always impressed that the only restaurants in the US where I go, where we get served by a robot is actually a Chinese chain.

Nuno Goncalves Pedro

Yes, the hot pot guys.

Bertrand Schmitt

It’s a hot pot guy. They have pretty good food, actually. I’m always shocked because it’s really working. You see the robots coming up, not hurting anyone, finding their way around. You have kids in this restaurant. It’s a very kid-friendly place. You can see it’s not a replacement for human. It’s really making humans more efficient and for sure decreasing the risk of breaking something, having a plate falling off, that stuff. I think it’s a very smart use. I’m surprised why not more restaurants do that, but I think there might be a cultural issue, especially in Europe and in the US.

Nuno Goncalves Pedro

I think there might be. In Asia, it’s probably where we’re seeing a lot of these advancements coming in. We’ll talk about some of the geopolitics around this in a bit. Moving maybe within still B2B robotics to what are the key innovations and technology movements we’re seeing. One very obvious one, which is the one is artificial intelligence and the use of machine learning, deep learning methodologies, computer vision, and a variety of other things to optimise lines, to optimise how things are done, but also to optimise in-process things and what’s happening.

That is very, very obvious. There’s a lot of things happening around that space. Robots are not very useful if they don’t have some brain, if they are not doing something that is defined within the realm of some degree of operational intelligence, as I would call it. AI is critical to that. That I think is the thing we’re all afraid of. It’s when robots are actually using proper AI then they’ll come to kill us. Sorry.

Bertrand Schmitt

Maybe we’ll talk later about the key players, but obviously NVIDIA has been pushing very hard in the robotic space and sees that as one of their big future markets.

Nuno Goncalves Pedro

Maybe moving along to something we already talked about, so co-bots, mobile and collaborative robotics in general. We’ve already talked about it. It uses a lot of the AI pieces that we were talking about, but it’s this notion that we will need to have things in this world that interact with us. There’s some cool things happening. Tesla with Optimus and Agility Robotics doing bipedal robots. We did have a bunch of… Boston Scientific was the dog ones, early on.

We’re having all of these things that are on the one hand, basically interacting with humans and on the other hand, looking more like animals and humans. Becoming a little bit more anthropomorphic on the human side as well. Interesting things that are happening in that space. As we discussed, those markets are real, they’re growing fast. Certainly in the manufacturing space, we know that’s the case. I think there will be a lot of crossover technology transfer to other use cases in the more consumer-related domain where there are people and little kids running around doing stupid things, et cetera.

Bertrand Schmitt

Maybe to keep going on the technology, another way to make robots happen at scale is all the work done in term of digital twins and simulation. When you can build virtual replicas of your factory for testing, for optimizing, that will help you decrease downtime, that will help you be more efficient with your deployment. That has been a key part of the game in order to bring robots to the factory.

Nuno Goncalves Pedro

Indeed. Last but not the least, the things that we would like to highlight, more business models that are changing robotics. A robot can be a very expensive, cost for a firm, for a company, and for a startup. There’s a lot of things happening around robotics as a service where companies can lease robots on subscription rather than just purchasing them.

I’d say that’s more of a financing play, to say the very least, but there’s deeper things going on in the space with really solutions that are optimised towards outcomes-driven revenue sharing. People could say, “It’s just a business model innovation.” But there’s a lot of cool things happening around that. I think we might have some of the big manufacturing companies of the future, et cetera, merging because of these business models with a fuller stack where I have my own robots and that’s what I’m bringing to table. Making them available to you.

Startups like Formic that have been quite heavily discussed about, and they are trying to really go on a usage-based fee play. It’s solely based on usage. The jury is still out if this is going to really scale, if it’s going to be at the level of mass market. But certainly, if we’re thinking about small-scale manufacturing, et cetera, I would say it’s a great business model and we’ll create a lot of innovation around it.

Bertrand Schmitt

I think business model innovation is quite critical. We have seen how software as a service, SaaS, has been able to transform the software industry and create basically a new dramatic wave of growth. For robotics as a service, could unleash a similar efficient model that will help scale to the next level robots, so it will be interesting to follow.

Nuno Goncalves Pedro

If we talk now maybe about leading companies and startups in the B2B robotics space and starting in industrial automation, industrial automation has the big boys, so ABB, FANUC, KUKA, Ishikawa, Kawasaki, Mitsubishi, Universal Robots, Teradyne. These guys are all super well-known. If we think about some of the big guys, they grew up with a lot of the solutions that we were talking about earlier, robot arms, but really expensive robot arms. That market is still dominated by these players, and they command significant premiums on their valuations, et cetera.

Bertrand Schmitt

Let’s not forget that KUKA was a German company that got acquired by a Chinese company some years ago in 2016. I think that was crazy because it was one of the Chrome J-well of the German manufacturing industry. To let it be acquired like this was probably a strategic mistake. Germany decided to make some change in how they are going to let M&A happen, depending on the country of origin of the acquirer. The acquirer was a media group, Chinese appliance manufacturer. I think that’s really a fair question because when you know that the acquisition of Chinese companies is not something so easy for Western companies, I’m not sure why we should let it work in the other way.

Nuno Goncalves Pedro

Very good. Logistics and warehouses. We’ve talked already about some of these examples, Amazon Robotics with the acquisition of Kiva Systems. That’s how itself got pulled in. 6 River Systems, which I believe was acquired by Ocado to make their deployments due. Locust Robotics, Grey Orange, Geek+, Boston Dynamics. A bunch of players that have been done. What’s for me interesting, it’s an area that has had a lot of acquisitions by the retailers themselves, which is not obvious.

Bertrand Schmitt

But not huge acquisitions usually as a result.

Nuno Goncalves Pedro

It’s not huge acquisitions, small acquisitions. Even Kiva, I remember was not a very big acquisition by Amazon. It was relatively important for them to go into that space. Anyway, I wrongfully, by the way, mentioned Scientific Boston Dynamics. Two different companies just to be clear. Boston Dynamics is the one with the anthropomorphic robots and also the dog-like robots. Boston Scientific, a total company altogether, but it is what it is. It’s a life science company.

Bertrand Schmitt

There are other types of AI startups, collaborative robots, universal robots, Techman, Doosan. I think for me also, the big guy we should talk about it’s really NVIDIA. NVIDIA is making the brains of many of these robots. I have a lot of platforms to develop robots. It’s just open source, a new model. Recently, it’s called Project GROOT. GROOT, G-R-O-O-T, the foundation model for humanoid robots. We will talk more about that later on, but NVIDIA is definitely pushing very, very hard in the robotic space. They want to be the brain of all the robots in your factory, in your field, the medical space.

Nuno Goncalves Pedro

NVIDIA platforms everywhere. Obviously, we don’t have… There’s dominating legacy operating systems for a robotics operation, but most of them are owned by the firms themselves, the ABBs of the world, et cetera. We haven’t seen a prevalent robotics operating system that would work across domains that has killed dramatically. There’s a lot of interesting things, and it wouldn’t be in the realm of impossibility for NVIDIA to go up stack, do more software platform ownership, and even into who knows operating systems. We’ll see what happens. Not out of the realm of possibility.

Talking a little bit about challenges, just to put a bit of a bookend on the current conversation on B2B. We’ve talked quite a bit about geopolitics of it, et cetera. One of the issues clearly around robots are people. You can frame it as the integration of people and the integration of their skills with the use of robots. It’s complex because you have to reskill staff, not only to maintain robots, et cetera, but to work alongside robots.

In some ways, we people are unpredictable. We do stupid things at times, we try to optimise because we know the shift is almost coming to an end, whatever. I don’t know. In some ways, that piece of just integrating people with robots, integrating their skills with the skills of robots, et cetera, is something that we know for a fact has been quite complex and have led to a lot of safety issues and a lot of concerns around the use of robots, even in the B2B environment.

Bertrand Schmitt

At the same time, it’s always easy not to say, “Okay, the robot is a danger.” Okay, sure, but we forget that many times robots are replacing work that is dangerous for human in the first place. Let’s be also careful about making sure we see the benefit of not having humans doing dangerous tasks or less dangerous tasks. A good example, actually, we don’t talk in that category, but if you think about robots for taking care of potential bombs, for instance.

Now you send your guided robot to try to basically make the bomb implode. No humans, neither. I can tell you that before that, it’s not a fun job for a real human. We know that there are robots as well for nuclear facilities, for instance, that can be used. I think that, yes, we have to be careful with human safety and at the same time, let’s not forget that a lot of these robots are decreasing risks for humans, ultimately.

Nuno Goncalves Pedro

Second big challenge is obvious. The high cost, the narrow eye. There’s a lot of things going on with robotics as a service, but the robotics as a service, someone’s paying for the robots. There’s still high costs in the space and there’s still a little bit of an argument on how do you think through return investment. It has to be a very top-down decision architecturally on what robots you go with versus not.

You can’t have a ton of trial and error in this space. I think that’s part of the issue. It’s not just that you have high cost and ROI, it’s just you can’t have a huge amount of trial and error. You have to get architectures right over time. If you made a significant mistake on your architecture, you’re going to pay for it, and it’s going to be very, very, very expensive.

Next, technical limitations. Very significant challenge. Robots can’t do everything under the sun. We know that. They have limitations in how they do things, the precision they have, what are they handling. There’s a lot of complexities around this. These machines. There’s a lot of complexity around it. There’s maintenance that needs to be done, make sure that it operates with the precision that people expect from it and all of that. That’s the third area of challenge in this space.

Bertrand Schmitt

What’s interesting is that some of these technical holders have been solved by some of the industries. If you take EVs, for instance, we have seen the rise of the electric motor and more and more high-performance electric motors. Some of this is going back to the robotic space. You could argue that a lot of the current stage innovation in robots is half. Yes, better AI, better vision, specifically, better understanding of the environment, but I believe it’s also around motors.

Motors are becoming much better at doing the job. If you want to have a smaller robot, if you want to have a human-size robot, if you want to have hands that can do something, then yes, electric motors, actuators have changed what’s possible.

Nuno Goncalves Pedro

That’s a little bit of the key issues that are more on the core technical business model side. Then, if we move to other areas, the robotic space we’ve already mentioned has a huge issue around interoperability and standards, with ROS, Robot Operating System being one of the most common used protocols/robot operating system thing.

But honestly, the reality is there’s very little integration between systems. There’s a lot of pervasive systems out there that are dominated by the suppliers themselves and the owners of the hardware. There hasn’t been a huge focus on creating a platform that truly works across the world and across different domains as I mentioned before. Interoperability and standards are still very much an issue.

Bertrand Schmitt

We just need robots that talk and listen and LLMs in the middle and problem solved.

Nuno Goncalves Pedro

We just need robots that do everything, yes and then it doesn’t matter.

Bertrand Schmitt

I think we are going there. The reality is that the more you can naturally command a robot and ask it to do a task and have it indeed do this task without too much detail or at least the similar level of details to a human trained at a specific level, I think the more things will change versus having a team of programmers to program the robots and any time the stuff change on the other side, you have to reprogram the robot. That was a big part of the cost of running a robot in a factory.

Nuno Goncalves Pedro

Two last but not the least topics. Maybe we’ll bundle them a little bit together. The regulatory and safety, regulations that occur from market to market and how this is done, the regulatory framework by which safety is managed, and public acceptance in general, and supply chain dependence. It’s very clear that you need advanced components from all over the world. Going through a world right now where there’s all this geopolitical instability, and there’s tariffs, and there’s all this stuff, how does that work? That is a bit of a creating also encumbrance on development of B2B robotics.

Bertrand Schmitt

As we said, China has seen a rapid adoption of robotics and that might surprise some because thinking about China, low-cost countries and stuff. But as you said, the reality is that China is a decreasing population, especially a population that can work, makes sense to automate. They also wanted to go more high-tech type of production. China is definitely big versus Japan, Europe, and US, where definitely there have been traditional struggles of automation. But as we just said, China is probably leading at this stage.

Nuno Goncalves Pedro

Just to be clear, the US is a big robotics market. If you’re listening to us, the US has to catch up. Maybe there’s potential to be growing, but the US from what we know, had 37,587 industrial robots installed in 2023. It’s a significant market, in particular around professional service robots. Some of the leading companies in the world. It remains hopefully a player in that space.

If some of the big brands we mentioned are not here, they’re in Asia, some of them are more in Europe, and now they’re owned by Chinese, as you were mentioning, Bertrandt. There’s still some stuff happening in Europe that’s significant, but I would say Asia has taken the lead in some ways across the board. China catching up now and going to the next level. Japan was one of the big, big first players a lot because of demographic pressure. South Korea has caught up as well. There’s a lot of interesting things happening in Asia in particular.

Bertrand Schmitt

I still remember years ago, there was really a question that your… Cheap people working in factories was a better deal in many, many situations than having robots. I remember stories about highly automated South Korean companies having trouble to compete versus actually cheap labour from China, but I think all of this has changed.

Nuno Goncalves Pedro

Indeed. Shall we move to consumer robotics, which is probably what a lot of people, “When will we have this robot serving me at home?” It’s like, “Well, probably not anytime soon.” There’s good news and bad news, but probably not anytime soon. It’s growing fast. To be very hone