ROBOTS ON THE MOVE
CEO India|February 2020
THE MARKET FOR PROFESSIONAL SERVICE ROBOTS IS POISED TO TAKE OFF WITH A VENGEANCE, FUELED BY NEW DEVELOPMENTS IN 5G TELECOM SERVICES AND AI CHIPS

The idea of robots picking items from warehouse shelves may still seem futuristic today. But the future may be closer than many people think. Of the almost 1 million robots we expect to be sold for enterprise use in 2020, we predict that just over half of them will be professional service robots, generating more than $16 billion in revenue — 30 per cent more than in 2019. What’s more, with regard to enterprise spending, the market for professional service robots is growing much faster than that for industrial robots. If recent trends are any sign, professional service robots may pass industrial robots in terms of units in 2020 and revenue — in 2021.

That’s not to say that the industrial robotics market is hurting. We expect revenues from industrial robot sales in 2020 to reach nearly $18 billion, a 9 per cent increase over 2019. But although industrial robots will remain important in the years to come, the professional service robot market is poised to take off with a vengeance, fueled by new developments in 5G telecom services and artificial intelligence (AI) chips.

INDUSTRIAL ROBOTS: A WELCOME RETURN TO GROWTH

The 10 per cent growth in unit sales we predict for industrial robots in 2020 is much better than the sector fared in 2018 and 2019. In 2018, unit sales went up 5 per cent, and actually declined slightly in 2019. The forecast return to higher growth in 2020 is very good news for the industrial robot industry after two years (and counting) of disruption by trade wars, tariffs, and the associated slowdown in the automotive and technology sectors, and in China.

Industrial robots find their greatest use in the automotive industry, where robots on assembly lines build cars, and the electrical/electronics industry, which uses robots to put chips on circuit boards. In 2018, these two industries combined drove 60 per cent of all global demand for industrial robots, accounting for about 120,000 (for automotive) and 110,000 (for electrical/electronics) unit sales. In terms of growth, automotive demand was up by 2 per cent, and electrical/ electronics demand fell by 14 per cent, in 2018 from 2017.

With respect to geography, China is the largest market for industrial robots: 154,000 industrial robots were sold in China in 2018, accounting for 36 per cent of global industrial robot demand. This is nearly three times as many as were sold in Japan, the second-largest market, and nearly four times as many as in the United States and South Korea, the third- and fourth-largest markets.

While the industrial robot market looks poised to resume healthy growth, it is still growing much more slowly than many expect. This may, however, be due to inflated expectations rather than any shortcomings in the industrial robot market.

Alarmist projections — such as a 2015 forecast from the Bank of England that the United Kingdom would lose 15 million jobs to robots, or a 2018 Brookings study stating that onequarter of all US jobs were at high risk of automation, or the World Bank’s 2017 estimate that robots would take over 600 million jobs globally by 2032 — are widely reported, and can conjure up scenarios of robots running rampant in the near future.

In reality, reports of these estimates usually select their numbers from the higher (more alarming) end, and the projections themselves encompass not only actual physical robots (both industrial and professional service) but also tools such as AI and robotic process automation. Most people, if told how fast the industrial robot industry is growing, might find the 10 per cent figure for 2020 to be much lower than their expectations… or fears. Modest growth in sales, of course, doesn’t translate into modest numbers of robots.

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