2020 marks one hundred years since the word “robot” was first coined by science fiction playwright, Karel Capek. Forty years later, in 1961, General Motors installed the worlds first industrial robot, paving the way for automated manufacturing and the era of programmable machines. Today, the global Industrial robot market is worth c.$48bn pa and demand for robotic technology is accelerating rapidly. This is on the back of the Fourth Industrial Revolution and advancements in digital technologies which are democratizing access to robot technology. In this article we analyze the growth in the global robotics market, identifying key trends driving demand: In Part 1, we explore the impact of digital technologies and the emergence of “Advanced” Robots In Part 2 we , providing a analyze which industries are driving demand for Advanced Robots deep dive into supply chain automation. In Part 3, we dissect the wider robotics ecosystem identifying key market players providing robotic hardware, software and accessories. Part 1: Smarter, Cheaper & Faster Introducing a new generation of “Advanced” Robots Digital technologies have evolved, allowing robots to marry physical automation with machine vision and intelligence. As a result, a new breed of “Smart” Robots are expanding the use case for robotic automation, driving the technology into new applications and under-penetrated markets. For over 50 years, industrial robots have been used to automate physical, repetitive tasks, relying heavily on their consistency and brute strength to generate value. These . “Traditional” Robots were expensive and lacked capabilities, effectively limiting adoption to a handful of heavy industries However; the latest generation of , combining physical automation with digital efficiency. As a result, Advanced robots are able to generate value where Traditional Robots could not. “Advanced” Robots incorporates the full technology stack 90% of robots shipped today are able to connect to the cloud, compared to less then 50% in 2016. This facilitates remote monitoring, real time collaboration and a notable step change in data collection & offsite analysis. Cloud Technology: , allow robots to develop spatial awareness, which is critical for autonomous mobility and precision picking. Advanced sensors and machine vision , adds the final layer of sophistication by allowing robots to apply logic and effectively automate decision making. AI and machine learning Industrial robots have never been cheaper and easier to operate. While global wages have steadily been ticking upward, industrial robot prices have fallen rapidly, reducing at a CAGR rate of 6.8% since 1995. At the same time, robotic systems have become easier to install, quicker to program and cheaper to operate. As a result, the . barriers to wider adoption are driven lower each year As robot prices continue to decline, we anticipate two major inflection points: Further deflationary pressure should , which have traditionally avoided robotic automation due to cost and complexity. In Europe, there are over 2m SME manufacturing enterprises, which employ c.6o% of the continents 17m manufacturing employees. Robot density among manufacturing SMEs stands at 6 units per 10 000 employees. This is significantly lower than the European average of 114, highlighting the market potential which has not yet been adequately addressed. fast track interest from the Industrial SMEs Over the next five years, we expect the . As a result, China’s competitive advantage in global manufacturing will likely decline, propelling a shift in global production to cheaper markets. To combat this trend, China is investing heavily in robotic automation. It is now the worlds largest market for industrial robots, accounting for c.36% of annual installations. upfront unit cost of an industrial robot to decline below the average annual manufacturing wage in China Advances in dexterity and sophistication are allowing industrial robots to make deeper inroads into precision roles. When industrial robots were first introduced in the 1970’s, the average robot arm utilized a relatively crude 5 axis design, which allowed limited range of motion. Fast-forward to today and most modern robot arms now utilize over 30 axis in their design. Whilst it is clear that these improvements in hardware design have played a key role in expanding overall robot dexterity, the real advances towards precision movement can be attributed to innovations in machine learning and sensor technology. This is particularly evident in the advances made in robots specifically designed for picking and sorting. In 2015, sorting robots could pick and place around 25 items per hour, however today these robots are able to pick and place well over 200 items per hour. Further advancements in the next three to five years, should see picking speeds advance past human capabilities, which would signal a significant inflection point for industrial automation Robotics unit sales reached a key inflection point in 2015, signaling the dawn of “Advanced” Robots and a new phase of growth. This burgeoning demand for robot technology is reflected in a 28% compound annual growth rate in global robotics sales since 2015 — a steep change from the 9% growth rate over the previous decade. , from a non-existent category in 2015 to a market segment that now matches Industrial Robot in unit sales. The largest growth vector has been emergence of Professional Service Robots (PSR) Going forward, it is clear that we have only peeled past the first layer of potential, promised by “Advanced” Robotics. The full impact of the cloud is yet to be realized Robot systems are getting cheaper each year Picking robot dexterity is fast approaching human capabilities A wave of new industries are starting to experiment with robotic automation, as the technology continues to democratize. Part 2: Smart Logistics (Coming Soon) The New Growth Engine Logistics and warehousing is one of the industries at the forefront of robotics evolution, ever looking for more efficient methods of storing, tracking and retrieving inventories. In Part Two (Coming soon) , we take a deeper dive into robotic automation in the logistics sector, dissecting the trends driving the market and identifying which companies are positioned to benefit from this growth. We hope you enjoyed this report. Please feel free to share widely and clap if you would like us to publish more insights! or reply in the comments below! If you have any questions or feedback on our report, please email insights@capitalxpartners.co About CapitalX Partners CapitalX is a corporate strategy and advisory firm, with a specialized focus on innovation and technology. We use market research and data science to gain perspective on market opportunities and business challenges. These insights allow our clients to de-risk key decisions and execute strategic initiatives with confidence. Find out more about CapitalX at www.capitalxpartners.co or follow us on Linkedin or Twitter

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