Evaluating Vertical Markets and Use Cases

Choosing the right vertical market

Robotics is not a standalone industry – it is a technology asset class with a wide range of applications across the largest, most essential global markets.

At the most fundamental level of evaluating a robotics solution, consider the vertical market for which it is being developed. Both the market, and the customers within that market, must show signs of readiness to adopt robotics.

1. Market Readiness
   1. Demand Indicators
   2. Infrastructure Indicators
2. Customer Readiness
   1. Internal Indicators
   2. External Indicators

Market Readiness

Demand Indicators

• Labor shortages and/or high labor cost
• Repetitive tasks
• High pressure for productivity, throughput, and predictability
• Increased demand for customization, mass production, quantities of one-of-one end products
• One (maybe two) market leaders pioneering robotics (ex. Amazon in supply chain)
• Underserved by automation

Infrastructure Indicators

• Professional organizations that facilitate industry best practices and knowledge sharing
• Presence of system integrators in the value chain
• Open pathways for new entrants; not entirely dominated by a few incumbent providers
• Distribution channels in place to access target customers (to give smaller companies options other than a direct sales approach)

Vertical Market Segment Insight

Market segment with high likelihood to adopt robotics: B2B, B2B2C

B2B markets are best suited for robotics adoption. Product requirements are more favorable because B2B settings are often in structured environments with less variable tasks. Employees and end users have technical knowledge or can be trained, human robot interactions are more defined, and even though there is a long ramp time in B2B it is ultimately easier to get early adoption with large scale potential.

Examples of robotics-friendly markets:

• Manufacturing
• Supply chain and logistics
• Healthcare
• Construction
• Agriculture

Markets with indicators for future robotics adoption:

• Space
• Energy
• Utilities

Market segment with low likelihood to adopt robotics: B2C

Consumer is historically the “go to” market sector for new tech innovation due to large markets, fast adoption with high volumes, and typically more relaxed performance and environmental requirements. However, in robotics it is the toughest market to penetrate – use case criteria and product development and cost considerations are all major challenges.

SO WHAT:

• B2C has historically seen the biggest failures in robotics startups. Operating robots in the presence of the everyday consumer in uncontrolled environments with the highest safety requirements with the most cost sensitive customers is an extraordinary challenge. iRobot is the best (and only) success story to date.
• Advancements in robotics and AI is bringing the industry closer to meeting this challenge, but carefully considered strategies will be required to ultimately be successful at scale

Customer Readiness

Internal indicators

• Tech-friendly, early adopters
• Clarity around problem set that can be addressed by automation
• Safety concerns for human workforce
• Tolerance for workflow changes
• Availability of capital for pilots and experimentation, R&D
• Customer willingness and ability to pay

External indicators

• Pressure to continuously improve and surpass the competition
  market and macro pressure for change
• Recent disruption in business landscape
• Recent or anticipated new policy and/or regulation
• New entrant to the industry that could change competitive dynamics

SO WHAT:

• Market Readiness and Customer Readiness VARIES A LOT and there are certain applications that are absolutely NOT ready to adopt robotic solutions today
• Proceed with caution, deeply analyze the market and customer readiness, and be sure that the expected adoption timelines will be acceptable
• Just because the robot could solve the problem doesn’t mean it is a good problem to go solve and build a high quality business around. Don’t fall into the “early adopters trap”