Universal Robots Struggles to Find System Integrators to Support Growth

By George Chowdhury | 4Q 2024 | IN-7579

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As intuitive User Interfaces (UIs) and Artificial Intelligence (AI) work to increase the accessibility of robots, a dearth of System Integrators (Sis) is causing the industry to stall. Robots offer significant efficiency advantages to Small and Medium Enterprises (SMEs) for applications such as machine tending, picking, and welding, but vendors are struggling to contract enough SIs to scale.

Many solutions, notably those leveraging the Collaborative Robot (cobot) form factor, offer end users intuitive interfaces that enable a non-specialist worker to re-task a robot in minutes. Currently, this is a key advantage of cobots: a worker can almost immediately automate a simple task, multiplying their labor. These solutions, which are relatively cheap and often not connected to an organization's greater Enterprise Resource Planning (ERP) software (simplifying integration), offer much-needed efficiency boosts to under-automated SMEs. Importantly, the Total Addressable Market (TAM) for small logistics and manufacturing eclipses that of heavy industrial manufacturing-if only it could be unlocked.

The main factors deterring SIs from servicing SME deployments are complexity and the number of robots at a single site. SMEs, by definition, are small. A customer will likely only require one or two robots to boost the output of their businesses. This is in stark contrast to the dozens of machines that need servicing in large manufacturing facilities-for an SI, costs will begin to eat into profits. The second arresting factor concerns complexity. Solutions like "scan-to-path" for spraying or Machine Vision (MV) attachments to automate the picking of heterogeneous goods offer dramatic advantages-when they work. The application of MV to robotics is fraught with edge cases and errors-technicians will regularly have to manually reset and reclassify objects within the robot's field of view to get a solution to work (this is patently evident at trade shows!). The amount of support required to manage these deployments is vast; so is the product and software engineering knowledge that an engineer needs to fix faults.

Since Universal Robots' (UR) launch of the first cobot in 2008, the established industrial robot Original Equipment Manufacturers (OEMs), sensing a sea change and not wanting to be left behind, have been quick to develop collaborative product lines of their own. The robotics OEMs have had fair success with their collaborative products, but this revenue pales in comparison to the upstart UR, which held a market share of some 50% up until 2022.

Established OEMs have found a receptive and loyal customer base among their existing manufacturing clients, while their large and capable SI networks have been easily incentivized to integrate cobots into existing manufacturing sites. Industrial OEMs have also enjoyed success by partnering with Computer Numerical Control (CNC) machine manufacturers (several, notably FANUC, manufacture their own) and offering off-the-shelf machine tending solutions.

However, this is a client base that will rapidly saturate. Within heavily automated industrial manufacturing, beyond machine tending, cobots are used for inline inspection and end-of-line processing. Cobots cannot be used to replace their industrial counterparts due to the precision, speed, and payload capacity of the latter. To begin addressing the larger TAM that cobots create, OEMs will need to pivot strategy and begin catering to smaller organizations en masse. However, with cobots accounting for a marginal share of revenue, robotics OEMs have taken a lackluster approach to engaging this market. Industrial robots are the backbone of manufacturing industries and demand is unlikely to decline in the coming decades. This results in little motivation for established OEMs to begin tackling the issue of SI shortages for small deployments-stick with what you know.

The situation is different for cobot upstarts. The primary go-to-market for UR is partner networks-this is logical, as it prevents UR from becoming burdened with developing and deploying particular solutions. Its partners, by leveraging UR cobots, are at the forefront of robotics innovations and adoption for SMEs. Niche products, often utilizing MV and custom software built on UR's adaptable PolyScope interface address pain points across the logistics and manufacturing verticals. For startups, entering a commercial partnership with UR is appealing. UR has well-established distribution and support networks, while its cobots offer accessible Application Programming Interfaces (APIs) and easily replaced modular hardware (reducing the price that SIs can charge for service and repair).

Problems begin to arise as solutions increase in complexity to address the idiosyncratic needs of a specific process. UR's partners are generally responsible for recruiting engineering teams to install and maintain their solutions and, despite the ambitions of innovators, turnkey products remain elusive in robotics. Further, the heterogeneous landscape of cobot solutions causes serious issues; SIs need to know how to maintain the hardware and the particular solution. For example, two European partners of UR are Smooth Robotics, a solution for automating small welding tasks, and OnRobot, a company that offers various services, including picking and palletizing. Although an engineer might know how to install a Smooth Robotics solution, they may not know how to install and maintain a product developed by OnRobot. Alongside the variety of applications, cobot startups often find themselves in a quagmire of edge cases, preventing maintenance from being passed to third-party Sis, which would enable them to focus on growth.

Financial incentives for multi-client SIs are another obstacle. SIs catering to FANUC or ABB hardware create most of their revenue not through the installation of a robot that should remain in operation for decades, but through service contracts. Adding a FANUC cobot to a factory that already has a dozen FANUC industrial robots is a win-win-win: the OEM can train a large group of SIs to maintain its (generally simple and universal) new solution all at once; the SI gains another product in its maintenance ledger; and the manufacturers gain a new, efficiency-boosting solution from a tried and trusted brand. The OEM and SIs can then duplicate this across their entire client base and with each new product they develop. Rinse and repeat.

The cobot industry is in a catch-22. Innovators are enjoying success with affordable, but complex, solutions that enable robots to automate new tasks. At the same time, the complexity and low cost of these solutions prevent innovators from handing off solutions to SIs, damaging their ability to scale.

• In the Short-to-Medium Term, One Solution to This Is Teleoperation: All humanoid robots are tele-operable (or "semi-autonomous"); within the retail sphere, Brain Corp and Simbe both offer teleoperation capabilities for their Autonomous Mobile Robots (AMRs) due to the low tolerance to failure in a public setting, coupled with the fallibility of Simultaneous Location and Mapping (SLAM); and within the drone space, Percepto maintains low-latency teleoperation oversight to appease regulators. Companies bringing teleoperation to cobots include Olis Robotics and Flexxbotics, with both are enjoying success (and both are UR partners). Having dedicated, remote human oversight derisks the adoption of solutions by reducing downtime and minimizing engineer callouts. This is a good strategy for scaling and fixing edge cases post-deployment, but it will not go all the way to ameliorating UR's expansion problems.
• UR Partners Should Gear Solutions toward Sis: This can be achieved by not straying far from the standard hardware and products provided by UR, while offering greater simplicity and transparency in UIs-shielding both the client and the service engineer from complexity will lead to growth. Financial incentives are another means of luring new integrators: reducing Capital Expenditure (CAPEX), while growing Operational Expenditure (OPEX) could be a winning recipe for many. However, this issue will lead startups-UR's partners-to present a smaller initial return on balance sheets, potentially spooking investors. To amend this, UR could shoulder more of the financial burden and risk itself-a strategy unlikely to win hearts among UR's shareholders.
• A Further Trend Is Manufacturers' Desire to Unburden Themselves from SI Services as Much as Possible: ABI Research's recent manufacturing survey indicates that end manufacturers desire open APIs and greater agency over their robots. Tools such as Renishaw's RCS-T90 enable manufactures to recalibrate industrial robots, conduct diagnostics to determine system health, and provide accurate predictive maintenance-ultimately reducing the need for SI callouts and, to some extent, democratizing industrial robotics. UR could adopt similar tools to begin to assuage the maintenance burden.

Catering to small deployments is the necessary step that will democratize automation, unlocking robotics' potential for increasing economic growth, while generating significant returns for participating OEMs. However, the challenge of achieving growth must not be understated. Support networks for industrial manufacturing have been established over decades, with the result that manufacturers are now often bound to SIs for all their maintenance needs. The size and homogeneity of industrial robot deployments simplifies the training of Sis, while creating ample incentives to cater to large manufacturers-AMRs have a similar advantage in the logistics sector. One major advantage that UR has is its partner network-startups innovate constantly with UR's hardware. Adopting small innovations that make supporting robot deployments easier-such as teleoperation-and implementing them as standard on all UR hardware will incrementally reduce the support burden of deployments. Maintaining accessibility to cobots is paramount-keeping the door open for innovators is how UR will remain a disruptor of the robotics market.