- Automation is changing the face of everything from retail to home security
- Annual revenues for the autonomous vehicle sector could reach US$7 trillion by 2050
- The state-of-the-art smart home continues to evolve
It was 1959 when car maker General Motors (GM) unveiled the imposing 2,700 pound Unimate #001 – the world's first robotic arm. The brain-child of George Delvo, Unimates were soon fully deployed across GM's die-casting plant, with over 450 machines in operation by the early 1960s. A robotic revolution was born.
Since then, automation has grown in sophistication, efficiency and operational range. It has become ubiquitous across the business landscape, used in everything from car manufacturing and industrial warehousing, to instrument inspection and security.
The world is just one click away
It's fair to say that the face of retail has changed irrevocably. Tempted by choice, price and convenience, consumers increasingly make their purchases online. Indeed, UK shoppers spent some £130 billion online in 2016 alone. As a result, many high-street firms have withered. However, this move from 'bricks to clicks' has seen an exponential rise in demand for warehousing. And with that, the need for ever-more sophisticated automation to pick, pack and ship the goods.
This has created opportunities for the likes of Jungheinrich, the German forklift and warehouse specialist. Its logistics business is now the fastest-growing segment of its operations, as it expands organically. More interestingly, it is rolling out its Industry 4.0 solutions. This system manages and controls the various warehouse procedures, creating a simplified, efficient and dynamic operation.
Overall market conditions remain buoyant and, within logistics systems, the company expects turnover of around €800 million by 2020 (from €440 million in 2016).
Staying with efficiency, Japan's Monotaro, an e-commerce company providing industrial supply products, recently conducted an assessment of its workforce practices. It found that its employees spent most of their time walking from one part of the warehouse to the other. Monotaro's response? Racrew - a fleet of automated guided vehicles that it hopes will double productivity at its newly built Kasama Distribution Centre.
Once confined to the realms of science fiction, the self-driving car is now becoming a reality. From 1980s pioneers like Navlab and Mercedes-Benz, to today's Waymo (owned by Google) and Waylab, automated vehicles have increasingly captured the public's imagination. As such, companies have had to develop increasingly complex and accurate control systems to enable their cars to safely navigate the roads. Cameras play a vital role here, tracking road signs, pedestrians and other road users. And every good camera needs a good lens, which is where the likes of Sunny Optical comes in.
Among the plethora of lenses it makes (for mobile phones, medical microscopes, industrial inspection systems), it also manufactures high-end automotive lens sets. These are primarily used for the vital sensor/driver safety suites that characterise modern vehicles. The penetration of cameras per vehicle is increasing (the latest Tesla has eight cameras), driven by both regulation and consumer awareness. Sunny is already a leader in the high-margin camera lens space, with an estimated global market share of 25-30%. Revenues reached RMB19 billion in the 12 months to 30 June 2017. With tech giants and start-ups alike increasingly investing in self-driving cars, this is a rapidly growing industry. Indeed, according to Intel, revenues from the autonomous vehicle sector could reach US$7 trillion annually by 2050.
Move over, Rover
Automation is not just found in industry: numerous household functions are increasingly carried out by autonomous machines. Take home security. Thanks to the advances in mobile technology and the 'Internet of Things', the homeowner has more control over their own security than ever before. One company to highlight is Alarm.com. It is the market leader in interactive home security, allowing consumers to create a fully-automated, state-of-the-art smart home. Alarm.com has achieved this by marrying smart security systems, video monitoring and access control into one cohesive system. It currently has over five million subscribers.
Of course Alarm.com is not alone in this field, which includes Honeywell and Verisure, among others. However, we believe Alarm.com's open eco-system, use of a cellular network (after all, Wi-Fi cables can be cut by industrious burglars) and an expansive network of over 7,000 service-provider partners, give it a competitive advantage over its rivals. At the time of writing, the company's shares had come under pressure after Amazon agreed to buy Ring, the video-doorbell company, for US$1 billion. However, Alarm’s chief executive dismissed the threat and reiterated that its customers prefer the "do-it-for-me solution" over the DIY option offered by Ring.
Looking ahead, it is clear that automation will increasingly play a pivotal role across the business world. This, in turn, will create numerous opportunities in both established companies and yet-to-be-identified technologies for investors like ourselves.