How a Mass. robot maker lost its mojo
Jürgen von Hollen had a lot on his plate during a recent visit to Boston. But gloating was not on the menu.
His company, Universal Robots, had just seen its best-known rival for factory robots, Boston-based Rethink Robotics, shut its doors without warning, a shocking end for a promising startup that had powerful backing.
But instead of taking a victory lap, von Hollen had travelled to the Boston area to meet about two dozen former Rethink Robotics employees whom Universal Robots had hired in the past few weeks, and he had nothing but nice things to say about his vanquished rival.
“One of the best competitors we ever had was Rethink,” said von Hollen, whose company is based in Denmark but was acquired in 2015 by Teradyne Inc. of North Reading. “We were both very, very respectful of each other’s capabilities.”
Rethink and UR faced off in the booming global market for collaborative robots, or “cobots,” small machines priced at $30,000 to $50,000 and made to do repetitive tasks inside factories. Car companies use cobots to assemble engines; in medical labs they handle and sort blood samples; in metalworking shops, UR cobots can lift, stack, and even visually inspect parts using attached high-resolution cameras.
Cobots are designed with safety features to prevent them from injuring nearby humans on the production line, so they can be deployed right next to people. Also, cobots are easy to program, even by factory workers with no formal computer training.
UR was born in 2005, and has sold about 27,000 cobots so far. That’s about half the global market, according to the research firm Interact Analysis,
Rethink was founded in 2008, with $150 million in funding from General Electric’s GE Ventures, investment bank Goldman Sachs, and Amazon.com founder Jeff Bezos, among others. Its cofounder, Rodney Brooks, is a robot-industry superstar. The former professor at the Massachusetts Institute of Technology had already cofounded iRobot, a maker of automated home floor cleaners and the first company to succeed at selling robots to consumers.
Rethink’s first product was called Baxter. Introduced in 2012 and priced at $22,000, Baxter resembled a human from the waist up — a torso with two robotic arms and a video monitor that displayed a friendly-looking face.
The eye-catching gadget garnered national media attention, but not that many industrial users, according to John Santagate, a robotics industry analyst at IDC Corp. in Framingham. For one thing, most potential customers didn’t need a machine with two arms.
“Single arms are much easier to adapt, more scaleable,” Santagate said.
Rethink responded in 2015 with Sawyer, a $29,000 single-armed robot similar to those made by UR. With a longer, faster-moving arm, the company predicted Sawyer would be popular for a variety of industrial applications, such as welding and circuit board assembly.
But Rethink’s robots used springs in the mechanism that moved its robotic arms. The added flexibility reduced the risk of injury to nearby humans. But critics say that the design also made the arm movements less precise, making the robots less attractive to manufacturers.
The Rethink design also didn’t sit well with Teradyne. The company is the world’s leading maker of equipment for testing microchips, a lucrative but mature industry. Chief executive Mark Jagiela, who took the helm in 2014, was looking to enter a fast-growing business. He settled on robotics, and almost made a bid to buy Rethink, until he learned about the springs issue.
“The mechanical design of it was basically flawed, and they could never get around that,” said Jagiela, who “decided their product wasn’t really a good industry product.”
Instead, Teradyne acquired UR for $285 million in 2015. The Danish company was already turning a profit, but it now had an affluent parent with ample resources.
UR has made the most of it. Its sales grew 60 percent in 2016 and 72 percent in 2017; its employee count over that time grew to 650, from 150.
While UR has sold robots to industrial giants like carmaker Nissan, its primary target is small and medium-size companies. “Probably 80 percent of our target market has never even heard of a collaborative robot, or has ever thought about automation being his thing,” said von Hollen.
All Axis Machining, a machine shop in Dallas, bought its first UR robot 14 months ago. Owner Gary Kuzmin was so impressed that a month later he ordered a second machine for laser-etching letters and numbers onto metal parts. Two months after that, All Axis got a third cobot, for sanding and polishing parts, and has since ordered even more.
“We got so good at integrating our own machine shop that we created a new company, All Axis Robotics,” Kuzmin said. “We sell these products now to help automate other machine shops.”
All Axis is now part of a worldwide network of about 400 resellers and system integrators that mainly targets small and mid-size businesses for Universal. And UR has created a rich ecosystem of compatible accessories, such as grippers, conveyors, suction devices, and video cameras, as well as specialized software for different industrial applications. This boosts the odds a potential customer will find a solution that has a UR robot at the heart of it.
According to Interact Analysis, UR accounts for about half the global market for cobots, which is expected to reach $600 million this year. And while 2027 is a long way off, Interact expects cobot sales to hit $7.5 billion that year.
Indeed, von Hollen said the cobot market is growing so rapidly that there was plenty of room for UR and Rethink to coexist. “Very, very seldom have we actually competed head to head with Rethink,” said von Hollen, “because the market is that big.”
For now, Universal is the leading provider of cobots, while Rethink’s technology was sold off to Hahn Group, a German industrial automation company. Meanwhile, impressed by UR’s success, the top makers of big industrial robots, such as ABB and Fanuc, have entered the cobot market. And cheaper versions from Chinese manufacturers are on the way.
Not to worry, said IDC’s John Santagate. “UR’s been doing it so long,” he said. “They’ve got a brand that has a lot of power in the market. I think that they’re fine.”
Correction: An earlier version of this story misstated the location of Teradyne. It is located in North Reading.