Led by iRobot, Mass. Robotics Cluster Growing, But Sales Still Small

When it comes to robotics companies in the Boston area, there’s iRobot—and then there’s everyone else.

A new study found that there are 122 robotics firms in Massachusetts, which employ around 4,700 people in total. Last year, those companies generated $1.6 billion in revenue from robotics products and related services, according to the report. (Some of the companies included in the study sell more than just robots.)

IRobot (NASDAQ: IRBT) makes up a big chunk of that economic activity. The Bedford, MA-based firm reported nearly $617 million in sales last year—more than a third of the total robotics revenues generated by Massachusetts businesses in 2015. IRobot employs more than 475 people in the Bay State, the report said, making up 10 percent of the state’s total robotics workforce.

The study, released Tuesday, was conducted by New York-based ABI Research for the Massachusetts Technology Collaborative, a public economic development agency.

The report noted that the state’s robotics sector is “healthy and growing”—33 new robotics firms were formed between 2011 and 2015, a 57 percent increase from the number of robotics startups created in the previous five-year period.

New startup activity could continue, especially given investors’ larger appetites for funding such ventures. Global robotics investments grew steadily between 2011 ($149 million that year) through 2014 ($341 million), and then spiked in 2015 to nearly $1.5 billion, the report said.

Last year’s figure included more than $190 million in venture capital and private equity invested in Boston-area robotics companies, the report found.

“Massachusetts has one of the most innovative and sizeable robotics clusters in the country,” the report’s authors wrote. “In many robotics segments, Massachusetts is ranked as one of the top three states based on revenue and employment. The robotics cluster growth reached a critical mass and became self-sustaining, and the cluster attracted a technology and investment pipeline to withstand any cyclical economic decline.”

But one big takeaway from the report is that despite all the hype and increased investments in robotics over the past several years, the local sector is still relatively small. Consider that the state’s largest IT firm, EMC (now officially called Dell EMC), generated nearly $25 billion in sales last year; and one of the state’s largest life sciences companies, Biogen (NASDAQ: BIIB), posted $10.8 billion in sales in 2015.

Nevertheless, if robots become ubiquitous in the coming years and transform society in the ways many companies and analysts predict, Massachusetts could be well positioned as a leader in this sector. One of the keys for local leaders, the report said, will be capitalizing on rapid advances in related technologies that are already boosting robots’ capabilities, such as sensors, cloud software, and artificial intelligence.

Other takeaways from the report:

—The state’s robotics cluster features a wide range of products. They include iRobot’s floor-cleaning machines (a Roomba is pictured above), CyPhy Works’ drones, Rethink Robotics’ factory robots, QinetiQ’s military robots, Amazon’s warehouse robots (from Kiva Systems), and Vecna Technologies’ robots used in healthcare settings.

—Manufacturing is the largest target market for local robotics firms, followed by the defense and healthcare industries.

—Looking at 2015 investments in Massachusetts and around the country, venture capitalists overwhelmingly prefer to back robotics companies whose target customers are either businesses or consumers. The percentage of investments in companies serving the defense, research, and education sectors was in the low single digits. “This is a reflection of investor emphasis on returns in the short term, but also their unease with the uncertainties and limited ceiling of companies reliant on public funding sources,” the study’s authors wrote. (Note that iRobot sold off its defense and security business to a private equity firm back in February.)

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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