Investment in robots and drones up 17.1%

Investment in robotic systems and drones rises to $128.7 billion, or 114.9 billion euros, in 2020. This is an increase of 17.1% compared to 2019. The positive trend is expected to continue until 2023 with a compound annual growth rate (CAGR) of 19.8%. Some $241.4 billion (€215.5 billion) is expected to be invested in robotics and drones by 2023.

This is predicted by research firm IDC. Robotics is by far the largest segment of the market; IDC expects a global total of $112.4 billion (€100.3 billion) to be invested in robots by 2020. Drones are a considerably smaller segment at USD 16.3 billion (EUR 14.5 billion), although the segment is expected to grow faster than the robotics segment at a CAGR of 33% (17.8% CAGR).

Zooming in on the robotics segment reveals that hardware purchases account for 60% of all investments in the market. This includes new robot systems, aftermarket robot hardware and system hardware. More than USD 30 billion is expected to be invested in industrial robots and service robots by 2020.

Investments in software are also being made. These investments are spread across several segments, including systems integration, application management and hardware implementation and support. Investment in services is expected to grow fastest at 21.3% CAGR, followed by software (21.1% CAGR). Hardware ranks third with 15.5% CAGR.

"Software developments are one of the major trends currently shaping the robotics industry. Solution providers are increasingly integrating additional software-based and often cloud-based functionalities into robotics systems. One operation-centric example is an asset management application to monitor robot performance in real-time. This brings solutions in line with current expectations for modern operations technology and facilitates embrace by operations leaders," explains Remy Glaisner, research director Worldwide Robotics: Commercial Service Robots at IDC.

"Equally important is the early trend driven by burgeoning software-defined capabilities for robotics and drone solutions. The goal is to enable systems beyond the limitations imposed by hardware and realise a new range of commercially viable applications."

The manufacturing industry will be the largest consumer of robotics systems this year, IDC predicts. Manufacturing companies are expected to purchase $53.8 billion worth of robots in 2020. The process industry, raw materials industry, healthcare and retail sectors follow. The use of robots is growing fastest among wholesalers (30.5% CAGR), retailers (29.3% CAGR) and construction companies (25.2% CAGR).

IDC points out that despite the US and China moving closer to a trade agreement, existing import tariffs on many robotic systems remain in place. This has a negative impact on both the manufacturing and commodity industries, where the embrace of robots is strong, according to the research firm.

Looking at drones, it appears that hardware purchases account for the vast majority of sales in the market. Of the hardware investments, 90% are spent on consumer drones, aftermarket sensors and service drones. Investment in drone software focuses mainly on command & control applications and drone-specific applications. For services, it is mainly on training and education. Software shows the fastest growth over the next five years at 38.2% CAGR, closely followed by services (37.6% CAGR) and hardware (32.8% CAGR).

Consumers account for almost 40% of total investment in drones and are expected to spend $6.5 billion on drones in 2020. The corporate sector is also betting on drones. The utilities sector leads with an expected investment of $1.9 billion (€1.7 billion), followed by construction ($1.4 billion or €1.25 billion), manufacturing and commodities (both $1.2 billion or €1.07 billion). IDC expects the commodities industry to overtake both construction and manufacturing in terms of investment by 2021. However, the biggest growth in investment is seen in central government (63.4% CAGR), education (55.9% CAGR) and local government (49.9%).

China is the largest market for drones and robotics systems with a total investment of $46.9 billion (€41.8 billion) in 2020. Asia-Pacific (excluding Japan and China) is the second largest region with $25.1 billion (€22.4 billion). The United States and Western Europe follow with $17.5 billion (€15.6 billion) and $14.4 billion (€12.8 billion), respectively.

Looking specifically at robots, China is the largest market with $43.4 billion (€38.7 billion) in investment. The fastest-growing market is the Middle East and Africa, with a CAGR of 24.9 per cent. China follows closely behind with a 23.5% CAGR. The US is the largest market for drones, with nearly $5.7 billion (just over €5 billion).
For drones, Asia-Pacific (78.5 per cent) and Japan (63 per cent CAGR) are the fastest-growing markets.

Author: Wouter Hoeffnagel