When we talk about robots in the workplace, we normally think of assembly lines. Hundreds of mechanical arms lined up, precisely assembling complex things like cars or electronics. We’ve gotten used to the industrial cases for robots, where efficiencies and returns on investment are the most important business drivers.
In recent years, Amazon (NASDAQ:AMZN) upped the ante for industrial robots. Their Kiva robots work autonomously in their warehouses, tirelessly locating items on shelves and loading them into packages — which is the key to the e-commerce giant shipping more than 5 billion Prime items every year. In September, I estimated that Amazon’s $775 million acquisition of Kiva Systems in 2012 was now worth $15 billion to shareholders.
But if Amazon’s warehouse robots were impressive, the next wave of robots will seem downright incredible.
We’re now being introduced to a new class of collaborative robots, who work in less monotonous and more “human-like” jobs. The efficiencies and ROIs of industrial robots’ past is evolving to focus on more creative and strategic metrics. Hospitality companies like Marriott are hiring robots in their hotels as concierges to help guests find fun things to do. Retailers are using robots to help shoppers place orders, and outpatient healthcare providers are using them to assist the elderly with their daily routines. Robots are now improving customer satisfaction and proactively troubleshooting problems.
One company leading the charge in this new era is Softbank (NASDAQOTH:SFTBY) Robotics. Softbank introduced Pepper last year, the first humanoid robot capable of detecting human emotions and adjusting its responses based on the behavior of the other party.
At this year’s Collision Conference last month, I got a chance to speak with Kass Dawson, who is Softbank’s Global Head of Marketing. In the video, Kass discusses how Softbank plans to use Pepper, how much the robot costs, and how businesses can quantify its value.
A full transcript is included below.
Motley Fool Explorer lead advisor Simon Erickson: Hi everyone. Simon Erickson from The Motley Fool joined today by Kass Dawson, Global Head of Marketing for SoftBank Robotics. Kass, thanks so much for your time.
Softbank Robotics Global Head of Marketing Kass Dawson: Pleasure to meet you.
Simon Erickson: Glad to meet you as well.
Now, we’re talking about Pepper today, which is the collaborative robot that SoftBank has that’s commercially available already.
Kass Dawson: Yes, it is.
Simon Erickson: We already know a lot about industrial robots. But collaborative robots are really getting a lot more attention right now. What are the industries that are using this?
Kass Dawson: So, we say social or humanoid robot but it is collaborative-
Simon Erickson: Social?
Kass Dawson: Right. The idea is, we’ve created a robot that’s built for human engagement and interaction. So, what we try to do is find industries where a pain point is communication with the customer; providing information to that customer in a very quick and efficient way so that they feel like they’re getting in and out as fast as possible. Some of the industries that we’re focusing on where we’re seeing success is hospitality, and another one is retail. Fast-casual dining is one we’re exploring as well. The company that owns a lot of the businesses inside the airport terminals, so they own the Starbucks, they own the newsstands, what have you, they’ve also been leveraging Pepper as just providing information, trying to draw people into their stores for business. So that’s been our focus, and that’s what we continue to explore.
I can see other opportunities in automotive industries and dealerships. We’re trying to have conversations there, as well as, as I mentioned, education is a big thing in terms of training people about what the future of work in the workplace is going to look like. Start learning how to build and develop on a robot, so in the future, when robots are becoming more and more [inaudible]. There’s greater opportunity there for future generations.
Simon Erickson: Sure. If I’m a retail establishment, or a fast casual, or any of those industries you’ve just named, how am I qualifying value for someone?
Kass Dawson: At this point, we’re still testing all of this out and trying to get a really clear definition of that. Each business that we deal with, we try to work and understand what their specific pain points are, what their needs are. We want to make sure that the ROI is very positive. So we tie it to, in hospitality — again, you asked about retail specifically — in retail, it’s, do customers come in and leave without ever actually having asked a question? How important is that to their business? Because they feel that when somebody’s getting the information that they’re looking for, they tend to buy x percent more, and there’s a ton of studies that each business has done and is exploring studies for trying to improve, and we’re trying to intercede into those metrics and see how we can improve.
Not necessarily tied specifically to sales yet, but converting folks, but understanding, along the path can we impact, and how can we do that? So again, four different businesses, understanding how they measure and what they look at, and we insert Pepper in ways that we’re confident that it will give them the information that they need and improve those metrics.
Simon Erickson: So, not micromanaging the interactions with the robot, or anything like that, but bigger picture — what’s important to your business, how can this help your larger business model. And then, how about, how much does it cost? What’s your ROI?
Kass Dawson: So, a Pepper unit is $25,000 right now to own. We’re looking at the model that has a three-year swap body. What that means, is a part of the $25,000 payment gets you as little downtime of Pepper as possible, if something were to happen. I mean, it’s a machine. Things tend to malfunction or break. So rather than you having to sit and wait for us to bring you a new one, we’ll ship you one, and you ship that one back. So there’s typically, we’re aiming to have a less than two-day downtime as a part of that. So it’s not inexpensive, but there’s a lot that goes into the $25,000 upfront. And with that investment, you will get a return.
Simon Erickson: Sure, and we’re speaking to individual investors as our audience here, too, talking about a capital investment for Pepper. What is the ROIs, or what are the payback periods you’re typically seeing for customers using it? Not necessarily in the United States, but just for the use cases that you have.
Kass Dawson: So, the use cases that we’ve seen in Japan, it becomes a piece of “is it saving your employees time?” And if it is saving your employees time, how much money is that saving on the back end for your business? Or, if it’s allowing for those employees to do higher-engagement tasks, what value do you put on those less things you’re seeing.
In restaurants in Japan, specifically in sushi restaurants, it’s a basically a chain of restaurants, being the largest chain. Pepper’s there to check people in, and then assign them tables as they come in and sit them down. So the person working at the front desk, or the cashier, has traditionally been swamped with trying to do cashier, as well as sitting people, and serving people. So now that person doesn’t have to also sit and serve. They can focus on running the cashier, and spend more time in less things. So they can reduce the queue, or the line, and they value that significantly, because it’s keeping their customers happy, and keeping things moving a lot quicker.
Simon Erickson: And will we see Pepper in the U.S.? Is Pepper already available?
Kass Dawson: Pepper is already in the U.S. We’re working with several different retailers, we’re working with hospitality, we have one at the Courtyard Marriott in Anaheim. They’re seen a lot of success there. They have internal metrics that tie to customer satisfaction. We’ve seen, in a one-month period, they’ve jumped seven places on their internal metric system within all of the Marriott properties, so they are really happy with that. Again, it ultimately depends on the value that business puts on any of those specific engagements that we are applying Pepper to.
Simon Erickson: That sounds great. Well, next time that you’re at the Courtyard Marriott in Anaheim, California, look out for Pepper from SoftBank Robotics. Kass, thanks very much for your time.
Kass Dawson: My pleasure, thank you.
Simon Erickson: Fool on!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Simon Erickson owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.