has a knack for extending its reach into new, highly disruptive
and exceptionally risky technologies.
Its latest buying spree has included eight robotics companies
at a cost of hundreds of millions of dollars. While you likely
aren't familiar with these companies, they are well known in the
robotics space: Redwood Robotics, Boston Dynamics and DeepMind
For investors, these transactions tell us what's ahead for
There is no question that robotics combined with artificial
intelligence has very exciting potential. But how Google will
monetize its latest spree of acquisitions, and turn them into a
viable revenue stream, is completely up in the air.
Companies such as Boston Dynamics have remarkable technical
knowledge, but little practical use. Its Wildcat robot is an
extraordinary creation, but leaves much to be desired in terms of
a purchasable product.
R&D is phenomenally expensive in this field, and the
payoff is generally murky because so few real-world robotics
applications exist today.
Luckily, we've finally got some information on an application
Google could be looking at for its up and coming Robotics
division. The Wall Street Journal recently reported that Google
was working with Foxconn to install robots in its factories.
The WSJ article highlights the fact that former Android Chief
Andy Rubin was recently assigned to spearhead a new Google
division. And he has been meeting with Foxconn to automate its
Foxconn currently employs over one million people, but has
expressed a strong interest in moving towards higher-end
technologies to meet its customer's needs. To make this
transition Foxconn Chairman Terry Gou is exploring the
integration of robotics into the company's factories.
Foxconn is infamous for the being a critical piece of mass and
questionably ethical labor for Apple's suite of hardware devices.
Apple - and almost every other consumer electronic manufacturer -
originally chose to manufacture its products in China because of
remarkably cheap labor. But that landscape is now changing as
In theory Google's robots could replace the workers in the
Foxconn plant. If that happens, a new and even cheaper age of
manufacturing labor will be upon us. Although talks are very
early, this is a very exciting potential use case for Google's
Not only would a company like Foxconn be interested in
Google's robotics potential, but so would every manufacturing
player that spends a large portion of its capital on human
Exploiting cheap, international labor has been a trend in
electronics manufacturing that has consumed the last several
decades. Google's latest acquisitions indicate we be near a
tipping point where robots are actually cheaper than human labor.
If Foxconn's plans are any indication, it seems like we are
nearing a tipping point.
Its now possible that in just a few short years a Google robot
will be assembling your next generation Apple iPhone.
If this opportunity realizes its full potential, it could be a
huge area of
growth for Google
, and create considerable efficiency for manufacturers. For
this reason the rollout and expansion of Google's Robotics
initiatives is something to keep a close eye on for all current
and potential Google shareholders.
Google shares have risen an impressive 45% over the last year.
With a forward P/E of just above 20, investors are expecting some
solid growth out of Google over the next couple of years. Up
until now, most of this growth was expected to come from its
steadily growing advertising business, as well as new initiatives
With robotics in the picture, Google is a first mover in an
industry with $100B+ potential. If this partnership becomes
official and growth estimates are extended, Google's share price
could continue its ascent thanks to this latest growth
Why did Google just invest $60 million in this
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