Japanese telecommunications company, Softbank (TYO: 9984), has bought the robotics firms Boston Dynamics and Schaft from Alphabet for an undisclosed amount. The deal was announced last Friday - striking many as an unexpected and potentially game-changing move for the robotics industry at large.
Google (now known as Alphabet)
Boston Dynamics is one of the highest-profile robotics companies in existence, previously funded by U.S. military's research contracts before Google's acquisition. It has grabbed the public's attention with a series of viral videos featuring its animal-like robots over the last decade. Boston Dynamics' most famous creations are "BigDog," "Cheetah," and "AlphaDog," which employ artificial intelligence and have been described as machines which could come straight out of sci-fi villain movies. The company has reportedly been up for sale since last March, as Alphabet has not been able to commercialize and profit off such creations.
Schaft, the smaller of the two companies, is a lower-profile bipedal robotics firm based in Tokyo. It's reputation is widely acknowledged as "secretive." Though it was the winning company of the 2014 Defense Advanced Research Projects Agency (DARPA) Robotics competition, virtually no media has been allowed access into Schaft's activities since the acquisition. The official Schaft website even returns a "403 Forbidden" message (meaning it is blocked from public view.)
SoftBank, on the contrary, has been boasting a growing profile and ambition as the largest VC fund in the world. Last year, the Japanese equity firm developed the $100 billion "Vision Fund" to invest in technology, such as robotics and artificial intelligence, which are expected to be an essential part of our increasingly digitized future. Since announcing the Boston Dynamics and Schaft deal last week, shares of the company hit a 17-year high by rising almost 8%. It is unclear if the deal officially falls under the Vision Fund umbrella at this time.
For Alphabet, this deal aligns with the company's recent mission of streamlining its efforts on business acquisitions and strategies which fit it's wider business and revenue goals - essentially cutting away projects that are not producing satisfactory return. For SoftBank, the deal reinforces the company's vision of working with the smartest and most advanced technology in the market. Additionally, the deal seems to make sense for the country of Japan at large. According to the World Bank, more than 26% of Japan's population is over age 60, meaning that there is an increase in workers leaving the labor market. Prime Minister Shinzo Abe stated in 2014 that Japan's robot market is expected to be worth $21 billion by 2020, as the country invests in robot technology for needs in the workforce and elderly care.
"At the end of the day Alphabet is a data and analytics company whose objective is to categorize and understand every piece of digital information that users generate and to sell those insights to marketers," said Richard Windsor, institutional analyst at Edison Investment Research, about the deal. "These robots can move around with relative ease, but how they would be able generate value for Alphabet shareholders was always unclear." He believes that this deal will help SoftBank "beef up its robotics expertise" to remain a major player on this technological front.
In a press release on June 8th, Masayoshi Son, chairman and CEO of SoftBank, said that he predicts Boston Dynamics to be the clear leader in this next stage of the Information Revolution. "Today, there are many issues we still cannot solve by ourselves with human capabilities... I am thrilled to welcome [Boston Dynamics] to the SoftBank family and look forward to supporting them as they continue to advance the field of robotics and explore applications that can help make life easier, safer and more fulfilling," said Son, who currently ranks as Japan's richest man.
Marc Raibert, CEO and founder of Boston Dynamics, said in the press release that he is looking forward to working with SoftBank on creating technology for a smarter and more connected world. "We at Boston Dynamics are excited to be part of SoftBank's bold vision and its position creating the next technology revolution, and we share SoftBank's belief that advances in technology should be for the benefit of humanity," Raibert said.
