Boston Dynamics: 3 Reasons for Losses and a High $1.1 Billion Valuation

Contents:

• The First Stage of the Boston Dynamics Ownership Change
• Ownership Change: The Boston Dynamics Journey
• The Boston Dynamics Acquisition: The Third Turn Owner
• Robotics Market Trends

The First Stage of the Change of Ownership of Boston Dynamics

In 2013, Boston Dynamics, which is famous for its innovations in the field of robotics, was acquired by Google. The acquisition was part of Google's broader strategy to expand its investment portfolio to include eight other robotics companies. The deal's value remained undisclosed, sparking considerable speculation among industry experts.

The new unit, called Replicant, was headed by Andy Rubin, creator of the Android operating system. Despite ambitious plans, serious problems soon arose when Rubin left the company in 2014 amid allegations of sexual harassment. This event caused discontent and disappointment among employees, as reported by Tech Insider, citing its sources. The situation surrounding Rubin and his departure had a negative impact on the company's reputation and its future development.

The conflict of interest between Google and Boston Dynamics was exacerbated by Google's attempts to adapt Boston Dynamics' developments to create consumer robots, including home and office assistants. This initiative met with resistance from the Boston Dynamics team, which provoked significant disagreements. One of the key factors exacerbating the conflict was the physical distance between the companies' headquarters: Boston Dynamics is located in Boston, while Google is in Mountain View, California. This distance complicated communication and coordination, which in turn affected joint project collaboration.

Financial aspects had a significant impact on the development of Boston Dynamics. Although the company has never disclosed its financial results, it is known that it has experienced losses throughout its 30 years of existence. According to Bloomberg, maintaining Boston Dynamics cost Google approximately $50 million annually. As Jonathan Rosenberg, advisor to Alphabet CEO Larry Page, noted, there is a certain time frame within which the company must achieve profitability, and it is a matter of the next few years.

Change of Ownership: The Path of Boston Dynamics

In 2016, Google decided to sell Boston Dynamics, a leading developer of robotics. In 2017, the company was acquired by SoftBank, a Japanese conglomerate that actively invests in innovative technologies. According to Bloomberg, the deal was worth approximately $165 million. Boston Dynamics continues to develop advanced robotic solutions, confirming the growing interest in robotics in the global market.

Completion of the sale of Boston Dynamics was contingent on receiving approval from the Committee on Foreign Investment in the United States (CFIUS), as the company's products could be used for military purposes. The deal contained covenants restricting SoftBank management from managing personnel decisions, developing product strategy, and accessing Boston Dynamics' intellectual property. These measures were aimed at ensuring the safety and security of technology, highlighting the importance of overseeing foreign investment in strategically important industries.

As a result of this transaction, Boston Dynamics became part of SoftBank's diversified portfolio. During its ownership, the Japanese corporation significantly increased its headcount to 300 people and moved its office to a new $20 million building in Waltham, Massachusetts. According to Bloomberg, operating expenses for the project amounted to approximately $150 million per year.

Under SoftBank's ownership, Boston Dynamics actively began commercializing its innovative developments. In particular, the company began offering its four-legged robot, Spot, for rent, and in 2020, it went on sale at a price of $74,500 per unit. This contributed to a significant increase in demand for its products and strengthened the company's position in the robotics market. Boston Dynamics continues to expand its offerings, attracting the attention of both businesses and research organizations to the potential applications of robotics in various fields.

Acquisition of Boston Dynamics: Third Turn Owner

In December 2020, a significant event in the tech industry occurred: Hyundai Motor Group acquired an 80% stake in Boston Dynamics from SoftBank, valuing the company at $1.1 billion. Despite the challenges SoftBank and Google faced in making Boston Dynamics profitable, the deal was concluded at a significant premium, highlighting the interest and potential of robotics technology. Hyundai's investment in Boston Dynamics opens new horizons for the development of automation and innovative solutions in the automotive industry and beyond.

Hyundai, known for its high-quality vehicles, is actively developing its interests in robotics. Ernestine Fu, Director of Product Management, shared the company's strategy, emphasizing the new direction of Hyundai New Horizon Studios, which is focused on the development of walking vehicle concepts. This innovative direction underscores Hyundai's commitment to integrating advanced technologies into the automotive industry, opening up new horizons for mobility and sustainability.

Fu noted that a key aspect is exploring the possibilities of integrating robotics with traditional wheeled propulsion systems, such as walking robots. This will allow the development of innovative vehicles capable of adapting to various conditions. In her opinion, the technology created by Boston Dynamics will become the foundation for turning these concepts into reality. The integration of such solutions can significantly change the approach to transportation and improve its efficiency.

The acquisition of Boston Dynamics opens new opportunities for Hyundai, allowing the company not only to expand its product range but also to integrate advanced technologies into vehicle development. With growing interest in robotics and automation, this trend could become a key aspect of the future of the automotive industry. The integration of innovative robotic solutions will allow Hyundai to not only improve the quality of its vehicles but also enhance its competitiveness in the market, responding to the demands of modern consumers.

Robotics Market Trends

According to the latest Market Study Report, the global robotics technology market reached $63 billion in 2019. It is projected to grow at a CAGR of 15.8% through 2027. The main drivers of this growth include improved workplace safety, improved production process efficiency, and increased overall productivity. Growing demand for automation, as well as rising labor and energy costs, are also driving the industry's growth. However, high initial robot costs and a lack of awareness of automation capabilities among small and medium-sized businesses remain significant barriers to further progress in this field.

Boston Dynamics isn't alone in the anthropomorphic and biomorphic robot market. Competitors such as ABB, FANUC, DJI, and Agility Robotics are also actively developing their own solutions. However, Boston Dynamics stands out thanks to its dynamic stabilization system, which allows robots to replicate human and animal movements with high accuracy. Promobot founder Oleg Kivokurtsev emphasized that while other walking robots exist, their designs and movement principles differ significantly from Boston Dynamics' solutions, making their developments truly unique. The company's unique technologies and approaches open new horizons in robotics, creating opportunities for application in various fields, from industry to healthcare.

Despite its significant achievements, Boston Dynamics continues to experience financial difficulties and remains unprofitable. CEO Robert Plater, who took over in 2019, predicts that the company will be able to achieve profitability in 2023-2024. However, expert Vladimir Bely from Alpha Robotics Venture believes that such financial results are the norm for this industry. In his opinion, profit should not be expected in the field of anthropomorphic and biomorphic robotics in the near future, since the main focus is on research and development of innovative technologies. This highlights the importance of investing in research and development, which could lead to future commercial success in robotics.

Boston Dynamics has significant potential for future commercialization. Each robot developed by the company is a source of innovative technological solutions that can be integrated into various electromechanical and automated systems, including cars and mobile devices. Mass production of individual components could generate significant revenue for the company, which could lead to an initial public offering (IPO).

Today, Boston Dynamics holds more than 100 patents for innovative developments in the field of dynamic stabilization, which can find application in the automotive industry, machine tool manufacturing, and robotics. As Kivokurtsev notes, the acquisition of Boston Dynamics will allow Hyundai to gain access to these valuable patents and competitive advantages. This will also increase the company's appeal to consumers and strengthen its position as a technology leader in the automotive industry. Integrating Boston Dynamics technologies into Hyundai products can help create safer and more efficient transportation solutions, which will be an important step in the development of the modern automotive industry.