Fanuc Leads The Way For Smart Factory Software For Now, Kuka And ABB To Follow Closely

Earlier this week, I wrote an article discussing Fanuc’s (OTCPK:FANUY, OTCPK:FANUF) open platform software bet on the futuristic smart factory. One reader asked about how Fanuc would compete with Kuka and the Chinese. In thinking about this, I decided to analyze the smart factory software playing field as objectively as I can.

For the purpose of getting the conversation flowing, I’ll focus on what the big 4 players are doing in the race for smart factory software development.

Major Partnerships Are Forming

As part of diving into smart factory software, the industry trend (NASDAQ:ROBO) has been to form partnerships with large tech companies. Currently, the known partnerships are Fanuc-Cisco (NASDAQ:CSCO), Kuka-Huawei (OTCPK:KUKAF, OTCPK:KUKAY), and the most recently announced ABB-IBM (ABB, IBM). Yaskawa Electric (OTC:YASKF, OTCPK:YASKY) seems to be floating around, though the company has had some involvement with Huawei and Midea Group (the folks that acquired Kuka).

China is betting big on industrial robots – so big that most of China’s jobs are at risk of being automated. Despite Mark Cuban’s call for government support, the US has been dragging its feet. Japan and Germany are robotic as usual. In terms of government support, team Kuka-Huawei probably has a leg up against the rest of the big 4.

I want to emphasize that this discussion revolves around smart factory software and not purely industrial robotics. The reason for this emphasis is that media coverage on the future of industrial robotics seems to place heavy emphasis on technological advantages. While bleeding edge tech might be the name of the game today, the environment is already changing.

Service Is The Game Changer

If we take a step back and think about why factories exist in the first place, the importance of after-sale service for industrial robots becomes clear.

Whether using humans or robots, the purpose of a factory is to process/assemble materials into end products of some form. From a business perspective, if the cost of purchasing and operating robots becomes cheaper than human labor, robots are where the money will flow. A perfect example of this line of thinking was observed in 2014, when US fast food workers demanded a $15 an hour minimum wage.

Here is what McDonald’s USA’s ex-CEO Ed Rensi had to say about the issue:

“I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry – it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries – it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”

Source: Fox Business

To state the obvious, a robot is only valuable when it is functioning. In the context of factory operations, school teachers and production managers would know: Just as a classroom progresses at the speed of the slowest…

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