Robot-as-a-Service (RaaS) Business Models in the Market Today (2022 edition)

  •  Gary Yates
  •  Dec 19, 2021
  •  1886 views
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The Robot-as-a-Service (RaaS) business model is a compelling value proposition for users and a game-changing strategy for robotics companies. In fact, in some market sectors, it has emerged as a necessary means of competition.


In 2022 report on the Robot-as-a-Service landscape, we look at the diverse business models employed by different Robot-as-a-Service players in different market segments.

The top five segments for robot-as-a-service (RaaS) plays are delivery robots, cleaning robots, factory robots, warehouse robots and security robots. These are markets where there are clear existing cost models, such as performance fees, like pay-per-delivery fees, or hourly labor wages such as pay-per-hour wages for cleaners and security guards.


These cost models serve as a competitive basis for robotics offerings to supersede and supplant. Can the total monthly operating cost of a security robot be lower or on par with their human counterparts, while providing superior and tireless surveillance and monitoring? Can delivery robots provide better reliability and shorten time of delivery through smart optimization to earn the same delivery fees or even reduce the fees?

Thus, the robot-as-a-service model provide an ideal way for solution providers to align closely with their competitive cost model and gain disruptive market entry.


Outline


Why Robotics Firms Should Consider RaaS Business Models

RaaS Benefits. Robot as a service offers compelling benefits to both customers and robotics firms. Customers can immediately put these robots to production without hefty upfront expenses, freeing up capital for other projects. RaaS providers gain a sharp edge over CAPEX-based competitors in terms of customer acquisition, accelerate market share and strengthen their foothold onto the customers’ operations.


ExampleGeek+ warehouse RaaS solution was able to help Hong Kong-based Janco 3PL achieve significant fulfilment efficiency and accuracy in their warehouse automation at an affordable investment model.


In other words, the RaaS strategy can help robotics companies acquire customers with higher success and at a faster pace.


RaaS is a moat. However, the underlying challenge is that RaaS companies require a higher startup capital vis-à-vis CAPEX-based built-to-order robotic firms. Yet, for companies that have implemented RaaS successfully, it is this exact challenge that creates a widening moat for competitors that lack the financial and operational wherewithall to run with this strategy.


RaaS 101: Key Considerations for Planning a Robot-as-a-Service Offering

RaaS 101. Aside from research and development challenges, these are the some considerations that startups grapple with at the outset of their robotic ventures.

Target Market — Are we inventing a new service category or disrupting an existing one? Is the demand for our RaaS offering ripe, premature or soft? What is the size of the addressable market?

Fleet Size — What is the initial robot fleet size needed to serve the market and target fleet expansion rate? ExampleStarship Technologies deploys about 20 to 30 delivery robots for each campus customer it serves.


A fleet of 30 Starship robots developed at the University of Houston to make food deliveries to the 53,000-strong student, staff and faculty population.

Risk and Regulation — What are the legal liabilities and insurance requirements of operating a robot fleet? What are the regulatory limitations across countries, cities and jurisdictions? The different states in the U.S. are in various stages of approving PDD (Personal Delivery Devices) for sidewalk and on-road use in their legislation.

Financing — Do you raise investment or tap into debt financing? What are the initial robot production costs and the expansion costs for team and operations? How do we sustain negative cash flows in the initial months and for how long?

Business Model — What are the fixed and operating cost models? What are the costs to fulfil the RaaS service-level agreement (SLA) for this market? What are the competitive pricing and revenue models?




Piloting is always needed

Unfortunately, answers to the above are not easy to come by. Thus, most startups begin with a pilot or a trial to discover the answers.

"Consumer" Pilots — For consumer-oriented businesses, startups may need to work with supply partners such as a grocery chain or an e-commerce brand. For wide-area pilots, startups will need to identify suitable locations with friendly local authorities who would permit the deployment of the autonomous robots on the streets.

Example — One example is Robot as a Service startup Robomart, which is running a grocery-on-wheels pilot with Stop & Shop to serve shoppers in the Boston area.


Enterprise Trials — For RaaS startups targeting enterprises, it could be collaborating with an anchor customer, such as a manufacturing or logistics company, for a trial run to prove to the anchor customer and the market the value of the RaaS solution.

Example — Enterprise-focused Magazino, a robotics company based in Germany, ran a pilot project with PUMA to demonstrate how its mobile picking robot, TORU, can pick and retrieve shoe boxes from warehouses for fulfilment.


Pilot Funding — In a good case, the pilot could be funded by direct seed funding from the customer, government grants or angel investment. For more bootstrapped startups, the support will likely come from the founders, friends and/or families.

But, the goal is clear — the startup must gather enough data from the pilot(s) to model the market and answer the questions above before they can raise bigger investments to fully scale their Robot-as-a-Service deployments.



Market Case 1: Delivery Robots-as-a-Service

Delivery RaaS by Service Range — Autonomous delivery vehicles (ADVs) can travel on public roads and are able to handle city- or town-range deliveries (5-20km radius), while local delivery robots serve a 5-6km radius, delivering for neighborhoods and campuses using sidewalks and small-roads. On-premise delivery robots deliver food or carry packages within a premise, such as a restaurant, hotel or hospital.


Brief overview of how Udelv Autonomous Delivery Vehicle (ADV) works

Pilot Goals — Pilots help RaaS startups validate price points and uncover patterns such as daily round trips, number of deliveries per round trip and demand peaks/troughs. Startups can observe the ease (or difficulty!) for users to retrieve correct packages from the delivery robots and thus, affirm or continue to improve robotic designs. There are also regulatory and legal liability issues to explore with local authorities on public-road and sidewalk usage.


Business Models — ADVs and local delivery robots target to disrupt the manual-delivery market and thus, compete on per-delivery fees (US$4-6 for ADVs, US$2-4 for local delivery robots). Companies, like Robomart and AutoX, further enable users to purchase items directly from in-vehicle stores.

On-premise delivery robots seek to reduce the need for service labor (e.g. waiters, porters) and thus, peg their fees to compete with human wages at USD$1.5 — $2k monthly. However,in 2020, these service fees have also dropped competitively for some of the on-premise delivery robot operators (e.g. Rice Robot US$499 monthly, Pudubot at US$650 monthly)

For more in-depth read on delivery robots in general and business model, please refer to the following article Robots and Business Models for the Delivery Industry.



Market Case 2: Cleaning Robots-as-a-Service

With emergence of the Covid-19 pandemic in 2020 and countries adopting 'living with Covid-19' policies in 2021, public and premise hygiene, cleanliness and disinfection has become an area of spotlight.


There are several types of cleaning robot-as-a-service solutions — (1) robots that can perform commercial floor cleaning or scrubbing, (2) robots that perform thorough UV-C or spray-based disinfection for premises, (3) robots that handle window or facade cleaning tasks, (4) service robots that perform restroom cleanings and (5) robots that help keep solar panels clean and efficient.


Let's break down some of the prevalent pricing models for these cleaning robots.


Floor cleaning robots — As these robots are "hired" to replace or supplement cleaning labor, they are priced at competitive labor rates, to the tune of US$500 to 1.5K per month. From the viewpoint of the service provider, the monthly price point also needs to consider the amortization of the cost price of the robots (US$25,000 — $60,000 per robot) over a 24-month to 36-month period.

The office-cleaning robot Whiz from Softbank Robotics can be leased at US$499 per month.while the Lionsbot suite of larger, industrial floor-cleaning robots have a leasing cost of around US1,000-$1,600 per month.


How Lionsbot developed its suite of floor-cleaning robots


UVC/spray disinfection robots — Unfortunately, there are not many players in the market offering disinfection services on a RaaS basis. The reasons are that the cost price of such robots are generally higher at US$40,000 to $150,000 per robot and organizations that have such disinfection needs typically tend to make deliberate CAPEX purchases of these robots and invest in staff training and workflow improvements to accommodate their custom usage patterns for disinfection tasks.


Restroom-cleaning robots -The RaaS subscription for restroom cleaning robots, such as SOMATIC, is priced at US$1,000 per month for an 8-hour per day or 40-hour per week usage.

Facade cleaning robots — The upfront purchase price for facade-cleaning robots can range from US$100,000 to US$200,000 per robot system. The Serbot suite of facade-cleaning robots are on the CAPEX model and cost 180,000 euros or around US$202,000 per robot. There are also other solution providers that provide a Robot-as-a-Service price of US$8,000 to US$20,000 per cleaning cycle or cleaning service.

Solar panel cleaning robots — These solar panel cleaning robots tend to be offered as upfront purchases rather than on a RaaS model. Depending on size and performance, solar panel cleaning robots can cost as low as a few thousand dollars in retail to US$100,000 for larger, higher-end models in terms of upfront expenditure. The SERBOT pvEco robot is estimated to cost around 13,560 euros (or US$15,000) while its pvClean version costs around 24,680 euros (or US$27,700). The basic version of the GEKKO Solar Robot costs around 61,280 euros (US$68,900) while its premium model costs 78,768 euros (US$88,560).


For more in-depth read on cleaning robots in general and business model, please refer to the following article State of Cleaning Robots — Business Models and Dataset.



Market Case 3: Security Robots-as-a-Service

Types of Security Robots. Indoor security robots roam offices autonomously, performing heat scans in the premises and face/badge scans for personnel identification. Outdoor security robots are equipped larger wheels for wide-area patrol, car license plate scanners and 360° HD cameras for full environmental scans.


Business Model. Security RaaS seeks to supplement the manned security industry where there are shortages in manpower and increased expectations in security performance. Tthe value proposition of acquiring a security robot is the consistency and effectiveness of its beyond-human security capabilities at an affordable cost comparable to the total cost of employing 1 or 2 persons for the tasks.

The security RaaS model is typically on a monthly rental basis, with each security robot costing from US$1.5K to as high as US$10K per month, depending on security performance and application.


Mid-to-high range Price Tier — Security robots such as the Cobalt robots and Knightscope robots (K1/K3/K5/K7) price their Robot-as-a-Service charges around US$5,000 to $6,000 per month (or US$60-$70K per year), which is approximately the total cost of employing 1 to 1.5 security guard(s).

On the higher-priced range, OTSAW's O-R3 is estimated to cost US$10,000 per month.


Knightscope K7 Outdoor Security Robot

Low-range Price Tier — SMP Robotics' outdoor patrol robots can be leased at around US$1,500 per month, while ZMP Japan's Patoro robot costs around US$1,250 per month (or 1,440,000 yen annually).


Patoro security robot from ZMP

For more in-depth read on security robots in general and business model, please refer to the following article State of Security Robots — Business Models and Dataset.



Market Case 4: Warehouse Robots-as-a-Service

Types of Warehouse Robots — Warehouse management is one of the major industries that is being automated at a blazing speed — from fetching items around the warehouse, to sorting and shelving , to picking and packing, and eventually shipping off. Picker-as-a-service players include InVia Robotics, Magazino and Geek+ Robotics. Warehouse AMRaaS (Autonomous Mobile Robot as a Service) players include 6 River (Chuck), Fetch Robotics, Locus Robotics and Ronavi Robotics.


Business Models. The business model for picker-as-a-service is usually on a per-pick basis, ranging from 6 cents to 10 cents per pick, while AMR-as-a-service is usually leased on a monthly basis, from US$711 per robot per month to several thousands of dollars per month, depending on the commitment period.


The 6 Rivers Systems' solution will cost US$250,000 for 8 robots in the first year followed by a recurring US$50,000 in maintenance costs per year. TORU, the picking robot from Magazino has a hybrid asset-purchase with pay-per-use model — charging EUR 55,000 (US$61,800) for the hardware asset purchase along with an subsequent charge of EUR 0.06 per pick.


TORU from Magazino

AMRs from Ronavi are available with a leasing price of 100,000 rubles (US$1,400) per month while an inVia picker robot can cost around US$4,000 per month to lease.


Ronavi's H1500

For more in-depth read on warehouse robots in general and business model, please refer to the following article Robots in Warehouses — Business Models and Dataset.




Conclusion

In this report, we have compiled and looked at Robot-as-a-Service business models for the various market segments. The RaaS business model is highly dynamic as it attempts to wrap itself around a market's existing cost structures. We see that more innovative RaaS models will emerge and disrupt even more markets deeply beyond these market cases covered.

We will continue to update this special report for next annual edition. Stay tuned!