The Cloud transforms the potential of robotics. Previously robots had to carry enough physical processing power to fuel their thinking. This made them impractical and expensive. Unlike the bulk of bottlenecks in recent technology, the bottleneck in robotics was coming from hardware, not software. That is changing. The hardware for robotics is becoming doable.
The cloud takes the brain from the robot away from the body. That means your small, inexpensive robot body sitting in your house can utilize a powerful, centralized brain at Google headquarters. Further, this brain can process realtime inputs from all around the world, leveraging a huge amount of computer intelligence and communicating continuously at a low marginal cost with a small, versatile robot--your robot.
I think Google (GOOG) will benefit from this paradigm shift. What the iPhone did with apps, Google is positioned to do with robots.
Apple (AAPL) has an advantage over Google with smartphones. That's because smartphones are about entertainment. Smartphones are about entertainment? If smartphones were about productivity we wouldn't be seeing these depressing articles about Research in Motion (RIMM), maker of the iconic productivity smartphone, Blackberry. Smartphones are about entertainment. But Google shines in areas of customization. Entertainment just doesn't need that much customization. Entertainment is all about quality. That's why when you go on YouTube you're likely to look at professional content, like music videos or television clips, not just homemade footage of kittens befriending puppies or random dudes talking about the fake Mark Zuckerberg.
Since Apple, with the perfectionist legacy of Steve Jobs, shines in terms of quality, it should be no surprise Apple shines in entertainment. Because robot apps relative to smartphones will involve more productivity, and thus more customization, Google will shine more than ever in robot apps. That is, smartphones, and the Internet in general, have been shown to be an entertainment consumer's medium. It is fair to assume robots (compared to smartphones) will be more productive. Think of all the things we used to do intellectually that we now outsource to computers. There is going to be similar displacement occuring in physical tasks when we outsource them to robots.
Another reason Google will own the cloud robot business is the frictionless nature of Google's user interface design. Look at something like Chrome, which is gaining market share. The reason Chrome is so popular is its minimalism. It eliminates distractions and delays, allowing you to engage entirely in the experience of browsing. Furthermore Chrome integrates smoothly with the spectrum of Google services, appealing to the many of us who appreciate simplicity. Since the idea of robots will be to make our lives and work easier, Google's acumen in user interface design will be competitively significant.
Sometimes seeing Apple and Google in competition loses sight of the big picture. Sure, there are areas of market overlap, but the companies are building a technological ecosystem. Realistically, the losers will be the smaller companies who try to compete with them. Microsoft (MSFT), ironically, due to its fragmentation, is becoming a collection of tiny companies, some of which may prove a fit for this category of losers. That's why I don't like the stock MSFT even though it's cheap. The strategy going forward for any small company has to be cooperation, not combat, with the monopolies.
Imagine this. You just got home from work, and you have a chore to do, like doing laundry or taking out the trash. Sure, you could do it yourself, but you don't feel like it, so you pay an app developer a small fee, and now your robot knows how to do the chore. Now imagine that you're a farmer who can lease an app to tend to celery. It's like The Matrix--downloading skills on demand.
Robots don't even have to be fully automated. You could pay someone in another country below minimum wage to guide a robot in a complex task which otherwise would require you to hire a manual laborer at or above minimum wage. So we will see hybrid robot apps that allow for some degree of human operation.
Keep in mind, Google is a middleman. Whether it's Pay-Per-Click Advertisements or app downloads, Google takes a commission for connecting buyer and seller. So cloud robotics will fit with Google's business model. Google can build the plumbing, and the app developers will take care of the rest. And Google will continue to be a de facto monopoly. Sure, other companies can do what Google does, but Google will be the only company to do it best. Why is that? Because it's hard to compete with a de facto monopoly.
Practically speaking, there are engineering problems that will inhibit the growth of cloud robotics. You probably won't have a robot babysitter any time soon (although a dog trainer might be nice). Talk of ubiquitous sensors has been around for years in engineering circles--the ideas I'm sharing with you obviously aren't new. But are these ideas priced into the stock market? The eventual potential market for robots, in my opinion, dwarfs the market for smartphone apps. Phones are literally one dimensional. It is worth considering the potential of Google in this space when one approaches the stock's current valuation. 21 is just too low of a P/E. 200 billion is not a market cap that is too big to grow!. One might also take a look at Nuance (NUAN), which will offer a great deal of transferable technology. We're already seeing a cloudish robot with da Vinci from Intuitive Surgical (ISRG). da Vinci was originally intended for remote operation.
While it makes sense to keep our feet on the ground, technology's acceleration justifies my suggestion that we look ahead. Technology grows as quickly as it can. As soon as a technology becomes practical, that technology becomes "necessary". The cloud is making robots practical on a widely distributed, customized level. Android phones are just the prequel.
If you had a robot that could help you with everyday tasks or specialized physical labor, what would you use it for? Please share your ideas in the comments.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.