This is the third in a six-part series we’re publishing on the future of robotics. Every day this week, we’re publishing a detailed outlook on a category within the robotics market including details on our thesis, outlook and market size for each category.

See previous notes in our Robotics Outlook 2025 series here: Intro, Industrial.

While the industrial robotics market accounts for the highest percentage of robot spend, we believe robot adoption in other commercial settings is approaching an inflection point and will experience faster growth than any other robotics market over the next 10 years. We define the commercial market as robots used in warehousing, healthcare, agriculture, security or any other commercial application outside of the manufacturing sector. Over the last 5 years, a wide variety of commercial verticals have integrated robotics due to lower robot costs, improved robot functionalities and enhanced safety features. Today, we believe the four biggest commercial robot markets include autonomous guided vehicles in logistic applications, drones, and medical and field robots. That said, there are several quickly emerging commercial robot markets that are small today, but that we view as large market opportunities over the next 10 years:

• Autonomous Guided Vehicles (AGVs): Autonomous guided vehicles are robots used in many different commercial industries to improve logistic efficiencies by moving materials without any human interaction. Advancements in software and computer vision allow these robots to understand their surrounding environment in real-time, which allows them to operate in challenging environments and nearby people. The largest adopters thus far of AGVs include e-commerce companies. Pricing on AGVs varies from $35 – 50K.
• Drones: Unmanned aerial vehicles (UAVs), better known as drones, are flying robots utilized in a handful of different verticals such as agriculture, telecom, oil and gas and public safety. Due to favorable regulation and breakthroughs in flight automation and sensor technologies, drones are providing these industries with cheaper and more efficient solutions than tradition business methods. Drones can take many forms including quadcopters and fixed wing. Pricing for UAVs can vary from sub-$1K to more advanced platforms that cost in excess of $50K.
• Medical Robots: Medical robots primarily take the form of machines assisting healthcare professionals during surgical and rehabilitation applications. Over the last 10 years, the number of surgeries performed by these robots has significantly increased. Today, medical robots are assisting in spinal, prostate, joint replacement and open-heart surgeries. Medical robots allow surgeons to perform smaller and more precise operations. They are one of the costliest types of robots on the market with average selling prices (ASPs) over $1M.
• Field Robots: Farms are becoming more automated as the precision ag movement gains momentum. Today, field robots take the form of milking robots, autonomous tractors, de-weeding robots, as well as robots used to pick fruits and vegetables. While these robots improve efficiencies and crop yields, we believe adoption of field robots will be highly correlated to commodity prices. However, as field robots continue to improve, farmers will likely be forced to adopt these technologies in order to remain competitive.
• Other: While we view AGVs, drones, medical, and field robots as the largest commercial markets today, we see many other commercial markets quickly emerging. These robots include professional cleaning, security, as well as public relations robots, but there are additional markets still in the very early phases of development. The catalysts driving these other commercial robots include: decreasing robot costs, increasing robot functionalities, software application development, market awareness, and public acceptance.

Commercial Robot Market to Grow to $29.9B By 2025

We believe a total of 130,321 commercial robots were delivered in 2016, which is up 86.6% from the prior year, and the total market value grew 29.1% y/y to $4.9B. We specifically believe 33,250 AGVs were sold in 2016, and over the next 10 years we anticipate the AGV market to be one of the fastest growing commercial robotics markets. By 2025 we believe the total AGV market value can exceed $10.0B, which represents a 29.4% CAGR and equates to over 370K unit shipments. We anticipate medical robots growing from $1.6B in 2016 to $8.0B by 2025, representing a 18.6% 10 year CAGR. Due to the abnormally high ASPs for medical robots, we anticipate the unit volume to be much lower than any other commercial category.

Within commercial robotics, we anticipate the commercial drone market to see the highest unit and market value growth over the next 10 years, due to the number of verticals drone technology will likely disrupt. We believe annual commercial drone shipments will increase from 84,000 in 2016 to over 830,000 by 2025, representing a 35.5% CAGR, and the drone market will eclipse $6.8B by 2025. Meanwhile, we believe the industry shipped 7,277 field robots in 2016, and believe just under 22,000 units will be shipped by 2025, totaling a $2.6B market opportunity.

Bottom Line:

By 2025, we expect the commercial robotics market to represent a $29.9B market opportunity, and over 1.3M commercial robots will be shipped. While our current forecasts estimate the commercial market will be the second largest robotics market over the next 10 years, we would not be surprised to see this segment one day become the largest robotics market, given the growing number of commercial applications robots are accomplishing better than humans. While we anticipate AGVs, drones, medical, and field robots to account for the highest percentage of all commercial robotics spend for the foreseeable future, we believe there will be many other commercial robot markets that emerge over the next 10 years. The catalysts driving robot adoption rates in all commercial verticals include: growing market awareness, public acceptance, lower robot costs, and improvements in robot functionalities. We also believe application development around the large amounts of data these robots can gather will be a meaningful driver for the commercial market.

Next: Domestic Robots

In our next piece, we’ll take a look at how robotics is starting to play a larger role within the home.

Austin Bohlig contributed to this note.