Massachusetts has birthed three global giants that helped pioneer the technology landscape of the last half-century: Digital Equipment, Lotus Development, and EMC.
And as of October, all three have now been sold for multi-billion-dollar sums to out-of-state acquirers. On Columbus Day, Dell announced its purchase of Hopkinton-based EMC, a company that shaped the way corporations store and manage vast troves of data, for $67 billion.
What are the up-and-coming companies with the potential to fill that void — if not reaching EMC’s size (it was #121 on the most recent Fortune 500 list), at least approaching its influence as an industry leader?
“We’re in a period of transition,” says venture capitalist Bijan Sabet of Boston’s Spark Capital. “We have some promising companies like Wayfair and HubSpot,” in e-commerce and digital marketing, he says, “and lots of young startups.” But “we’ve got to get our companies to stop selling out” says Sabet, who was an early investor in companies like Twitter and Oculus, the virtual reality pioneer.
So who has the potential to grow into a major player? Here’s my top pick, plus some young, promising companies.
Top pick: iRobot
IRobot doesn’t sweep its failures under the rug. Visit the company’s Bedford headquarters, and just past the reception desk is a showcase of prototypes and products — some of which never turned into significant money-makers for the company. Not far from a robotic dinosaur toy is a snake-like bot designed to repair oil wells; across the hall is a floor-buffing bot that resembles a small Zamboni, designed for after-hours cleaning work in offices.
The company’s founders acknowledge that they started the company because they wanted to build robots outside of the confines of MIT’s labs. But once iRobot began making surveillance bots for police and the military, and the line of Roomba home vacuum cleaners, it grew into one of the leaders of the mobile robotics field. (A mobile robot is one that can roam around, rather than be bolted to the floor.) IRobot has about 500 employees, and brought in $557 million in revenue last year, up 14 percent from $487 million in 2013.
IRobot has the potential to grow much bigger — and remain a central player– as robots continue to move spread from the factory and battlefield into the consumer market. Boston Consulting Group, a management consulting firm, estimated the global market for consumer robots will grow 17 percent a year into the next decade, climbing to $9 billion by 2025 from $2.5 billion in 2015.
Many companies are capable of building expensive robots for specific industrial uses. But very few have amassed the skills to make inexpensive robots — and sell them to consumers. Those abilities put iRobot in a prime position as the robotics business grows.
Dan Kara, the robotics practice director at ABI Research, says he sees the company exploring new jobs for robots, like using them to map the inside of buildings, while avoiding projects that have little hope of success. “I’ve always been struck by their business-first approach,” Kara said.
Co-founder and CEO Colin Angle says that the company’s early attempts to make toys taught it about building bots inexpensively; building products that could go into rough environments like oil wells or caves gave the company an immersion course in durability. Lots of people can put together a robot that performs some cool function, Angle says, but building thousands of them that can survive in the real world without constant tending is a major challenge.
“That’s why the robot industry is such a tough row to hoe,” he says. “I’ve been profoundly frustrated and profoundly grateful at the difficulty of this business.” Why grateful? It means that there are still lots of jobs left for iRobot’s products to do — “some real pockets of value left to discover out there,” he says.
While iRobot already sells cleaning robots for floors, gutters, and pools — some for as little as $300 — Angle says that the company is “investigating the market” for products that would deal with lawn care. The company is also conducting research work on “manipulators” — a/k/a hands — that might allow bots to take on other boring chores, like laundry folding.
There’s also interest in developing a lower-cost version of the company’s RP-VITA, a bot for hospitals that lets doctors “beam in” to a patient’s room, and can even connect to diagnostic equipment like a stethoscope or otoscope. A less-expensive version of the RP-VITA could bring more healthcare services to the patient, rather than forcing the patient to come to the office.
“We have this unstoppable demographic shift going on,” Angle says. “We need technologies to allow people to live in their homes longer.”
How much of an industry influencer has iRobot become? When the British vacuum-maker Dyson launched its own robotic device this fall in Japan, thirteen years after the Roomba first appeared, it picked a name for the product that carries more than a slight echo of the company whose trail it is following: the 360 Eye Robot.
Three others on the rise:
The four-year old Somerville company is trying to make 3D printers every bit as easy-to-use as the laser printer in your office. But unlike rivals like MakerBot, it has kept its focus squarely on the professionals responsible for designing new products, rather than hobbyists. Formlabs has 105 employees, and earlier this year opened an office in Berlin. An upgraded version of its printer, released in September, sells for $3,500.
Business spend billions on advice, whether from small consulting firms or global giants like McKinsey or Bain. HourlyNerd of Boston operates an online marketplace that aims to make advice more affordable: post a project, and more than 10,000 freelance consultants around the world will bid to take it on, whether it involves figuring out who your most profitable customers are or building a fundraising presentation. HourlyNerd has attracted an impressive group of investors including “Shark Tank” star Mark Cuban, the Kraft Group, GE Ventures, and Scott Cook, the founder of tax software giant Intuit.
Massachusetts has been a fertile place for companies that make computer-aided design, or CAD software; the biggest local player is PTC of Needham, with $1.4 billion in 2014 revenue. But Onshape, a Cambridge company is bringing CAD software into the cloud, making it possible to review, comment on, and alter a “draft” product from a desktop machine or even a mobile phone anywhere in the world, without installing special software. Since its inception in 2012, the company has raised $144 million from investors.
Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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