Amazon’s $775 Million Acquisition of Kiva Systems Could Shift How Businesses See Robots

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The only surprise about Amazon’s move to acquire Kiva Systems for $775 million is that it didn’t come sooner. Kiva is a robotics company focused on making warehouses more efficient. Amazon spent $4.6 billion on warehouses last year. The expression “no brainer” seems fitting.

Kiva’s dutiful orange robots aren’t likely to inspire any science fiction stories soon. Think of them as smart forklifts that bring inventory to the workers instead of making them walk around a large warehouse looking for it.

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What’s interesting about Kiva — well, to somebody like me who covers the world of robots — is just how coordinated the system is. A central computer keeps track of each robot as it scans codes set on the floor and coordinates their position, which ensures they don’t ram into each other and spill the contents of their shelves. It doesn’t sound like rocket science, but it’s hard not to be impressed by video of these things buzzing around a warehouse floor.

Several companies that use Kiva Systems, including Soap.com, Diapers.com and Zappos.com, have already been bought by Amazon. Whether or not the Seattle-based giant decides to make Kiva available to competitors — including companies like Staples and CrateandBarrel.com that already use it — remains to be decided.

Regardless, if other people can use Kiva’s robots, they’ll definitely have their hands — err, I mean, custom-made ball screws — full, considering that Amazon says it expects to have 69 total warehouses up and running by the end of the year, according to the New York Times. All of this won’t come cheap — CNN figures that it costs about $15 to $20 million to install a system with 1,000 robots in a large warehouse.

The fact that a company as large as Amazon is willing to sink that much money into Kiva’s robots could represent a serious shift in how robots are used in commerce worldwide. Before, robots were mostly stationery things that worked in the automotive and electronics industries.

Think of the simple, immobile robots that spray and assemble parts, like the ones Foxconn announced it would be manufacturing in its “robot kingdom” back in November after its factory workers started committing suicide. That, of course, gets us to the other big issue: What does this mean for workers? If you don’t remember, Foxconn chairman Terry Gou announced that the company was building an industrial park in the Taiwanese city of Taichung, where it hopes to produce 1 million robots in three years to replace around 500,000 jobs.

Amazon certainly didn’t have workers jumping to their deaths from ledges, but it did get a lot of bad PR last fall when employees complained about extremely high temperatures and mandatory overtime while working in the company’s warehouses. Typically the rule is that if a robot costs more than two years salary, it’s more cost effective to just hire a human worker. But for highly profitable companies who want to avoid bad publicity and lawsuits, the best long-term solution could be to just eat the high installation costs and hope it pays off over time.

Now companies like Kiva are taking the debate beyond just electronics and auto companies; if some other company comes along and offers similar systems for less, who is to say smaller distributors won’t start using robots too. This deal could be just as beneficial for mobile robots in general as it is for Amazon’s bottom line.

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3 comments
johnbond1616
johnbond1616

I'm a little bit weary about robots in the workspace. Not just because I don't trust technology but because it is also bad for jobs. It's also hard to work with robots if you don't know how to program them.

John Bond | http://www.officeworksllc.com/archives/825

alexmak
alexmak

@Alfishe судя по тому, что говорит их CFO — нет, дело не в этой сделке.

Alfishe
Alfishe

@alexmak о, нашел - аналисты гундят что это инвестиции в LivingSocial http://t.co/mfdjgOEI