SoftBank’s robotic ambitions bypass as Pepper loses power

TOKYO, July 21 (Reuters) – When SoftBank Group Corp (9984.T) CEO Masayoshi Son unveiled the wide-eyed android Pepper in 2014, he painted a vision, once limited to science fiction, of a new era of personal robots in which his company would be the industry leader.

That vision, and the company’s expectations for Pepper’s claim, have proven to be overly optimistic, two sources familiar with the matter said. Seven years later, Pepper is hanging on to life, with closed production and units cobbled together with obsolete components.

SoftBank will end sales of new Pepper units in 2023 at the latest, as those parts become obsolete, according to the minutes of an internal meeting held in Paris in late May and reviewed by Reuters. Sales of refurbished units will continue after that point, management told staff.

The company disputed the minutes of the meeting and Kazutaka Hasumi, marketing director of SoftBank Robotics, told Reuters that the company is committed to ensuring that Pepper survives in one form or another, possibly with a new design.

“We will still be selling Pepper in five years,” Hasumi said.

The humanoid was custom designed for SoftBank by Aldebaran, a French robotics startup acquired in 2012. Son hoped Pepper would turn robots from a factory tool into an everyday companion, just as computers had gone. from offices to homes and pockets.

But Pepper’s appeal was limited by its basic functionality: he can do rudimentary conversations, engage in simple interactions via his chest-mounted tablet, and sing while gesturing. It often broke down, the two sources said.

“Pepper wasn’t upgraded to handle real tasks. There was very little Pepper could do that you couldn’t do with an iPad,” said Morten Paulsen, head of research at the iPad. Japan at CLSA.

Retailing for 198,000 yen ($ 1,800) plus a monthly fee of 14,800 yen, Pepper was out of reach for most households, and SoftBank was quickly forced to focus on businesses. Pepper was greeted with some early enthusiasm in this industry; stores and restaurants provided a more predictable environment where the robot could be programmed for tasks such as greeting customers.

But poor relations between Tokyo and Paris have hurt the development of Pepper, according to sources familiar with the matter, and two others. All sources spoke on condition of anonymity as they were not authorized to speak to the media.

SoftBank supported Pepper’s early sales by rolling out units to its mobile phone stores, two of the sources said. 27,000 units were eventually produced, said one of the two sources familiar with the matter.

Now Pepper’s sales have plummeted to less than 100 units in a matter of months, according to documents reviewed by Reuters.

Production at a Foxconn factory in China was halted last year as the number of unsold units increased and the line has since been shut down, according to the documents.

SoftBank has less than 2,000 Pepper units, according to the documents. The heavy batteries that power the robot are degrading and the chest-mounted tablets run on an outdated Android operating system without the latest security updates, one of the sources said.

ELECTRIC DREAMS

Son, a self-proclaimed “big talker”, has a habit of realizing the improbable, breaking Japan’s telecommunications duopoly and raising $ 60 billion in Middle East oil money for his Vision Fund.

The billionaire also has an eye for hits, bringing Apple’s first iPhone to the Japanese market. But when her company launched Pepper, it had little experience in designing and manufacturing products, let alone androids.

And the expected market never materialized. Although Pepper helped spread the SoftBank name around the world, some customers returned it at the end of rental periods.

Two years ago, SoftBank attempted to restart its robotics business with the launch of Whiz, an automated vacuum cleaner.

Sales staff struggled to persuade customers to pay $ 500 per month for a product that could only clean open spaces and would fail, two other sources said.

Whiz demand was boosted by the pandemic, with orders for 8,000 units in the April-June quarter, said Kenichi Yoshida, commercial director of SoftBank Robotics.

SoftBank has considered other robotic products, including one that makes ramen, the two sources said. It sells a food service robot, Servi, developed by California-based Bear Robotics, which can carry food to diners.

PURE INVESTMENT

SoftBank Robotics’ underperformance came to a head last year as the downturn forced Son to change strategy, selling assets to stabilize the group’s balance sheet and pushing portfolio companies to prioritize cash generation.

SoftBank Robotics has embarked on a global restructuring, reported by Reuters last month, which plans to cut half of its Paris-based workforce.

The business is close to profitability and listing is a possibility, Yoshida said.

The conglomerate switched to pure investing through its Vision Fund and sold majority stakes in companies like Boston Dynamics. He continues to take smaller stakes in robotics-related companies.

SoftBank has sales agreements with partners such as Iris Ohyama in Japan and RobotLAB in the United States. There is a niche market for selling Pepper to business and education, RobotLAB CEO Elad Inbar said in an interview.

“Our job in this ecosystem is to show that there is market demand,” he said.

($ 1 = 109.7900 yen)

Reporting by Sam Nussey. Editing by Gerry Doyle

Our Standards: Thomson Reuters Trust Principles.

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