Mad Hedge Technology Alerts!
I know tech stocks are down on their luck these days as external forces suppress the appreciation of their stock prices.
However, we need to look to the future to better understand what is next after software-as-a-service (SaaS).
Technology never keeps still and evolves.
Even giant busts like what the metaverse appears to be means that countless numbers of dollars and man-hours are invested into these projects for little profit.
I do believe the next iteration and extension of technology services will be accretive to the tech ecosystem and help boost stock shares and that piece of technology will come in the form of Robotics-as-a-Service (RaaS).
The RaaS market size is expected to grow by US$1.23 billion from 2021 to 2026 at 18.12%.
Like a number of other shared services, RaaS is becoming increasingly popular due to its convenience and flexibility, as well as being cost-effective and easy to implement.
Remember that human workers get sick, like to take days off, shout to the rafters about promotions, better pay, and more benefits.
Robots don’t do that.
RaaS also allows a company to have the benefits of robotic process automation by leasing robotic devices and accessing a cloud-based subscription service.
You will own nothing and be happy.
By not having to purchase the equipment outright, organizations can avoid the downsides of ownership and maintain their bottom line.
Cloud computing solutions are already in place for many organizations, so the foundation for RaaS has been perfectly set for the model’s increased use.
As adopting smart robotic technologies requires companies to part with a significant chunk of their financial resources, a RaaS solution also means companies have no need to invest in costly infrastructure.
Remote services and IoT are major growth, but lack of awareness and acceptance pose challenges
A major driver of the market is going to be the increased remote services provided by vendors in the market.
Companies are moving away from the physical approach of providing break-and-fix services to incorporate services that are predictive and proactive by combining the remote service platform with the Internet of Things.
The reason why uptake won’t be higher is because in some settings that require a personal touch like healthcare, companies will be hesitant to adopt robots because customers could feel alienated.
We are still in the early innings.
As the tech ecosystem advances, the integration of robots into this industry is inevitable.
Yes, they will be relied on to perform mundane tasks at first like Amazon’s warehouse robots who move around large amounts of packages.
We need to start somewhere.
In the future, robots will increasingly start to reach further up the value-added chain to offer some quite impressive set of skills to contribute to the labor force.
Rome wasn’t built in one day.
Some stocks to be on the lookout in the RaaS space are:
Rockwell Automation (ROK) is a leader in industrial-grade technology. Its systems, components, and software help manufacturers develop smarter and more efficient machines.
Zebra Technologies (ZBRA) is a longtime player in the automation space. The firm develops mobile computing devices to help employees of a company work more efficiently.
Teradyne (TER) is a developer of industrial equipment that helps automate repetitive tasks.
Intuitive Surgical (ISRG) is a pioneer of robotic-assisted surgery. Its da Vinci system made its commercial debut in 2000 and has since expanded across the globe.
Lastly, a second derivative play powering these robots will be Nvidia (NVDA) chips.
Mad Hedge Technology Letter
November 18, 2022
Fiat Lux
Featured Trade:
(THE LUCK OF SILICON VALLEY)
(TWITTER)
Elon Musk sends people to outer space; I’m confident he can figure out how to run a simple app run by juveniles.
Let’s talk about the most controversial tech company out there right now, Twitter, and a tech firm that sets the tone for the rest of the industry.
Twitter has undergone an extreme makeover lately.
Not the product, but the staff.
Musk started off by firing half the staff, which later turned into an ultimatum for the rest to either get on board with the new Twitter or accept 3 months’ severance pay out the exit door.
Many left.
Cutting staff was rejuvenating, maybe not for the employees who were let go, but for a dire need of a mentality change.
Twitter became too corporate and too political inside its office.
Most of the former Twitter staff was utterly useless.
The 10% leftover is really what is essential and like Musk said, he was able to hang on to the “best people.”
Next, he should cut the office space to increase efficiencies or at the very minimum renegotiate the office lease to downsize the square footage by 90%. San Francisco city center is a ghost town now – a relic of its former self.
Twitter’s big layoff will also act as a feeder strategy for the rest of Silicon Valley to push staff into a leaner and more efficient model.
In a way, Musk is saving the technology sector by offering the blueprint of how to manage a software company.
Silicon Valley needs to fire 90% of staff immediately, maybe even 95%.
Elon Musk noted that Twitter was paying an average of $400 per lunch at the Twitter headquarters in San Francisco.
I know San Francisco is expensive and almost unlivable, but this was the type of extreme activity that was allowed to happen under the past management whose main job was to wait for their monthly paycheck.
It’s no wonder that shareholders were getting screwed.
Although it’s quite fashionable to jump on the Musk hate wagon lately to say how Twitter will go down in flames, I don’t think it’s justified and it appears to be more about sour grapes because many don’t like Musk’s politics.
Ruthlessly cutting costs is a great tactic for tech executives. Costs are way too high, which is why Facebook let go of 11,000 workers last week.
Amazon just announced 10,000 firings too, and I think they could handle 50,000 firings easily.
Luckily, positions like Chief Diversity Officer, Chief Ethics Officer, and the managers of middle managers need no replacements at all.
Musk noted that Twitter is losing $4 million per day and these measures will go a long way to fixing that.
He’s smart enough to find solutions and I wouldn’t bet against him. I can already visualize him picking apart the best slices of Twitter and supercharging them.
Twitter is a premium asset with unlimited scarcity value. We are just scratching the surface with it.
Where is the end game?
I wouldn’t be surprised if Twitter went public in 5-7 years with a valuation of $150 billion after Musk unlocks the embedded value that is literally everywhere on Twitter.
I would say $150 billion is lowballing him and this company will be worth between $180 billion- $220 billion in the next 7-10 years.
Many people still don’t understand Twitter very well and it’s become even more important than the mainstream media.
