The Economy Will Be Roboticized: Amazon Buys Kiva

Amazon has agreed to buy warehouse robot maker Kiva systems for $775 million (which is a lot of money).

As a research note from Barron’s states,

Kiva uses a series of computer-controlled robots to bring product to warehouse pickers rather than employees running the floor to find the same products. The systems appear to greatly reduce labor while concurrently improving order accuracy. Kiva also has a good base of existing users including Staples (SPLS), Gap (GPS) andWalgreen (WAG), potentially providing an alternative revenue source to Amazon in some form…

Unlike traditional pallet and shelving systems where employees seek products to fulfill orders, the Kiva systems use a series of movable-shelving systems that port products to the pickers. Because the process is automated, the shelf systems can be stacked side by side rather than necessitating room for continuous access. As a result, floor space can be used more efficiently. In other words, shelves do not need to remain accessible at all times since the robots can move them on an as needed basis.

I find it hard to believe that Amazon is buying Kiva only for its own fulfillment centers. It seems much more likely that with the purchase Amazon is getting deeper into the logistics business by offering warehouse automation gear.

It feels to me like we’re quickly heading into a business world in which Amazon is (in part) a logistics company, Google offers transportation automation services, Apple gets even deeper into entertainment, and so on. In short, it feels like the high tech giants are coming after the rest of the economy. As Marc Andreesen wrote a little while back in the Journal, “My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.”

We consumers should be thrilled by this. But should the rest of the economy be scared? I think so – do you? Leave a comment, please, and let us know.