SoftBank Claims Pepper The Robot Still Alive Despite Sales Dive

• Reports say production at Foxconn factory in China has already ceased

• Humanoid was designed for SoftBank by French robotics start-up Aldebaran

When SoftBank Group CEO Masayoshi Son unveiled the wide-eyed android Pepper in 2014, he painted a vision, once confined 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 of demand for Pepper, proved overly optimistic. Seven years later, Pepper is clinging to life, with production shuttered and units cobbled together with out-of-date components.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, Reuters reported. Sales of refurbished units will continue after this point, management told staff.

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However, the company has disputed that report and Kazutaka Hasumi, chief marketing officer of SoftBank Robotics, said the company is committed to ensuring Pepper survives in some form, perhaps 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 start-up it acquired in 2012. Son hoped Pepper would transform robots from a factory tool into an everyday companion, just as computers had moved from offices into homes and pockets.

But Pepper’s appeal was limited by its basic functionality – it can make rudimentary conversation, engage in simple interactions through its chest-mounted tablet and sing while gesturing. It would frequently break down, though.

POOR RELATIONS

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

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

But poor relations between Tokyo and Paris hurt Pepper’s development, sources claimed.

SoftBank propped up Pepper’s sales in the early days deploying units in its mobile phone stores and it’s claimed 27,000 units were eventually produced.

UNSOLD UNITS

Now, sales of Pepper have slumped to less than 100 units in some months, according to documents reviewed by Reuters.

Production at a Foxconn factory in China was stopped last year as the number of unsold units mounted and the line has since been shut down.

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

Son, a self-described “big talker”, has a track record of achieving the unlikely, breaking up Japan’s telecoms duopoly and securing $60 billion in Middle Eastern oil money for his Vision Fund.

ANDROID INEXPERIENCE

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

Two years ago SoftBank made a major attempt to reboot its robotics business with the launch of Whiz, an automated vacuum cleaner.

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

Demand for Whiz has been boosted by the pandemic, though, with orders for 8,000 units in the April-June quarter, said Kenichi Yoshida, chief business officer at SoftBank Robotics.

GLOBAL RESTRUCTURING

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

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

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

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

NICHE MARKET

The conglomerate has been shifting to pure investing through its Vision Fund and has sold down majority stakes in firms like Boston Dynamics. It continues to take smaller stakes in robotics related businesses.

SoftBank has struck sales deals with partners such as Iris Ohyama in Japan and RobotLAB in the US. There is a niche market for selling Pepper to corporate clients and in education, Elad Inbar, CEO of RobotLAB, said in an interview.

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