Shift From Research to Practical Applications : Odetics Gears Up to Put Its Robots to Work, Turning Out Big Profits

To relax at the end of a long day or just to escape the routine of the mad scientist, Stephen Bartholet sneaks away to the warehouse where his true love is kept. There, he fires up her seven on-board computers and, with a mixture of awe and delight, watches her strut her stuff on six legs.

There are few times when the worlds of advanced science and pure entertainment fuse so completely, and Bartholet, a mechanical engineer by training and an admitted kid at heart, clearly relishes such moments with his sophisticated robot.

“I can justify playing with a machine worth millions by saying that it’s a good way to find (its) bugs,” says the balding, 44-year-old bachelor. “But, the fact is that I just like to do it.”

No matter. These days, the “Father of the Functionoid,” as Bartholet has been nicknamed, can do almost whatever he wants at Odetics Inc., the Anaheim high-technology manufacturer located in the shadow of Disneyland’s Matterhorn mountain.

Bartholet’s patented designs for the “functionoid’s” six legs helped turn Odetics into a world-renowned leader in what could become a $1-billion market for what are known as programmable robots.

Needs Practical Uses

But Odetics, still a small firm after 18 years in business, isn’t yet a commercial success. The company’s challenge is to convert its advanced know-how into profits, a feat that might be more difficult than anything it ever has accomplished.

To prosper, Odetics, which traditionally has valued scientific prowess over marketing savvy, must find practical uses for its robotic technology before high-tech giants such as well-financed aerospace firms do.

Unfortunately for Odetics, robotic applications are still widely misunderstood outside a tight fraternity of enthusiasts.

“The potential is huge, but it’s a 1990s market,” says William Gibson, an analyst with Sutro & Co., a San Francisco securities firm. “People are still getting a handle on what it all means and what these machines can really do for them.”

Unlike their robotic predecessors, whose abilities are largely limited to single-action factory assembly and other repetitive and stationary chores, “advanced intelligent machines,” such as those built by Odetics, can be programmed electronically to perform a series of sequential acts that add up to a single, but more complicated, task.

Assignments for these programmable robots already include removing equipment from hazardous locations--a task consisting of entering the site, retrieving the material and getting out--and patrolling areas inaccessible or dangerous to humans.

Within the family of programmable robots, “Odex,” as Odetics’ 416-pound, six-legged machine was named, offered significant breakthroughs on several technological fronts when it was unveiled in 1983.

According to members of Robotics International, a engineering trade association, Odex was the first robot to carry its own on-board computer system, meaning it could be programmed in advance to execute its tasks without additional instructions from operators.

Odex also was the first walking robot to use a hand-like “manipulator,” an advancement that allows it to travel a distance to retrieve an object. Its six legs allow Odex to cross uneven terrain and climb stairs--a major improvement over wheel-based robots that work only on flat surfaces.

Finally, Odex was the first robot to lift five times its own weight; it can pick up objects weighing more than a ton.

Although Odex is credited with opening a vast new potential for robotic applications, the questions still persist: How much does the world need these machines? And just where does their admittedly exciting sci-fi entertainment value end and their practicality begin?

Detractors call the machines a technological solution in search of a problem. And even staunch defenders admit that the applications still are catching up with the abilities. “Technologically, Odex was way ahead of its time,” says Dave Nyman, vice president of Robotics International.

However, uses for the $1-million-plus machines slowly are emerging as Odetics begins to reap the rewards of nearly two dozen research and development contracts with customers in military, space, commercial and energy markets.

The company shipped the first of its working robots last year to the Energy Department’s Savannah River Laboratory nuclear power plant in South Carolina. “Robin,” as this version was nicknamed--it’s short for Robot Insect--was assigned radioactive clean-up chores.

Meanwhile, the company is testing other models for their ability to fight fires on board Navy ships, to help load battlefield ammunition and to help build NASA’s $8-billion orbiting space station.

“We’re still a long way from an R2-D2 type machine that can act as a servant and friend,” says Nyman. “But the applications are finally catching up with the technology.”

Still, the company has yet to prove itself to the financial community. Annual profits have broken the $1-million threshold only once, in 1982, despite gradually growing revenue that is expected to hit about $38 million for the fiscal year that ended March 31.

‘Fun to Work For’

“They’re known as a company that’s fun to work for, but doesn’t care much about its profits,” says Sutro’s Gibson, who admits to having been put off on his first visit to the company four years ago by the discovery of a six-foot pet alligator in the executive suite.

Although company officials bristle at such statements, they still proudly offer tours of their employee fitness center, complete with lap pool, and actively advertise the company’s inclusion in “The 100 Best Companies to Work for in America.” Several dozen of the company’s 440 employees participate in the Odetics Repertory, a drama troupe that stages a play each year for friends and family.

But there are strong indications that fun finally is taking a back seat to profits, which had plunged with the company’s entry into robotics. Last year, profits fell to $33,053 from $475,961 the year before, while revenue increased to $33.1 million from $31.5 million. For its fiscal 1987 and the current year, however,the company expects much-improved operating results.

Even if Odex hasn’t set the world afire yet, it has turned its maker into a different company, and Odetics finally may shed its reputation as a free-wheeling laboratory for wild-eyed scientists.

Founded in 1969, the company initially was known for its video security cameras for stores and sophisticated data recorders for space vehicles.

Now, after spending nearly $15 million in the last five years to start its robotics operations, Odetics is actively pursuing development contracts from would-be robot buyers and new commercial applications for its robotic research.

Gibson estimates that the company has received 22 robot-related development contracts in the last two years for a total of nearly $10 million. Although most of the contracts are highly secretive, the company is known to be working with the Electrical Power Research Institute in Palo Alto on a power plant robotic janitor, with the Defense Nuclear Agency on robotic security guards and with General Motors on a three-dimensional laser imaging system.

Furthermore, Odetics is gradually developing new robotic products that can be sold commercially, generating cash while the company waits for the major defense, space and power products to go into full production.

The first such product, unveiled last year, is a sort of robotic jukebox that allows television stations to automate the airing of commercials. Using the $250,000 machine, one operator at a personal computer can program up to 93 hours of continuously playing shows and commercials. So far the company has sold about 10 machines, and analysts estimate that another 20 units will be sold this year.

The strategy Odetics is pursuing with its robotic products is the same one that always has guided the company: find small market niches and dominate them.

And although some optimists speculate that new markets could turn Odetics into a wildly successful, $1 billion-a-year company, most Wall Street analysts are skeptical.

“They’re not going to sell in volume, that’s for sure,” says Floyd Gelhouse, an engineer with the Electric Power Research Institute. “It’s not like coming up with a new toothpaste for the masses.”

Nevertheless, Odetics is counting on robotics to be its major line of business within the next five years.

“We feel we’re at the start of an industry,” says Joel Slutzky, founder and chairman. “Robotics is no longer a fad product.”

Slutzky estimates that within five years, about two-thirds of the company’s revenue will be generated by its robotic products, compared to about 20% now. Furthermore, he believes the company will increase its rather meager profit margins of recent years now that the research and development phase is giving way to production.

“There are really no limits on how big we can grow,” Slutzky says, “Just look at the market. You can’t get your arms around it.”

Slutzky didn’t always feel that way.

When he was first approached about pursuing the technology in the late 1970s by Bartholet, who had developed a prototype of a robotic leg, with the lathe he keeps in his dining room, Slutzky passed on developing it.

“We kept saying, ‘Where’s the market? What product are we going to build?”’ Slutzky recalls. However, to keep Bartholet happy and his interest alive, the company gave him about $5,000 a year to spend on the hobby then code-named “ZORK.”

It wasn’t until 1982 that Bartholet’s project and Odetics’ future came together. A consulting team hired to find the company a new line of high-tech business cited robotics.

Within months, Bartholet’s robotic leg, which has since been awarded four patents, was dusted off. Eighteen months later, Odex, which now sits in the Smithsonian Museum of Space and Science, was unveiled.

While others talk of market share, financial statements and commercial potential, Bartholet focuses on what he regards as his functionoid’s considerable mechanical potential and quasi-human attributes.

To Bartholet, Odex is a “she,” and he says he hears a kind of speech in the whirring noises of her her computers.

“I’ve thought about robots since I was a kid,” says Bartholet. “The way I look at it, Odetics is paying me to build my toys.”