Have Robot, Will Program : Little Odetics in Search of Market for 6-Legged Odex

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.

“I can justify playing with a machine worth millions by saying that it’s a good way to find the 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 pretty much do whatever he wants at Odetics Inc., the Anaheim high-tech manufacturing company located in the shadow of Disneyland’s Matterhorn mountain.

It was Bartholet’s patented designs for the “functionoid’s” six legs that helped turn Odetics into a world-renown leader in the emerging billion-dollar market for sophisticated, reprogrammable robots.

But, now, the challenge for Odetics is to turn its advanced know-how into a smoothly running money machine. That hurdle may prove far more difficult to clear than anything the small company has faced in its 18-year history.

To succeed, Odetics, which has traditionally prided itself for valuing scientific prowess over marketing savvy, must find practical uses for its technology before the giants of the high-technology industry, such as the well-financed aerospace companies, beat them to it.

Unfortunately for Odetics, however, robotic applications are still widely misunderstood outside the tight fraternity of scientific specialists and science fiction enthusiasts.

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

The possibilities are many.

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 electronically programmed to perform individual sequential acts that add up to a single, but more complicated, task.

Components of Task

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

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, an engineering trade association, Odex was the first robot to carry its own on-board computer system, meaning it could be programmed to execute its tasks without additional instructions from human operators.

Odex was also the first walking robot to operate 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 whose turf is limited to flat surfaces.

Finally, Odex was the first robot to lift five times its own weight, a feature that allows it to 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?

Behind in Applications

The answers are divided.

Detractors call the machines a technological solution in search of a problem. And even staunch defenders admit that the applications are still 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 are slowly 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 contracts allow Odetics to combine its basic Odex robotic package with specialized “work packages,” as they are called, to create robots capable of performing specific tasks.

The company shipped the first of these working robots last year to the U.S. Department of Energy’s Savannah River Laboratory nuclear power plant in South Carolina. “Robin,” as this version was nicknamed--that’s short for Robot Insect--was assigned radioactive cleanup 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,” Nyman says. “But the applications are finally catching up with the technology.”

‘Fun to Work For’

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

“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 being 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 they 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 is finally taking a back seat to profits, which have plunged with the company’s entry into robotics. Last year profits fell to $33,053 from $475,961 the prior year, while revenues increased to $33.1 million, from $31.5 million.

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

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

Now after spending nearly $15 million of its own money 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.

Secrecy of Contracts

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 interim cash while the company waits for the major defense, space and power products to go into full production.

The first product, unveiled last year, is a robotic jukebox that allows TV 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; analysts estimate that another 20 units will be sold in the fiscal year ending March 31.

A second commercial robotic product is due to be announced shortly. While the company is typically mum, analysts have speculated that it will be aimed at the food-processing industry.

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

Odetics’ space recorders, which sell for up to $3 million, are said to own almost the entire market for such products. An Odetics recorder was on board the Challenger Space Shuttle when it exploded in early 1986 and captured the flight data and final words of the astronauts. Since 1970, the company has sold about 300 recorders, with sales averaging about $15 million per year since 1982.

Closed-Circuit Camera

The company’s second product, a closed-circuit video camera for in-store security systems, has been holding its own against stiff competition from Japanese manufacturers. Analysts estimate that the company leads the industry with 45% to 50% of the market, which enjoys sales of about $30 million per year.

The markets Odetics wants to pursue with its robotic technology are similarly narrow and not conducive to high-production volumes. And although some optimists speculate that the combination of the markets could turn Odetics into a wildly successful $1-billion-a-year company, most Wall Street analysts cynically wonder whether the pursuit is worth the effort.

“You can dominate these niches, but it may not make any difference in the grand scheme of things,” notes one analyst.

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

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

“Intelligent machines are the focal point and the strategic thrust of the company now,” says Joel Slutzky, founder and chairman. “We feel we’re at the start of an industry. Robotics is no longer a fad product.”

Slutzky estimates that within five years, about two-thirds of the company’s revenues will be generated by its robotic products, compared with less than 10% in the fiscal year ended March 31 and about 20% in the current year.

Furthermore, he believes that the company should be able to increase its rather meager profit margins of recent years now that the research and development phase is giving way to production.

Sees No Limits

“The feeling now is that we’ve paid our dues and we will start realizing a return on our investment in the future,” he says. “There are really no limits on how big we can grow. 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 on the mill and 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 now 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 collided. A consulting team hired to find the company a new line of high-tech business identified robotics as the hot new field.

Within months, Bartholet’s robotic leg, which has since been awarded four patents, was dusted off. Eighteen months later, the first Odex, now in a Smithsonian Institution museum, was unveiled.

While others talk market share, financial statements and commercial potential, Bartholet views his functionoid in terms of pure mechanical potential with quasi-human attributes.

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

“I’ve thought about robots since I was a kid,” said Bartholet, who was given the nation’s most prestigious robotics award last month. “The way I look at it, Odetics is paying me to build my toys.”

ODETICS AT A GLANCE Founded: 1969 Headquarters: Anaheim Employees: 440 Principal Products: Space-borne data recorders; video camera security systems; intelligent robots.

Year Sales Earnings in thousands 1986 $ 33,100 $ 33 1985 31,500 476 1984 26,700 278 1983 26,600 208 1982 24,200 1,009