The Tesla Optimus Skills Store Will Mimic The Apple App Store
Much like your smartphone, Optimus robots will have access to an app/skills store – the Tesla Optimus Skills Store. This platform allows developers to create specialized apps/skills for various tasks,
Imagine a construction site where Tesla's humanoid robots, known as Optimus, are seamlessly tying rebar (an extremely laborious, repetitive, and often dangerous job) with precision and efficiency. This is not a scene from a sci-fi movie but a glimpse into our near future. These robots, along with those developed using Nvidia’s Isaac Robotics platform, are poised to transform physical labor tasks, leveraging advanced AI, machine learning, and an ecosystem of third-party applications.
There are many more skills, applications and services other than rebar tying that billions of people and millions of enterprises will need, and that means lots of third parties will have to help these robots become proficient at doing these manual labor tasks.
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Here’s how it all comes together and why it could mean big business for Tesla (we'll tackle Nvidia's Isaac Robotics platform and its model in an upcoming analysis later).
AI Training Through Video Feeds
The foundation of this revolution is in the training. Optimus robots learn through video feeds, analyzing hours of footage where humans perform tasks like tying rebar. For relatively simple tasks, Optimus may be trained in real-time by humans saying something like "Hey Optimus, watch me perform this task, then repeat after me."
But we think it will be impractical for humans to in essence manually train Optimus for every possible task. Especially for specialized tasks that may have many tiny variations, it will be more effective for Optimus to learn from watching hours of video footage of humans performing the task so that it can pick up on all of the little nuances that enable humans to perform their jobs well.
An example of this would be teaching Optimus robots to cut hair. While they could learn one haircut by watching a hairdresser work their magic, after doing so they would only know how to do that one haircut on that specific shape of head. What if instead, someone collected thousands of hours of video footage of barbers and hairdressers doing hundreds of different styles of haircuts on hundreds of different head shapes and hair types, and then used that data to train Optimus? This would enable any Optimus equipped with this "app" to handle almost any requested hairstyle with ease.
In order for this to work, Optimus will need to be trained on how to do things like tying rebar or cutting hair using thousands of hours of video data of humans performing the same task. This is similar to how Tesla cars are trained to drive themselves. However, collecting, processing, and preparing thousands of hours of video data, and then training an AI Model on expensive GPUs from NVIDIA, is extremely expensive.
Given all of the thousands of use cases for Optimus Robots, it will be impractical for one company (Tesla) to spend the time and money collecting all of this video data and training AI models for every single task. Therefore, we expect third parties will spend the time and money collecting this data and building these AI models, almost like how third-party app developers build 99% of the apps on Apple's App Store.
Third-Party Apps Integration
The true game-changer here is the integration of third-party apps (I imagine Tesla will call these Skills, not apps). Much like your smartphone, Optimus robots will have access to an app/skills store – the Tesla Optimus Skills Store.
This platform allows developers to create specialized apps/skills for various tasks, from construction to healthcare. Imagine an app specifically designed to make any Optimus robot proficient at the skill of tying rebar that includes the latest techniques and safety protocols. These apps can be regularly updated, ensuring the robots are always equipped with the most current skills, knowledge and best practices.
Tesla Optimus App Store Revenue Model
Here’s where the business potential explodes. Tesla could take a 30% cut from all fees and subscriptions sold through the Optimus App Store, similar to how Apple’s App Store operates. With millions of robots potentially deployed across various industries, the revenue from these apps could be substantial. Let’s do some quick math:
Initial Assumptions: If an Optimus robot app/skill costs $240 per year (that's just $20 a month and some third parties will change hundreds or even thousands of dollars per month for some of the most advanced skillsets), and there are 100 million Optimus robots in use within ten years, with each robot using at least five apps, that’s a $120 billion annual market.
Tesla’s Cut: At a 30% cut, Tesla would make $36 billion annually just from app store revenues – very high, nearly 100% gross margin revenues, that is.
Let's cut that by one-half to get a more conservative estimate or nearly $18 billion of gross profit for Tesla each year from its Skill Store in a few years. As the ecosystem grows and the variety of available apps/skillsets expands, this figure could be much higher. How many apps do you have on your phone right now?
I guarantee it's more than 5. I would expect many Optimus robots will have dozens, if not hundreds, of apps on them.
Performing Physical Labor with Precision
Optimus robots are designed to replicate human dexterity and strength, making them perfect for physical labor tasks. Trained with AI and video feeds, these robots can handle rebar, twist ties, and secure connections with speed and accuracy. Their sensors and real-time feedback systems ensure that every task is performed to exact specifications, reducing errors and increasing efficiency.
Continuous Learning and Adaptation
One of the standout features of these robots is their ability to learn continuously. They don’t just perform tasks; they adapt and improve over time. If a robot encounters a new type of rebar or a different tying technique, it captures this data, processes it, and updates its operational algorithms. This means that each robot becomes more proficient as it works, ensuring continuous improvement and adaptability for all Optimus robots using that app/skillset.
Economic and Operational Impact
The economic implications are profound. Businesses can expect increased productivity and reduced labor costs, as robots can operate (on shifts with some down time for charging) 24/7 without fatigue. Safety on construction sites will improve as robots take over the more dangerous tasks. The flexibility offered by third-party apps means that these robots can be easily retooled for different jobs, by simply downloading new apps/skillsets providing a scalability that human labor cannot match.
The Future of the Workforce
Integrating robots like Optimus into the workforce represents a monumental shift. These robots are not just tools but intelligent partners capable of performing complex tasks with a level of precision and efficiency previously unattainable. The Optimus App Store will be a critical component of this ecosystem, driving innovation and ensuring that robots can handle a wide range of tasks across different industries.
Conclusion
Tesla’s Optimus robots and the accompanying app store are set to Revolutionize the labor market. By leveraging AI, machine learning, and a robust ecosystem of third-party applications, these robots will perform tasks like tying rebar with unprecedented precision and efficiency. The revenue potential for Tesla, with a 30% cut from app sales and subscriptions, is enormous, potentially reaching billions annually within a decade. Obviously, Tesla also plans to make many billions of dollars selling the actual Optimus robots too.
But the app/skill store is going to be a kicker that few people have even thought through just yet.
This is a prime example of Revolution Investing:
staying ahead of transformative trends, mitigating risks, and capitalizing on new opportunities. The future is here, and it’s powered by intelligent, adaptable robots that are set to redefine the boundaries of what’s possible.
Obviously, the best way to play invest in the Optimus App Store today is to buy Tesla, but we'll also be on the lookout for what will be the equivalent of Uber, Spotify, Meta, etc. in the Optimus apps/skills store.