(Bloomberg) -- Japan's obsession with robots isn't just a cliche. Companies have been trying to drum up enthusiasm for them for years, with little success.
Pepper, a humanoid machine carrying the hopes of SoftBank Group Corp.'s billionaire founder Masayoshi Son, was supposed to change that. Promoted as the first robot to be endowed with emotions, the company marketed Pepper aggressively after it was unveiled in 2014, promising the gadget was sophisticated enough for tasks usually handled by shop clerks, receptionists and translators.
"It's not there to have a conversation," said Junichi Nishi, a municipal government official in Fujieda, a city of about 140,000 in central Japan. "We use it primarily as a tablet," he said, referring to the touch screen attached to the robot's chest.
Now, it looks like Pepper is destined to join Honda Motor Co.'s soccer-playing ASIMO and Sony Corp.'s QRIO humanoids as the latest cool-but-impractical robot to come out of Japan.
Conversations with those involved in the machine's development suggest that all the elements for success were in place, only to crumble due to bad decision making and missed opportunities.
Sebastien Cagnon is an engineer who worked on Pepper and came to SoftBank through its 2012 acquisition of French company Aldebaran Robotics SA. That year, he went to an Apple Store with his colleagues and was told that the robot had to be able to offer customer service that was as good as those by the store's workers.
"Seeing all those Apple employees fuss over the few customers in the store made me realize just how far we had to go," said Cagnon, who quit SoftBank in March to start his own robotics consulting business.
Aldebaran and SoftBank's cultures didn't mesh well. Engineers in Japan fumed when their French counterparts disappeared for weeks on vacation. Aldebaran employees, accustomed to a flat structure, suddenly found many of their decisions second-guessed by an army of managers in Tokyo.
The Japanese parent created SoftBank Robotics Corp. to oversee the business and sell Pepper. It named Fumihide Tomozawa, a business manager who doesn't speak English or French, to oversee development. Son put Takashi Tsutsui, a close ally and a veteran network engineer, in charge of technology.
"The company was basically run by project managers with no understanding of robotics or artificial intelligence," said Andrew Gambardella, who spent one year doing AI research at the company. "There was an utter lack of vision and direction. They just put me in a room and said 'do AI.'"
SoftBank acknowledges that bringing Aldebaran into the fold had its challenges, but says much of the conflict was to be expected when transforming a prototype into a commercial product. The company has also made countless improvements to hardware and software based on the data it collected since launch.
"When it comes to human-robot interactions, the number of permutations is infinite, an aspect we might have underestimated at first," said Kazutaka Hasumi, senior director at SoftBank's robot division. "We are still at a stage of collecting behavior patterns, a step before you can start to apply deep-learning techniques." SoftBank outsourced many key functions—speech, vision and analysis of emotion from voice—further sidelining Aldebaran staff. By the time Pepper shipped in June 2015, Aldebaran founder Bruno Maisonnier had left, taking along several deputies who helped to build the robot. Pepper's main selling point—the emotion engine—became a stumbling block. The software is based in part on ideas by Shunji Mitsuyoshi, an eccentric sculptor with a Ph.D. in engineering. His algorithms translated Pepper's external stimuli into inputs, simulating emotional responses, but French engineers found the software unusable. They gave up trying to convince SoftBank to drop his company, AGI Inc., as a supplier because of Son's close relationship with Mitsuyoshi, two people familiar with the matter said, asking not to be identified discussing private details.
Instead of using machine learning and artificial intelligence, SoftBank's engineers had to laboriously code combinations of sensor inputs and their corresponding emotional outcomes. As a result, Pepper has a tendency to jump from contentment to fear and happiness in a matter of seconds, because it only understands specific cues rather than moods.
The emotion engine was so far behind in development that Peppers sold to businesses since October 2015 shipped with the ability to possess feelings turned off, the people said. SoftBank is now preparing to launch the robot in China and the U.S.
"I'm not sure that being able to read emotions can add to service," said Morten Paulsen, who covers industrial automation giant Fanuc Corp. as head of Japan research at CLSA Asia Pacific Markets. "There are several Peppers in my office building, but I don't see anyone gathering around them anymore. They are basically animated iPads."
Still, they managed to build an impressive piece of machinery. Featuring more than 20 motors and highly articulated arms, Pepper is capable of expressing human-like body language. Multiple cameras, microphones and depth sensors let Pepper make eye contact and respond to touch. It even simulates breathing when it is in standby mode, imitating sleep.
Thanks to SoftBank’s willingness to take a loss on each unit sold, the robot is priced at an affordable $1,800. Prospective buyers in Japan can try it out at the company's nationwide network of mobile phone stores. Foxconn, a Taiwanese manufacturer that builds iPhones, PlayStations and GoPros, was contracted to make the hardware in its factories.
"The Pepper project is incredibly ambitious when you look at what robots can and cannot do, because human interaction is still very difficult," Paulsen said.
A resort hotel in northern Japan bought three units, expecting Pepper to greet guests and introduce the facilities. Instead, the robots were relegated to tablet stands for entertaining kids. An amusement arcade has also found the robot lacking and isn't planning to renew its contract.
Son, who is known for his willingness to make big bets and brush them off when they don't succeed, already seems to have turned his attention to new, bigger endeavors. The billionaire founder of SoftBank gambled $32 billion with the acquisition of chip designer ARM in September. Just this month, he announced a $100 billion fund with the Saudi government that will invest in tech companies.
Whether the Pepper project survives will depend on Son, who has said his dream of an emotional robot dates back to early childhood. There are signs that he isn’t ready to give up. At an internal meeting for SoftBank executives late last year, Son took to the whiteboard, sketching out what looked like a Roomba vacuum bot with bear ears and a tablet, e-mails obtained by Bloomberg showed. Nicknamed Cooman, Pepper's potential successor is also slated to have feelings of its own.
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