NEW YORK (The Street) -- The market for robotics just expanded dramatically. 

Massachusetts-based Teradyne's  (TER - Get Reportacquisition last week of Danish company Universal Robots underscores the growing market for collaborative robots -- an inexpensive, semi-sentient robot that works alongside humans in factory settings. 

"The acquisition was a surprise and portends more M&A activity in the space," says Travis Briggs, chief executive officer at Robo-Stox, a global robotics and automation index. "It adds a new growth area for Teradyne and provides selling opportunity to existing customer base."

Collaborative robots have applications in a variety of settings, including manufacturing at small businesses and large organizations alike.

At a recent industry conference, Rethink Robotics co-founder Rodney Brooks, who co-founded iRobot (IRBT), talked about the market for collaborative robots in performing simple tasks and caring for seniors at care facilities.

The operational flexibility of collaborative robots (they can be programmed to work up or down the assembly line or to perform other retail-related tasks) makes numbers regarding their market size "speculative," said Ulrik Jorring, Senior Vice President at the Danish Growth Fund, the main investor in Universal Robots.

They have, however, made the potential market for robots bigger.

Despite their obvious economic benefits, robots have had limited traction in non-automotive industries.

A recent study by the International Federation of Robotics (IFR) estimated that there were only 200 robots per 10,000 workers in non-automotive industries. That's because of the robots are large, expensive, and present work-safety concerns.

To get an idea of how expensive industrial robots are, look at the advanced robotics spot welder, whose average cost was $133,000 in 2014. Although that figure is expected to drop by 25% in 2025, the cost of a robot still wouldn't be affordable for most small- and medium-sized enterprises.

With enhanced safety, reduced power consumption, and operational flexibility, collaborative robots offer a number of advantages over conventional robots.

In particular, Frank Tobe, author of The Robot Report, says they also solve an apprenticeship and talent problem in small businesses staffed by ageing workforces, "particularly if you empower the worker with 'his' robot to produce 'his' products."

Small businesses have a mostly ageing workforce that is unfamiliar with robots. As a result, they aren't able to compete on an even keel with large organizations.

Since collaborative robots are easy to program and manipulate, the robots serve as apprentices for such workers, bringing efficiency and increasing productivity for small businesses.

At average prices between $20,000 to $25,000, collaborative robots are relatively cheap. The average payback period for the company's robots is 195 days, says Universal Robots spokesperson Mette McCall.

Universal Robotics isn't the only startup manufacturing collaborative robots.

Rethink Robotics has already received funding in excess of $100 million from marquee investors, such as Amazon (AMZN) founder Jeff Bezos and Goldman Sachs (GS).

Rethink's robots - Baxter and Sawyer - feature a user-friendly interface and programming capability that enables even novice workers to be up and running with the robot in a short time. The company counts small businesses as well as large organizations as its customers.

A number of established players have also jumped into the fray.

Industrial robotics company ABB designed Yumi -- short for You and Me -- for the April consumer electronics industry fair in Germany.

According to Robo-Stox's Briggs,  Zurich-based ABB's acquisition of gomTec, another co-bot startup, shows that it wants to redefine the collaborative robots market to include bigger factories as well.

Car manufacturers BMW and Volkswagen have also deployed Universal Robots in select plants.

For companies, significant investments in robots translate into greater efficiencies and better bottom lines.

"(This means) improved earnings for those companies that can successfully execute the implementation," says Briggs. "The result for investors is bigger profits with those forward-looking, first-mover companies."

To be sure, the Universal Robots acquisition is only the latest in an industry-wide cycle that has been going on for the last two years.

Google (GOOG) has snapped up eight robotics-related companies. Similarly, Facebook (FB) acquired a startup for its plans to connect the world with drones, and Amazon wants to deliver goods using the devices as well.

"All segments have companies that need to shore up their position in the field by acquiring the latest technology and talent (similar to what Google has done)." he says. "We could see larger players behind the curve attempt to catch up and new entrants expand their business model via acquisition."