A “definitive merger deal” between Amazon and iRobot was revealed, whereby Amazon will pay iRobot $1.7 billion. To put it mildly, the news came as a surprise, and we’ve barely had time to digest it. But examining what is currently known can still provide early (though imperfect) explanations for why Amazon and iRobot wish to collaborate, as well as if the merger makes sense.
The press post doesn’t go into much depth, like most press releases regarding acquisitions of this kind do. But first, some quotes
Dave Limp, SVP of Amazon Devices, stated that “we understand that saving time important, and chores require precious time that may be better spent doing something which customers love.” The iRobot team has demonstrated over many years its capacity to redefine how people clean with devices that are incredibly useful and inventive, from cleaning when & where consumers want while avoiding frequent barriers in the home, to autonomously emptying the collecting bin. Customers adore iRobot products, and I’m eager to collaborate with the team to design things that will improve and ease their lives.”
According to Colin Angle, chairman & CEO of iRobot, “Since we launched iRobot, our team has been on a goal to build innovative, useful products that make consumers’ lives easier, resulting to inventions like the Roomba & iRobot OS.” I can’t think of a better environment for our team to carry out our purpose than Amazon, who share our vision for creating meaningful technologies that enable people to achieve more at home. I’m incredibly eager to join Amazon and to see what we can create for customers in the coming years.”
There isn’t much available information here, but iRobot has already pointed us to Amazon PR, which seems a little bit like a kick in the stomach. We adore (loved?) so many things about iRobot, including their unusual early history working on strange DARPA projects and even mysterious toys, everything they accomplished with the PackBot and most notably, the fact that they’ve built a successful business creating practical and reasonably priced robots for the home, which is just… It’s so challenging that we are not even sure where to begin. Furthermore, nobody knows what will ultimately happen to iRobot. Even though we are sure iRobot & Amazon have a tonne of ideas, promises, and other things in the works, We are now concerned about iRobot’s future.
What exactly is in it for iRobot? It is obvious why this is a smart move for Amazon.
It is rather clear why Amazon desired to acquire iRobot. Since many years ago, Amazon has been trying to become a part of homes, first with audio systems (Alexa), then with video (Ring), and more lately with some dubious house robots of its own, including its indoor surveillance drone and Astro. With its exceptionally qualified crew of extremely skilled engineers, iRobot can probably offer some advice in helping Amazon comprehend how to make household robots useful. And it goes without saying that iRobot is already well established in a large number of houses, with brand recognition similar to that of Velcro or Xerox, in that people have Roombas rather than “robot vacuums.”
For iRobot, all those Roombas in every one of those houses are also gathering an incredible amount of data. However, it would be stupid to suppose that Amazon does not see a lot of opportunity for learning much, much more about what happens in our living rooms. iRobot itself has been rather privacy-sensitive about this. It’s more troubling because Amazon has its own opinions on data privacy, and it’s unknown what this will signify for Roombas as they become more and more camera-dependent in the future.
We get why this is a smart move for Amazon, but We have to admit that we still not sure what iRobot will gain out of it, except from the obvious “$61 per share in an all-cash deal worth about $1.7 billion.” Which, to be honest, seems like a ton of money. The typical appeal for the robotics business in this kind of deal is that they unexpectedly have a tonne of money to spend on innovative new ideas along with a huge support structure to help them succeed (I’m thinking back to Google buying all those robotics companies in 2013).
It is true that iRobot has reportedly struggled to develop and expand, since its most anticipated brand-new consumer product (the Terra lawn mower) has been put on hold till 2020. This deal may have been made for various reasons, including the large cash reserve, the lack of growth concerns associated with being a publicly traded company, and the opportunity to work on new initiatives that are similar to those of Amazon.
But we concerned that iRobot will just get absorbed by Amazon and cease to exist in a significant and distinctive way. We are hoping that this historical trend will not apply to the partnership between Amazon & iRobot. Additionally, there is precedent for this; Boston Dynamics, for instance, has endured several acquisitions while retaining its technology and philosophies in a more-or-less independent and unchanged fashion. Colin Angle’s continued appointment as CEO is a fantastic place to start. It will be up to iRobot to act extremely actively to protect itself.
In the following weeks, we’ll be looking for more people to speak with to get a more in-depth and nuanced view on this. Give your Roomba a hug in the meanwhile; it’s been a great day for little spherical robot vacuums.
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Now retrieving the price.
