- Amazon has put its plans to buy IRobot on hold, which could be a devastating blow for the company.
- In the past decade, companies of the same nature as IRobot have struggled, including companies in China and South Korea.
- Now IRobot’s plans include cutting a third of its workforce and outsourcing non-core engineering functions to reduce costs, perhaps as a stopgap.
Robots’ management may have thought they had found an easy and lucrative way out by striking a deal with Amazon. When a company has a 46% market share but still faces tens of millions of dollars in losses, it is likely that the main problem is the management of the bank, not just market competition or regulatory challenges.
Robots’ management may have thought they had found an easy and lucrative way out by striking a deal with Amazon. When a company has a 46% market share but still faces tens of millions of dollars in losses, it is likely that the main problem is the management of the bank, not just market competition or regulatory challenges.
While Chinese companies went full steam ahead, they just sat on the lead for a long time and did nothing.I think the biggest failures are Braava and automatic dumpster emptying, which should have integrated functionality into the roomba a long time ago, rather than making us pay for a one-trick virtual pet.
A sudden suspension of plans
Amazon’s proposed deal for iRobot fell through because of regulatory issues. That may be a win for privacy advocates, but it could be big bad news for the Roomba robotic vacuum cleaners we know.
The European Commission deemed the deal anti-competitive, which is a cruel irony for iRobot because the deal has fallen through while iRobot’s competitors remain.
iRobot is a market leader struggling against a huge wave of competition. It relies on an infusion of cash from Amazon and the resources it needs to survive in today’s hyper-competitive robotic vacuum market.
Since 2014, iRobot’s dominant market share has been steadily declining. According to Statista, this proportion has dropped from 64% in 2016 to 46% in 2020. This is a grim reality.
Also read: Amazon abandons $1.4 billion deal to buy Roomba maker iRobot
Competitors are also improving
Over the past decade, Chinese companies like Ecovacs, Roborock and dream Technology have flooded the global market with cheaper prices. Samsung and Us-Based SharkNinja are also getting in on the action, not to mention the dozens of unknown brands on Amazon that sell their robots for less than $200 – a fraction of the price of flagships such as Roborock($1,600) and Roomba($1,400). In terms of price, iRobot is clearly not dominant.
The market is tough, and Neato Robotics shut down last year. Now, iRobot Corp. is reporting a net loss for 2022 and may need a deal like Amazon’s to survive. Meanwhile, Roborock, Ecovacs, and dream Technology have been innovating all-in-one solutions, such as one that mops, vacuums, empties trash cans, refills mops, drains dirty water, cleans and blow-dry mop pads, and even connects to your home’s plumbing. So you hardly need to lift a finger robot vacuum cleaner. A year later, iRobot introduced the Combo j9 Plus, which had the ability to auto-fill the mop but lacked many of the features touted by competitors. Now, with the company’s founders out and cash running short, investors are stepping in.
A dilemma
iRobot expects an operating loss of up to $285 million in 2023. Last year, it had to borrow $200 million before the Amazon deal closed, and Amazon only apologized for pulling out of the deal for $94 million, so it had to find the rest of the money elsewhere or risk a partial sale.The desperate plan included cutting a third of the workforce, closing offices and reducing research and development costs by $20m a year by outsourcing non-core engineering functions. The company will also drop its line of air purifiers (the company acquired Aeris in 2021) and its Terra robotic lawn mower (which was never launched in the U.S.), which will once again give it a head start on the competition.
Both Ecovacs and dream will ship robotic lawn mowers to the U.S. for the first time this year, and Ecovacs’s robotic air purifiers will be coming to the U.S. market soon. Without substantial research and development, innovative new products, and (relatively) excellent software, Roomba could quickly become a loser as Chinese companies enter and gain more market share. The robotic vacuum cleaners produced by these companies are of good quality and are quick to innovate, but they have their own problems, including a lack of user repairability and some privacy concerns.
Mr. Angle said this week that he believes “iRobot has an exciting future.” With basic robotic vacuum cleaners rapidly becoming a commodity, the next big development in home robotics is a leap I’m really excited about.Although iRobot is at the top of my list of companies, I wish I could be as optimistic about its future.
