one year and Half after announcing its intention to acquire iRobot, the Amazon deal is officially dead. All parties involved anticipated some level of regulatory scrutiny, but after a few decades of technology company consolidation, few expected so much friction. The agreement had already gone through select international regulatory bodies, including the United Kingdom. Ultimately, however, the European Union's recent clampdown on perceived anti-competitive mergers and acquisitions proved to be the final nail in the coffin. This morning's news also shows iRobot laying off 350 people, representing almost a third of its total workforce, as former CEO Colin Angle resigns.
“iRobot is an innovation pioneer with a clear vision of making consumer robots a reality,” Angle said in a statement. “The termination of the deal with Amazon is disappointing, but iRobot now looks to the future with a focus and commitment to continuing to build thoughtful robots and life-enhancing smart home innovations that our customers around the world love.”
The deal has already taken its toll on the company, including two rounds of layoffs. Last July, Amazon lowered its purchase price by 15%, from $1.7 billion to $1.4 billion. The news came as iRobot announced it was raising $200 million to continue operations after the initial deal was expected to close.
“iRobot is acquiring new financing that we believe is sufficient to support our operations in a hypercompetitive environment and meet our liquidity needs, as well as repay iRobot's existing debt,” Angle said at the time.
The phrase “hypercompetitive environment” is revealing. It effectively does two things. It explains the need for fresh cash, amid financial struggles that preceded the acquisition announcement. It also speaks to the broader regulatory scrutiny around the deal. When it was first announced, there were two key points of contention among critics.
The first and least discussed was privacy. Roombas have mapping capabilities and Amazon has often faced criticism for its decisions to offer Ring camera security footage to authorities. The idea of allowing the company into private residences in this way has been understandable and has given many advocates pause.
The second and most important sticking point is competition. Amazon has the largest retail billboard on the Internet. In theory, the company could have promoted Roombas in a way that excluded “hyper” competition.
Of course, there's no doubt that the environment is dramatically more competitive than the one iRobot entered 20 years ago. When iRobot finally found its place in the robot vacuum space after years of false starts (including dolls and lunar rovers, to name a few), the company finally hit upon what, to this day, remains the only home robot successful on a significant scale. . Angle likes to say that he finally found success as a roboticist after becoming a vacuum cleaner salesman. It's a nice line that gets to the heart of an industry that requires identifying needs in other fields that most roboticists are not well versed in.
After two decades, robot vacuum cleaners exist on their own island. This is certainly not because iRobot or the competition hasn't tried. It seems like every year another “companion” robot comes and goes. Nor can the problem be attributed to a lack of demand. Above all, it is a technological problem. There are currently many limitations to the functionality of hardware automation that is priced acceptable to consumers, and this is not likely to change anytime soon.
Image credits: Amazon
Look at Amazon's Astro robot. It's cute, compelling, and does some interesting things (the periscope security camera is a genuinely clever innovation that avoids the Roomba's limited point of view). But it wasn't exactly what set the world on fire. At this point, it's probably best to classify it as an interesting experiment. That's not to say Amazon is done with it or other home robots (it's not), but it currently feels like an evolutionary dead end. However, I would love to be proven wrong here.
Meanwhile, there are now dozens of robot vacuum cleaners. Some come from bigger names like Samsung and Dyson, while much cheaper models have flooded the market. Search “cheap robot vacuum” on Amazon and you'll find plenty of options for under $100. iRobot's focus, on the other hand, has been to push the latest in technology, resulting in robots that are around 10 times that amount when things like the self-cleaning bin are taken into account.
iRobot has certainly felt the impact of the category it created. Remember Looj gutter cleaner or Verro pool cleaner? Over the years, the company has sought to apply Roomba's successes to different parts of the home with a mixed track record of success. Meanwhile, Terra, which mows lawns, has been hit hard by Covid and supply chain constraints. It was frozen indefinitely almost four years ago, and this morning's news doesn't bode well for the project's future.
That decision, of course, will ultimately fall to the person who takes over as the second CEO in iRobot's 34-year history. Currently, Executive Vice President Glen Weinstein will assume the interim role.
Layoffs should always be regretted because of the toll they take on people, who are too often arbitrarily singled out. This absolutely applies to the multiple rounds iRobot has gone through in recent years. Since its founding in 1990, the company has been a pillar of the Greater Boston area's thriving robotics ecosystem. A year or two after I started, TechCrunch hosted a private dinner for Boston robotics luminaries, and it seemed like almost every guest had been involved with iRobot in one way or another over the years.
Boston robotics will finally be okay. Those extremely talented people no longer with the company will form the next generation of world-changing robotics startups. This is sad and hard news, but at the end of the day I don't care too much about those smart, capable people. They will do great things. I'm also not particularly worried about the future of the home robot. It's off to a slow start that may drag on even longer, but we will soon see key advances in artificial intelligence, navigation and mobile manipulation that will spawn a new generation of capable home robots.
Hopefully, despite its difficulties, iRobot will continue to play a key role in that world.
