Amazon's $1.7 billion purchase of the company behind the Roomba shows it's leaning into home robots after its first experiment, Astro, was met with mixed reviews

·4 min read
Roomba i7_Lifestyle_Living Room
The Roomba, made by iRobot, has been on the market since 2002.iRobot
  • Amazon will buy Roomba-maker iRobot for $61 per share, or about $1.7 billion.

  • Roomba saw a pandemic-era boom, but revenue has dropped 30% since last year.

  • The deal signals Amazon's commitment to robotics following the launch of its home robot last year.

Amazon is making a big bet on robots with its latest acquisition.

The e-commerce giant announced Friday that it's buying iRobot — the company behind Roomba — in an all-cash deal valued at roughly $1.7 billion. It's Amazon's fourth-largest deal following its $4 billion acquisition of healthcare provider One Medical last month.

The acquisition marks a major coup for iRobot: Shares of the company closed around $50 on Thursday and Amazon will pay $61 per share, a 22% markup.

Roomba got a pandemic boost as more people spending time at home equated to a rise in robotic vacuum sales. But supply-chain challenges and a drop in orders in recent months have taken a toll on iRobot's bottom line: In its second quarter earnings, posted Friday, the company reported a 30% decline in revenue compared to 2021.

In an effort to cut costs, iRobot said Friday it will lay off 140 employees, or about 10% of its workforce.

While Amazon may be getting a deal on iRobot, it's gaining a popular home device and a wealth of in-home data collected over two decades. It's a signal that Amazon is committed to robotics, despite mixed reviews for its own home robot, Astro.

Amazon has big plans for its little robot

Amazon Astro robot on kitchen floor surrounded by people talking
Amazon unveiled Astro, an autonomous home robot, in September 2021.Amazon

When Amazon unveiled Astro in September 2021, it was billed as a home security companion that could autonomously navigate your house.

But even Amazon insiders were divided over the $1,450 robot's viability: Some employees told Insider at the time that Astro could eventually have the same mainstream success as the Amazon Echo, while others predicted it would fail spectacularly.

Early reviews of Astro — which is still available by invitation-only — highlighted the robot's ability to learn its way around your space and keep an eye on your home, but noted that the robot mostly just got underfoot and wasn't worth the steep price tag.

The Wall Street Journal's Joanna Stern noted, perhaps prophetically, that Astro would be more helpful if it could also vacuum while it scoots around the house.

Indeed, even before Astro was unveiled, Amazon had big plans for its little robot. One employee told Insider last September that the long-term goal for Astro is to make it "the ultimate personal assistant" that could carry things and complete household chores, like vacuuming.

The ambitious goals for Astro may stem, in part, from the high stakes attached: Astro was Amazon founder Jeff Bezos' passion project, and he was closely involved in the development of the robot before he stepped down as CEO.

(In fact, Bezos' own kids seemingly predicted the marriage of Amazon and iRobot back in 2018, when they built their own home robot by taping together an Echo and Roomba.)

By buying iRobot, Amazon is gaining more than just another device to add to its robotics portfolio. Roomba has been on the market since 2002, which means that not only has iRobot had a 20-year head-start on home mapping and navigation, it also has two decades worth of customer data that could be highly valuable to Amazon's smart home objectives. (An Amazon spokesperson told Insider that protecting customer data is "incredibly important" to the company.)

Now that the Roomba is under the Amazon umbrella, some of those ambitions could take shape.

Ken Washington, who leads the Astro team as Amazon's vice president of consumer robotics, told GeekWire in an interview last month that the company is at the "beginning of the journey" when it comes to home robotics.

"Astro is our first consumer home robot," he said. "It's not going to be our last."

Read the original article on Business Insider