Why Amazon is acquiring Roomba

The Amazon (AMZN) empire with Alexa is about to get a lot bigger. The e-commerce and smart home giant announced on Friday that it is buying Roomba maker iRobot (IRBT) for $1.7 billion. The move means Amazon’s collection of connected devices will soon include everything from smart vacuums to air purifiers.

It also comes at a time when Amazon is working to move its Alexa-enabled devices from stationary objects like smart speakers to mobile machines that can follow you around your home and respond to your commands at any time.

It’s clear that Amazon is heavily invested in the future of the smart home, and while robotic vacuum space is competitive, with this deal Amazon has acquired and reinforced its expertise, wrote Raymond James analyst Brian Gesuale in a note from August 5.

“There are major players in the robotic vacuum space such as LG, Samsung, Shark and a host of others creating a competitive market that has seen prices and margins slashed in recent years with no end in sight,” he wrote.

“The broader smart home ecosystem has an even wider set of competitors. Amazon is small in the robot market with its recently launched Astro product, so in the short term it is more about vertically integrating the channel as it develops a long-term plan for the smart home and attached data.”

But it’s not just about building smarter devices. The acquisition of Amazon is part of its broader strategy of trying to ensure that its Prime service is always at the top of consumers’ minds, and by selling more physical products that connect to the platform, it can do just that.

Bringing Prime Members

Amazon’s ultimate goal for its ecommerce business is to get everyone to its Prime platform. The service, which costs $14.99 a month or $139 a year, gives subscribers access to everything from next-day delivery and Prime Video to Prime Music and Twitch.

Of course, people who subscribe to Prime are also more apt to buy their products through Amazon, which is a double benefit for the company. After all, Amazon takes your monthly or annual fee and takes a cut of the products you buy.

FILE - A Roomba 980 robot vacuum cleaner is unveiled during a presentation in Tokyo, Tuesday, September 29, 2015. Amazon on Friday, August 5, 2022, announced that it has entered into an agreement to acquire the maker of iRobot vacuum cleaners for approximately $1.66 billion.  The company sells its robots all over the world and is most famous for the circular-shaped Roomba vacuum.  (AP Photo/Eugene Hoshiko)

Amazon is acquiring iRobot for $1.7 billion. (AP Photo/Eugene Hoshiko)

Amazon’s own products, like the Echo speakers, are set to encourage you to sign up for Prime as well. After all, it’s easy to quickly tell Alexa to buy you something or play a song via Prime Music if you’re a Prime subscriber.

IRobot is also bringing you more than just the Roomba vacuum. The company also sells its Braava Jet smart mop and handheld vacuum. The company was previously working on a smart lawn mower, but dropped the idea.

Still, iRobot’s existing portfolio gives Amazon one more avenue to persuade customers to sign up for Prime.

building better bots

IRobot’s products, however, will also help Amazon build its own collection of home robots. Currently, Amazon offers its own robot called Astro. A kind of Alexa on wheels, the little robot is currently only available for purchase by invitation and costs $999. If and when Astro is available to the general public, it will cost $1,499.

UNSPECIFIED - SEPTEMBER 28: In this screenshot, Senior Vice President, Devices & Services, Dave Limp introduces Amazon Astro during the September 28, 2021 Amazon Devices and Services announcement. (Photo by Jamie McCarthy/Getty images)

Amazon Senior Vice President of Devices and Services Dave Limp introduces Amazon Astro in 2021. (Photo by Jamie McCarthy/Getty Images)

Astro’s key functions include being able to follow you to listen to podcasts and music, bringing small items to people in your home via a small rear-mounted container, allowing you to manually use it to check your home when you’re away, and act as a security sentry patrolling your house at night.

So far, though, Astro appears to be a poorly made bot with an uncertain direction. Reviews from CNET, The Wall Street Journal, and TechCrunch all point to the fact that Astro isn’t as good at the many things it should be doing. Reviewers point to everything from the bot having a hard time determining a house’s layout to simply getting in the way.

There’s also the problem that Astro doesn’t make stairs. You cannot go up or down through them. So you’re stuck to a floor in your house.

Astro isn’t Amazon’s only home bot. The company’s Ring business has its own flying security drone called the Always Home Cam, which can take off when a security alert is triggered or be remotely controlled like a flying camera. Also available by invitation only, the Always Home Cam is $249.

While iRobot’s devices are more focused on individual tasks like vacuuming and mopping, the company’s technology could be especially useful to Amazon as it develops its robotics capabilities for the home.

The acquisition of iRobot will also be pivotal in Amazon’s data collection efforts. Roombas creates maps of your home, so the device knows where it’s been, where it’s going and how clean those rooms are, said Ian Greenblatt, who leads JD Power’s Telecommunications Technology, Media and Intelligence practice.

“It’s more of a sensor platform, not unlike Ring or Alexa or even your retail purchase history,” Greenblatt said. “You have to keep in mind that all this together creates a very three-dimensional image of a person. With Roomba, it’s now moving around your house.”

It’s also worth noting that iRobot devices are already Alexa-compatible, which means you can tell your vacuum to clean an area using Alexa, and it will take off and start working. So it stands to reason that the experts at iRobots themselves are already quite familiar with Amazon’s technology.

Ultimately, the fact that the Roomba is mobile is a big deal — while Amazon has plenty of home bots, this acquisition will help Amazon bring “the next generation of robotic home companions, among other opportunities,” Greenblatt said.

Have a tip? Email Daniel Howley at [email protected] Follow him on Twitter at @DanielHowley.

Allie Garfinkle is a senior technology reporter at Yahoo Finance. Find her on Twitter @agarfinks.

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