Amazon and Roomba: A Match Made In Heaven - If Lina Will Let Them
Amazon and Roomba: A Match Made In Heaven - If Lina Will Let Them
Right on the heels of Amazon’s continued expansion into healthcare with its almost $4 billion acquisition of OneMedical, Amazon has acquired iRobot for $1.7 billion.
That is about a 1 times revenue multiple on the business.
You might recall, Amazon has been rolling out its Astro and Echo robots, which are relatively unsophisticated and more or less function as an Alexa on wheels with a camera. Amazon needed to level up its skills to move to the next phase.
What does Amazon get with this acquisition of iRobot?
First, Colin Angle will remain the CEO of iRobot which is amazing for Amazon since he is one of the greatest roboticists of our generation. That, not to mention some of the best robotics talent in the US at iRobot.
Readers are probably not aware that I spent my graduate school training at Vanderbilt University at the Intelligent Robotics Lab back in the ~1996 timeframe.
At the time, the lab manager (under the direction of kaz. kawamura) is an old friend of mine named Robert Pack, who already had a few robotics patents. Robert went on to several robotics companies, including iRobot, and landed at Amazon several years ago.
I wanted to shout out to Robert, who now gets to reunite with his old friends!
Second, iRobot has a portfolio of about 1,500 patents related to robotics. This is a huge asset for the company.
A lot is being made about how Amazon gets maps to your home or something, but I think this is being a little overplayed for media effect.
It’s very easy for Amazon to get leverage from this acquisition because they have more facilities and parcel volume than anyone else. 532M square feet, according to MWPVL International Inc.
They can easily leverage this talent across the widest network, not just within the home.
Amazon needs a group working on basic research that can be applied across the entire company, and I would think of it as robotic microservices.
But why did Amazon buy a robot company right now? One obvious reason is that before last year, Amazon didn’t seem to be serious about consumer robotics. I think iRobot also had a reason, just looking at the last few years of their annual reports.
iRobot was growing at around 9% year over year with gross margins of around 45% at a 10% operating income. The problem is that gross margins declined last year to 35%, which forced them to lose a little bit of money in 2021. Perhaps Amazon-level scale will help them improve their gross margins.
One last thing? This deal still needs to pass Federal Antitrust review from Lina Khan, who is no friend of Amazon. TBD on this!
Oh yeah, they also probably want to map your home ;-). But it's not the only reason by a long shot.
