Why Amazon buys Roomba

The Amazon Empire (AMZN) based on Alexa is about to expand. The e-commerce and smart home giant announced Friday that it was buying the maker of Roomba iRobot (IRBT) for $ 1.7 billion. The move means Amazon’s collection of connected devices will soon include everything from smart vacuum cleaners to air purifiers.

It also shows up at a time when Amazon is working on moving its Alexa-enabled devices from stationary facilities like smart speakers to mobile machines that can follow you around your home and respond instantly to your commands.

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

“There are major players in the robot vacuum, such as LG, Samsung, Shark and many others, creating a competitive market where prices and margins have fallen indefinitely over the past few years,” he wrote.

“The wider smart home ecosystem has an even wider set of competitors. Amazon is small in the robot market thanks to the recently launched Astro product, so in the near future it is more about vertical channel integration as it is developing a long-term plan for the smart home and attached data. ”

But it’s not just about creating smarter devices. The Amazon acquisition is part of his broader strategy aimed at ensuring that his Prime service is always on top of consumers’ minds, and by selling more physical products that connect to the platform, he can do so.

Introducing Prime Members

Amazon’s ultimate goal in e-commerce is to let everyone benefit from the Prime platform. Costing $ 14.99 per month or $ 139 per year, the service 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 likely to buy their merchandise through Amazon, which is a double boon to the company. After all, Amazon receives a monthly or annual fee and then receives some of the products purchased.

FILE - The Roomba 980 Robot Vacuum Cleaner is unveiled at a Tokyo presentation on Tuesday, September 29, 2015. Amazon on Friday, August 5, 2022, announced that it has made a deal to purchase an iRobot vacuum cleaner for approximately $ 1.66 billion.  The company sells its robots worldwide and is best known for its round Roomba vacuum cleaner.  (Photo by AP / Eugene Hoshiko)

Amazon buys iRobot for $ 1.7 billion. (Photo by AP / Eugene Hoshiko)

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

The iRobot is also about more than just a Roomba vacuum cleaner. The company also sells the Braava Jet Smart Mop and Handheld Vacuum Cleaner. The company previously worked on a smart mower, but abandoned this idea.

Even so, the existing iRobot portfolio gives Amazon another opportunity to convince customers to sign up for Prime.

Building better bots

However, the IRobot products will also help Amazon build its own collection of home robots. Currently, Amazon offers its own robot called Astro. Kind of like Alexa on Wheels, the tiny robot is currently available by invitation only and costs $ 999. If and when Astro becomes available to the general public, it will cost $ 1,499.

INDEFINITE - SEPTEMBER 28: In this screenshot, senior vice president of devices and;  Services, Dave Limp introduces Amazon Astro at the Amazon Devices and Services Announcement on September 28, 2021 (Image: Jamie McCarthy / Getty Images)

Amazon’s Senior Vice President of Devices and Services, Dave Limp, introduces Amazon Astro in 2021 (Photo: Jamie McCarthy / Getty Images)

Astro’s main features include being able to follow you to listen to podcasts and music, bringing small items to people around the house with a small container mounted on the back, allowing you to manually use it to check at home when you are away and act as a security guard. patrolling your house at night.

So far, Astro appears to be an undercooked bot with an uncertain direction. Reviews from CNET, The Wall Street Journal, and TechCrunch indicate that Astro isn’t that great at a lot of the things it’s supposed to do. Reviewers point to everything from a bot having difficulty figuring out the layout of a house to simply disturbing.

There is also a problem that Astro does not make stairs. He cannot climb or descend them. So it’s glued to one floor in your house.

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

While iRobot’s devices are more focused on single tasks such as vacuuming and mopping, the company’s technology could prove particularly helpful to Amazon as it develops its robotics capabilities for the home.

The acquisition of iRobot will also be central to Amazon’s data collection efforts. Roombas maps your home so it knows where it’s been, where it’s going and how clean those rooms are, said Ian Greenblatt, technology, media and telecommunications manager at JD Power.

“This is another sensor platform, similar to Ring, Alexa or even retail purchasing history,” said Greenblatt. “You should remember that all of this together creates a nice three-dimensional image of a person. Roomba is now moving around the house. “

It’s also worth noting that iRobot devices already support Alexa, which means you can tell the vacuum cleaner to clean the area with Alexa and it will take off and get to work. So it’s understandable that iRobots experts are already quite familiar with Amazon technology.

Ultimately, the fact that Roomba is mobile is a big deal – while Amazon has many home bots, this acquisition will help Amazon introduce “the next generation of home companion robots, among others,” said Greenblatt.

Got a tip? Send an email to Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @Danielhowley.

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

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