Why Amazon is buying Roomba

Amazon’s (AMZN) Alexa-powered empire is about to get much 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 vacuum cleaners to air purifiers.

It also comes at a time when Amazon is scrambling 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 all times.

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

“There are major players in the robotic vacuum space like LG, Samsung, Shark and a host of others creating a competitive market that has seen prices and margins squeeze over the past few years with no end in sight,” said he wrote.

“The wider 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’s more about vertically integrating the channel as it develops a longer-term plan for the smart home and associated data.

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

Bring in Prime members

Amazon’s ultimate goal for its e-commerce business is to bring everyone to its Prime platform. The service, which costs $14.99 per month or $139 per 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 likely to buy their products through Amazon, which is a double boon for the company. After all, Amazon collects your monthly or annual fee and then a portion of the products you buy.

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

Amazon’s own products, such as its Echo speakers, are set up to trick you into signing up for Prime too. 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.

iRobot also brings 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 scrapped the idea.

Still, iRobot’s existing wallet gives Amazon another way to persuade customers to sign up for Prime.

Build better bots

However, IRobot’s products will also help Amazon build its own collection of home robots. Currently, Amazon offers its own robot called Astro. A sort of Alexa on wheels, the little robot is currently available for purchase by invitation only and costs $999. If and when Astro becomes 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 at the announcement of Amazon devices and services on September 28, 2021. (Photo by Jamie McCarthy/Getty Images)

Dave Limp, Amazon’s senior vice president of devices and services, introduces Amazon Astro in 2021. (Photo by Jamie McCarthy/Getty Images)

Astro’s main features include the ability to follow you around so you can listen to podcasts and music, bring small items to people in your home via a small rear-mounted container, allow you to use it manually to check your house when you are and act as a security sentry patrolling your home at night.

So far, however, Astro appears to be a half-baked robot with an uncertain direction. Reviews from CNET, The Wall Street Journal, and TechCrunch all point to Astro not being so good at the many things it’s supposed to do. Critics point to everything from the bot having trouble figuring out a home’s layout to simply getting in the way.

There’s also the problem that Astro doesn’t do stairs. He can neither raise nor lower them. It is therefore glued to a floor of your house.

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

While iRobot’s devices are more focused on individual tasks such as vacuuming and cleaning, the company’s technology could prove particularly useful for Amazon as it expands its robotic capabilities for the home.

The acquisition of iRobot will also be key 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 the practice at JD Power Technology, Media, and Telecommunications Intelligence. .

“It’s yet another sensor platform, much like Ring or Alexa or even your retail purchase history,” Greenblatt said. “You have to keep in mind that all of this creates a nice three-dimensional image of a person. With Roomba, it now moves around your home.”

It’s also worth pointing out that iRobot’s devices are already Alexa-enabled, meaning you can tell your vacuum to go clean an area using Alexa, and it’ll take off and get to work. So it stands to reason that iRobots’ own experts are already quite familiar with Amazon’s technology.

Ultimately, the fact that the Roomba is mobile is a big deal – although Amazon has plenty of home robots, this acquisition will help Amazon create “the next generation of home companion robots, among other opportunities,” said said Greenblatt.

Do you have any advice? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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

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