Why Amazon is acquiring Roomba

The Alexa-based Amazon (AMZN) empire is about to get much bigger. The e-commerce and smart home giant announced on Friday the purchase of 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 working to move its Alexa-enabled devices from stationary objects like smart speakers to mobile machines that can follow you around the house and respond to your commands in an instant.

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

“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 compressed in recent years with no end in sight,” he wrote.

“The broader smart home ecosystem has an even wider range 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 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 always comes first in the minds of consumers, and by selling more physical products that plug into the platform, it can do just that.

Involve Prime members

Amazon’s ultimate goal for its e-commerce business is to get 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 benefit for the company. After all, Amazon gets your monthly or yearly fee, so it gets a portion of the purchased products.

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

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

Amazon’s products like its Echo speakers are set to incentivize Prime membership as well. 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 offers more than just the Roomba vacuum cleaner. The company also sells its Braava Jet smart mop and handheld vacuum cleaner. The company was previously working on a smart lawn mower, but turned down the idea.

However, iRobot’s existing portfolio offers Amazon another avenue to persuade customers to sign up for Prime.

Building better bots

IRobot’s products, however, will also help Amazon build their own collection of home robots. Currently, Amazon offers their own robot called Astro. A kind of Alexa on wheels, the tiny 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.

NOT SPECIFIED - SEPTEMBER 28: In this screengrab, Senior Vice President, Devices & Services, Dave Limp introduces Amazon Astro during the announcement of Amazon Devices and Services on September 28, 2021. (Photo by Jamie McCarthy / Getty Images)

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

The main functions of Astro include the ability to follow you around to listen to podcasts and music, carry small items to people in the house via a small back-mounted container, allow you to use it manually to control your home when you are away, and act as a security sentry patrolling your home at night.

So far, though, Astro appears to be a half-baked robot with an uncertain direction. Reviews from CNET, The Wall Street Journal, and TechCrunch, all point to the fact that Astro isn’t all that good at the many things it is supposed to do. Reviewers point to anything from the bot having trouble determining a home’s layout to just getting in the way.

There is also the problem that Astro doesn’t do stairs. He cannot go up or down. So he’s stuck on a floor in your house.

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

Although iRobot’s devices are more focused on individual tasks like vacuuming and mopping, the company’s technology could prove particularly useful for Amazon as it develops its home robotics skills.

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 technology, media, and telecom intelligence practice.

“It’s yet another sensor platform, not unlike Ring or Alexa or even retail purchase history,” Greenblatt said. “You should keep in mind that all of this together creates a rather three-dimensional image of a person. With Roomba, now it moves around your home. ”

It’s also worth pointing out that iRobot’s devices are already compatible with Alexa, which means you can tell your vacuum to clean an area using Alexa and it’ll take off and get to work. So it makes sense that iRobot experts are already familiar with Amazon’s technology.

Ultimately, the fact that Roomba is mobile is a big deal: Although Amazon has many home robots, this acquisition will help Amazon realize “the next generation of companion home robots, among other opportunities,” Greenblatt said.

Do you have a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @Daniel Howley.

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

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