Amazon to buy vacuum maker iRobot for roughly $1.7 billion

Amazon on Friday announced it has agreed to acquire the vacuum cleaner maker iRobot for approximately $1.7 billion, scooping up another company to add to its collection of smart home appliances amid broader concerns from anti-monopoly and privacy advocates about Amazon’s market power and ability to gain deeper insights into consumers’ lives.

iRobot sells its products worldwide and is most famous for the circular-shaped Roomba vacuum, which would join voice assistant Alexa, the Astro robot and Ring security cameras and others in the list of smart home features offered by the Seattle-based e-commerce and tech giant.

The move is part of Amazon’s bid to own part of the home space through services and accelerate its growth beyond retail, said Neil Saunders, managing director at GlobalData Retail. A slew of home-cleaning robots adds to the company’s tech arsenal, making it more involved in consumers’ lives beyond static things like voice control. The latest line of Roombas uses sensors to map — and remember — a home’s floor plan, offering a trove of data that Amazon could potentially integrate with its other products.

Amazon’s Astro robot, which helps with tasks like setting an alarm, was unveiled last year at an introductory price of $1,000. But its rollout has been limited and has received a lacklustre response.

Amazon hasn’t had much success with household robots, but the iRobot acquisition and the company’s strong market reputation provide a “massive foothold in the consumer robot market” that could help Amazon replicate the success of its Echo line of smart speakers, said Lian Jye Su, a robotics industry analyst for ABI Research.

Su said it also illustrates the shortcomings of consumer robotics vendors like iRobot, which struggled to expand beyond a niche product and was in a “race-to-the-bottom” competition with Korean and Chinese manufacturers offering cheaper versions of a robotic vacuum.

On Friday, iRobot reported its quarterly results. Revenue plunged 30 per cent primarily on order reductions and delays, and the company announced it was laying off 10 per cent of its workforce.

Amazon said it will acquire iRobot for $61 per share in an all-cash transaction that will include iRobot’s net debt. The company has total current debt of approximately $332.1 million as of July 2. The deal is subject to approval by shareholders and regulators. Upon completion, iRobot’s CEO, Colin Angle, will remain in his position.

Noting that iRobot has been running its robotics platform on Amazon’s cloud service unit AWS for many years, Su said the acquisition could lead to more integration of Amazon speech recognition and other capabilities into vacuums.

In afternoon trading, iRobot shares rose 19 per cent. Amazon’s were down 1.7 per cent.

The company spun off its defence robotics division in 2016 to become almost exclusively a seller of vacuums and some other home robots, such as the Braava robotic mop. It planned to launch a robotic lawn mower in 2020 but backed off, citing problems tied to the pandemic.