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Why Amazon is acquiring Roomba

·5-min read

Amazon’s (AMZN) Alexa-powered empire is about to get a lot larger. The e-commerce and smart home giant announced Friday that it is purchasing Roomba maker iRobot (IRBT) for $1.7 billion. The move means that Amazon’s collection of connected devices will soon include everything from intelligent vacuums 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 throughout your home and respond to your commands at a moment’s notice.

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

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

“The broader smart home ecosystem has an even broader set of competitors. Amazon is small in the robot market with its recently launched Astro product, so in the near term it’s more about vertically integrating the channel as it develops a longer-term plan for the smart home and the data attached.”

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

Bringing in Prime members

Amazon’s ultimate goal for its e-commerce business is to get everyone onto its Prime platform. The service, which costs $14.99 per month or $139 a 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 apt to purchase their goods through Amazon, which is a double boon for the company. After all, Amazon gets your monthly or yearly fee, then gets a cut of products you purchase.

FILE - A Roomba 980 vacuum cleaning robot is presented during a presentation  in Tokyo, Tuesday, Sept. 29, 2015. Amazon on Friday, Aug. 5, 2022, announced it has entered into an agreement to acquire the vacuum cleaner maker iRobot for approximately $1.66 billion. The company sells its robots worldwide and is most famous for the circular-shaped Roomba vacuum.  (AP Photo/Eugene Hoshiko)
Amazon is acquiring iRobot for $1.7 billion. (AP Photo/Eugene Hoshiko)

Amazon’s own products like its Echo speakers are set up to incentivize you to sign up for Prime too. After all, it’s easy to quickly tell Alexa to purchase something for you or play a song via Prime Music if you’re a Prime subscriber.

IRobot is also bringing 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 lawnmower, but axed the idea.

Still, iRobot’s existing portfolio gives Amazon yet another avenue to persuade customers into signing up for Prime.

Building better bots

IRobot’s products, however, will also help Amazon build out its own collection of in-home robots. Currently, Amazon offers its own robot called Astro. A kind of Alexa on wheels, the tiny robot is currently only available for purchase via invitation and costs $999. If and when Astro becomes available to the entire public, it will cost $1,499.

UNSPECIFIED - SEPTEMBER 28: In this screengrab, Senior Vice President, Devices & Services, Dave Limp introduces Amazon Astro during Amazon Devices and Services Announcement on September 28, 2021. (Photo by Jamie McCarthy/Getty Images)
Amazon senior vice president for devices and services, Dave Limp introduces Amazon Astro in 2021. (Photo by Jamie McCarthy/Getty Images)

Astro’s main functions include being able to follow you around to let you listen to podcasts and music, bring small items to people in your home via a small rear-mounted container, let you manually use it to check in on your home when you’re away, and act as a security sentinel by patrolling your home at night.

So far, though, Astro appears to be a half-baked bot with an unsure direction. Reviews from CNET, The Wall Street Journal, and TechCrunch, all point to the fact that Astro isn’t all that great at the many things it’s supposed to do. Reviewers point to everything from the bot having a hard time determining a home’s layout to simply getting in the way.

There’s also the problem that Astro doesn’t do stairs. It can’t go up them or down them. So it’s stuck to one floor in your home.

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

While iRobot’s devices are more focused around individual tasks such as vacuuming and mopping, the company’s technology could prove especially helpful for Amazon as it builds out its robotics capabilities for the home.

The iRobot acquisition will also be key in Amazon’s data-gathering efforts. Roombas create maps of your house, so the device knows where it’s been, where it's going, and how clean those rooms are, said Ian Greenblatt, who leads J.D. Power's Technology, Media, and Telecommunications Intelligence practice.

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

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

Ultimately, the fact that the Roomba is mobile is a big-deal – though Amazon has many in-home bots, this acquisition will help Amazon bring about “the next generation of in-home robot companions, among other opportunities,” said Greenblatt.

Got a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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

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