Photo: iRobot
Is Amazon’s deal for iRobot all about mapping Americans’ homes?
Amazon.com on Friday announced that it has entered into a definitive agreement to acquire IRobot, the maker of the Roomba vacuum cleaner, in an all-cash transaction valued around $1.7 billion.
The deal, which will pay iRobot investors $61 a share, will need to get shareholder and regulatory approval to proceed. Colin Angle, iRobot CEO, will remain in that position once the closing is completed.
“The iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive—from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin,” said Dave Limp, SVP of Amazon Devices, in a statement. “Customers love iRobot products—and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”
The Roomba maker’s technologies are currently used for “cleaning, mapping and navigation” and the company is focused on developing robotic and smart home devices.
Multiple articles on the deal focus on iRobot’s mapping technology and Amazon’s designs on it. Mr. Angle in the past suggested that iRobot might one day look to monetize mapping information by sharing it with other companies.
Amazon with Alexa, Ring and Eero is already in American homes. Adding iRobot’s mapping technology will further its understanding of what takes place in those households.
The Verge reports that Amazon has already tried to do as much with its Astro home robot. That device, which does not include a general release date, does not offer the cleaning functionality of the Roomba.
“People tend to think of Amazon as an online seller company, but really Amazon is a surveillance company,” Evan Greer, director of Fight for the Future, told Wired.
“Acquiring a company that’s essentially built on mapping the inside of people’s homes seems like a natural extension of the surveillance reach that Amazon already has,” he added.
A Bloomberg article suggests that Amazon may seek to monetize the data to sell to marketers. “The size of your house is a pretty good proxy for your wealth. A floor covered in toys means you likely have kids. A household without much furniture is a household to which you can try to sell more furniture. This is all useful intel for a company such as Amazon which, you may have noticed, is in the business of selling stuff.”
Discussion Questions
DISCUSSION QUESTIONS: What do you think is the strategy behind Amazon’s deal to acquire iRobot? How would such a deal affect Amazon’s data ambitions and iRobot’s sales?
Poll
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Richard Hernandez
Merchant Director
David Slavick
Co-Founder & Partner, Ascendant Loyalty
The connected “home” means many things, and Roomba is good fit with Amazon’s existing home products portfolio. However the notion of monetizing and mapping homes is disturbing. Where does the line between offering a valuable product or service cross into unwanted surveillance? Given Amazon’s past behavior in using data, I would be very concerned about what data is being collected and how it’s being used. While Roomba may be attractive for Alexa users who don’t mind “Big Brother” watching, many other consumers are coming to the realization that their privacy is at stake.
Sure, Amazon really spent $1.7 billion to have maps of the homes of of a small proportion of people! Please, what hysteria! This deal has everything to do with Amazon trying to extend and grow its range of home services and devices, especially off the back of a retail division that is not generating as much growth as it once did. It also has everything to do with Amazon’s desire to automate more home tasks through robotics and smart technology (Astro is another example of this). It has very little to do with Amazon trying to get information on people – much of which (such as house value and home size, demographics, etc.) is already publicly available via the Census, numerous local data sources, USPS zip code databases, sources like Zillow, and so forth.
And you think that was worth $1.7 billion, when Google only paid a billion for Ring? Seriously?
Ring is owned by Amazon! Yes, the valuation seems toppy. However Amazon pays to get a stake into industries it sees as having long term potential – which is what it did with Ring. It may also see IP value in the technology, which it can adapt for other purposes or evolve. I find the idea Amazon paid all this money to get partial floor plans of a small proportion of households as misplaced. It already has stack of data which it doesn’t use all that well (some of the product recommendations they make are plain odd) and a lot of information on homes is already available elsewhere.
I have a feeling home mapping is exactly what Amazon is after, which is exactly why my upright vacuum will be in my life a lot longer than I anticipated.
If you doubt that Amazon is a surveillance company, watch the Frontline documentary on the company, and learn more about their relationship with the CIA. Engage with these products at your own risk.
#totalworlddomination
And they still want physical access inside our homes to make grocery deliveries? And hand over data to the police without a warrant? #ohheckno
This is all about the continuation of “all things connected.” Amazon fulfilling their desire to infiltrate the home with lots of devices that can deliver small but important insights on consumers’ personal lives is their objective. Combining these device data and re-running algorithms against them will open up new ideas for follow-on innovative products and services.
While I like the idea of Alexa being able to clean my home, I don’t necessarily like the idea of a computer mapping my home so it can sell me more things or services. No thanks.
The Roomba acquisition is another piece of the pie to collect consumer data that will help Amazon sell more, keep consumers reliant on it, and ultimately keep Prime’s price inelastic.
Does it sell to a wide addressable market? No. But more and diverse data sources will always strengthen business intelligence.
This is part of a much larger trend among retailers that goes well beyond Amazon. With their margins of 2 percent to 3 percent, retailers of consumer goods have long been enamored by the much fatter margins of most suppliers. Now they are doing something about it. Through acquisition, like this and other Amazon deals, or by product development through a contract packer or even the buying or building of a manufacturing/processing facility, retailers are getting into the supply business. And they’re not just doing it for their retail channels. They are actively expanding the product market region by selling to other merchants. And this is just the start.
I think the mapping concerns are inflated. The real value is likely to be in the added connection point for Amazon – adding Alexa to the Roomba is a natural first step. Yes, it’s about surveillance but that’s a more complex goal than just a map of your house.
I guess we’ve gotten over the “privacy is dead” conversation. It’s very much alive and this is a bridge too far.
Seems like a pretty obtuse way of gathering useful information about consumers. Maybe my Roomba will start playing my favorite Prime music while it gets stuck under our living room chair, and auto-purchasing cleaning supplies based on what it finds on the kitchen floor. Now you’re talking….
It’s no secret retailers want to get inside our homes. The evolution of the Internet of Things depends upon connected homes.
Acquiring iRobot helps Amazon “own the home,” adding to smart home devices like Alexa, Ring, Eero and Fire TV. iRobot further embeds Amazon offerings into our frequent habits. Amazon gains access to rich data for marketing personalization, including furniture and electronics.
This domestic data could also inform Amazon’s ambition to expand into home insurance.
Amazon wants to be part of everything you do, to be the essential partner whatever your lifestyle. The more devices in the home, the more connections into your viewing habits, your search and purchase history, the more insights the company can generate, and the greater its predictive power. All of which create more valuable advertising opportunities for higher ad revenue. Data is the gateway to all future revenue streams.
Mapping my home and noting what is there is a little too close to having a stranger come into my home and then share the information about what they found with other strangers who may want to sell me their products. Is the next step to have Amazon or one of its sellers send me an email that says, “Hey we noticed you don’t have X, would you like to buy it?”
Evan Greer is exactly right. Nice to sell some vacuums for site traffic and cash flow, but the real value is surveillance. Most don’t realize how Echo and Ring devices work together from house to house to house to form a mesh network–one that is paid for by consumers! Amazon uses those networks along with mobile data to track movement outside of homes including people it identifies via mobile MAC addresses that don’t have an Echo or Ring device. So even a neighborhood stroll or walking the dog is tracked.
Roomba adds the “last mile” so to speak, adding in home tracking so that they can know where someone is at all times when combined with Echo and mobile tracking data.
Unfortunately, most people will think this is benign, but it is yet another overreach of big tech that has long-term negative consequences.
Data is gold. Letting anyone into your home opens the door to privacy invasion. This type of acquisition in the IoT space is just the start of something Amazon aspires to. I would anticipate a hard sell is required to get this approved by regulators.
“Hey Roomba, let’s quickly clean up the living room, I’ve got friends coming over.” For Amazon it’s a continuance of their effort to being part of the home, an essential component for every consumer out there en mass. There are other synergies as well. The deal enables integration with Alexa, Ring, and Fire TV. The ecosystem for the home is where Amazon wants to be unassailable. There is also the robotics side of iRobot that drives integration with Amazon’s warehouse robotics (formerly Kiva Systems). This deal is a powerful one for Amazon.
I would have thought this was a dystopian joke, except for some of the things that have happened with Alexa.
I made a joke about this over the weekend, and my family thought I was down a conspiracy-theory rabbit hole.
Amazon using Roombas to map out our homes and monetize the data (through their own product sales or selling it off to third parties) seems pretty likely.
I also think it makes sense for Amazon to capitalize on already-successful smart device concepts. While Alexa devices are ubiquitous, Amazon has not been as successful with some other smart-device ventures (eg Dash buttons). Roombas are an easy connection into the Alexa ecosystem.
I think if you’re one of those people who finds something sinister in everything Amazon does, then you won’t like this. I’m not one of them, so I tend to give this a shoulder shrug. At the same time, though, I find myself asking the same thing after most Amazon acquisitions — or really any big company acquiring another company (and I’m not sure if I ask more when the acquisition is related or unrelated to the acquirers core business): how was the world made better off by this happening? I usually don’t think it was.
Data. Data. Data. Amazon isn’t the only company doing it. Nor the only retailer. I would expect to see more of these types of deals in the future. Mapping your home with a remote vacuum, understanding your eating/drinking habits from smart fridges, coffeemakers, ovens, etc. Or your hobbies and other home needs from smart watering devices for your garden. When you know your customer really well you can increase sales. Organizations looking to sell to people have always found new ways to learn more about their customers. IoT devices are just the next evolution. Is it a good thing? Not necessarily. But for each new generation more invasive techniques will just feel normal.