Why Amazon is acquiring Roomba

Amazon’s (AMZN) Alexa-powered empire is about to get a lot bigger. The e-commerce and smart home giant announced 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 intelligent vacuum cleaners to air purifiers.

It also comes at a time when Amazon is working to move its Alexa devices from stationary objects like smart speakers to mobile machines that can follow you around your home and respond to your commands in the blink of an eye.

It’s clear that Amazon has invested heavily in the future of smart home, and while the robotic vacuum cleaner space is competitive, this deal has enabled Amazon to gain and strengthen its expertise, Raymond James analyst Brian Gesuale wrote in a note dated Aug. 5.

“There are major players in the robot vacuum space like LG, Samsung, Shark and a host of others who are creating a competitive market that has seen prices and margins compress in recent years with no end in sight,” 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 will be more about the vertical integration of 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 all part of its broader strategy to ensure its Prime service always has consumers’ attention, 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 ecommerce business is to get everyone on 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 goods through Amazon, which is a double boon for the company. After all, Amazon gets your monthly or annual fee and then gets a share of the products you buy.

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

Amazon’s own products, such as the Echo speakers, are set up to encourage you to sign up for Prime as well. After all, it’s easy to quickly tell Alexa to buy you something or play a song through Prime Music if you’re a Prime subscriber.

IRobot also brings more than just the Roomba vacuum cleaner. The company also sells its Braava Jet smart mop and handheld vacuum. The company previously worked on a smart lawn mower, but dropped the idea.

Still, iRobot’s existing portfolio gives Amazon yet another opportunity to convince customers to sign up for Prime.

Building better bots

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

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

Astro’s key features include being able to track you to let you listen to podcasts and music, bringing small items to people in your home through a small container in the back so you can manually use it to get to your check in at home when you are. away and act as a sentry patrolling your home at night.

So far, however, Astro seems like a half-baked bot with an uncertain direction. Reviews from CNET, The Wall Street Journal, and TechCrunch all point out that Astro isn’t very good at the many things it’s supposed to do. Reviewers point to everything from the bot having a hard time deciding the layout of a home to simply getting in the way.

There’s also the problem that Astro doesn’t do stairs. It cannot go up or down. So it is attached to one floor in your house.

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, which can take off when a security alert is triggered or be controlled remotely like a flying camera. The Always Home Cam is also invite-only and costs $249.

While iRobot’s devices are more focused on individual tasks like vacuuming and mopping, the company’s technology could be especially helpful to Amazon as it expands its robotics capabilities for the home.

The iRobot acquisition will also play a key role in Amazon’s data collection efforts. Roombas creates maps of your home so it knows where it’s been, where it’s going, and how clean those rooms are, says Ian Greenblatt, who leads JD Power’s technology, media, and telecommunications intelligence practice.

“It’s yet another sensor platform, not unlike Ring or Alexa or even your retail purchase history,” says Greenblatt. “You have to keep in mind that all this together creates a nice three-dimensional image of a person. With Roomba, he now moves through your home.”

It’s also worth pointing out that iRobot’s devices are already Alexa compatible, meaning you can tell your vacuum cleaner to clean an area with Alexa, and it will take off and go to work. So it goes without saying that iRobot’s own experts are already fairly familiar with Amazon’s technology.

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

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

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

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