Do Not Copy - Andhra University, Visakhapatnam

ICMR Case Collection
Icfai Center for Management Research
iRobot’s Roomba: Bringing Robots into Homes
MKTG 206
This case was written by V. Namratha Prasad, under the direction of S. S. George. ICFAI Center for
Management Research (ICMR). It was compiled from published sources, and is intended to be used as a
basis for class discussion rather than to illustrate either effective or ineffective handling of a management
situation.
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iRobot’s Roomba: Bringing Robots into Homes
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MKTG/206
“(It’s) one of the first practical robot stores ever to be in existence that wasn’t focused on meeting
the needs of the hobbyist. I think it is an important milestone in our industry.” 1
-Colin Angle, Chief Executive Officer of iRobot in 2008.
“Today, people say, ‘That’s not a robot, that’s a vacuum,’ or, ‘that’s not a robot, that’s an
unmanned ground vehicle in the military. But they all are robots. We want to make sure people
understand this is a new emerging technology with a large number of areas that it can be adopted
in. And at iRobot, we’ve taken some of the good first steps”. 2
INTRODUCTION
- Helen Greiner, Former Chairman and Co-founder of iRobot in 2005.
In November 2008, iRobot Corporation (iRobot) announced the opening of a retail kiosk in
Burlington Mall near its headquarters in Bedford, Massachusetts. The kiosk was open from
November 07, 2008, to January 15, 2009. It was managed by trained company staff, and offered
live demonstrations of the various commercial robots manufactured by the company.
iRobot expected the kiosk to generate interest in the company’s commercial robots, and
consequently increase sales. It also considered the kiosk to be a low-risk, low-cost way of testing a
possible future retail strategy. Colin Angle, Chief Executive Officer of iRobot, said, “As we roll
the clock forward you’re going to see more and more home robots…and the concept of a robot
store is going to be something that every mall is going to want to have.” 3
iRobot was established in 1990, to create practical applications for robots. The company started
out making robots for research purposes, an activity which yielded poor returns. It became more
successful when it began manufacturing robots for use by the military. However, the product that
brought the company worldwide recognition was the iRobot Roomba, a floor cleaning robot which
was introduced in September 2002 and was hailed as a major innovation. .
The Roomba was developed after years of research, during which time iRobot developed the
complete design of the robot including a unique vacuuming system, and navigation and artificial
intelligence software. Over the years, the Roomba made it to several best product lists and came to
be sold in several countries around the world. iRobot also launched several line extensions of the
Roomba, including another popular commercial robot, the floor scrubbing Scooba.
By 2004, iRobot had sold over one million Roombas. The company, which had struggled to get
venture capital funding in its early stages, had a highly successful IPO in 2005. In 2007, iRobot
introduced the iRobot Create, a robot with a standard hardware platform that other people could
use to make further improvements or add extensions.
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1
Robert Buderi, “A Robot Store in Every Mall? iRobot CEO Discuss Firm’s Efforts to Boost Retail Sales,”
www.xconomy.com, November 12, 2008.
2
Mark Jewell, “The woman who creates robots,” www.rediff.com, May 30, 2005.
3
Robert Buderi, “A Robot Store in Every Mall? iRobot CEO Discuss Firm’s Efforts to Boost Retail Sales,”
www.xconomy.com, November 12, 2008.

iRobot’s Roomba: Bringing Robots into Homes
As there were no other robotic floor cleaners, the Roomba’s competition came from low-end
vacuum cleaners. Analysts considered the Roomba to be a good value proposition, but some of
them also believed that iRobot could have marketed it more effectively.
In late 2008, when the sales of the Roomba began to decline, iRobot decided to test out a new
retail strategy for its robots. As a first step, it opened the retail kiosk to offer live demonstrations of
the Roomba to get customers interested in the robots and to purchase them online.
BACKGROUND NOTE
iRobot was founded in 1990 by Dr. Rodney Brooks (Brooks), Colin Angle (Angle), and Helen
Greiner (Greiner). The company was named after ‘I, Robot’ 4 a well-known book by science fiction
writer Isaac Asimov 5 . The trio met in the 1980s, while working at the Massachusetts Institute of
Technology (MIT)’s Computer Science and Artificial Intelligence Lab (CSAIL), where they used
to develop robots.
The three founders came from diverse backgrounds. While Brooks was doing research in artificialintelligence,
Angle had earlier designed unmanned extraterrestrial vehicles, and Greiner had
experience in developing robots for research purposes.
iRobot was formed to develop practical, commercial applications for robots. Greiner later said,
“We are not there to do demonstrations of technology. We are not there to talk about stuff that’s
going to happen 50 years from now in robots -- although that’s going to be extremely exciting. We
really concentrate on practical and affordable systems for today.” 6 The goal of the company was
specified to be the creation of affordable robots that could perform dull, dirty, and dangerous jobs,
safely and efficiently. The mission statement of iRobot was, “Build cool stuff, deliver great
product, make money, have fun, and change the world.”
The company’s initial years were spent designing experimental robots for research purposes. In
1991, iRobot’s first products — six-legged walking machines called Genghis and Attila, with
numerous onboard computers and several infrared sensors 7 — were developed as tools for robotics
researchers. But the founders soon realized that the returns from selling robots for research
purposes were very low, and did not even cover the costs for manufacture. To make up for the
shortfall, they used up the credit limits on their credit cards and even took bank loans of up to US$
100,000.
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Over the years, iRobot worked with companies like S.C. Johnson & Son Inc. (Johnson) 8 and
toymaker Hasbro Inc. (Hasbro) 9 to develop devices that could be mass marketed. Later, Johnson
backed out of the collaboration with iRobot, even before the robotic floor cleaner which they were
working on made it to production. After some time, iRobot’s second collaboration also ended,
when the life-like doll and the robotic velociraptor (a type of dinosaur) it had developed for Hasbro
met with poor sales.
4 ‘I, Robot’ written by Issac Asimov, is a collection of nine science fiction short stories based on robots.
5 Issac Asimov (1920-1992) was a highly successful American writer who was famous for his work in science fiction.
He is credited with coining the term ‘Robotics’.
6 “Is There a Robot in Your Future? Helen Greiner Thinks So,” http://knowledge.wharton.upenn.edu, April 5, 2006.
7 In an infrared sensor, a narrow band infrared beam is transmitted from a Light Emitting Diode (LED). When the beam
strikes an object in its path, it is reflected back onto the Position Sensitive Detector (PSD). This helps the sensor
detect the position and distance of a particular object from it.
8 The company is the largest component of the Johnson Family Enterprises. It is a manufacturer of household cleaners
like Windex and Pledge, and other consumer chemicals.
9 Hasbro is the second largest toy manufacturer in the world after Mattel. An American company, it is also the
publisher of several popular board games, including Monopoly.
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iRobot’s Roomba: Bringing Robots into Homes
iRobot finally found a measure of success when the robots it developed began to be used by the
military. In 1993, the company was engaged by the US Department of Defense and the Office of
Naval Research to develop an underwater minesweeper. In 1996, iRobot developed Ariel, a robot
which has crab-like legs that helped it remain upright and to easily maneuver itself over hurdles.
Ariel was mainly used to locate and disable mines in war zones both on the ground and under
water.
In order to meet its research and manufacturing costs, iRobot needed a further infusion of capital.
However, the company found it extremely difficult to get any funding from venture capital firms.
It was only in 1998 that it was able to attract funds from five venture capital funds — Trident
Capital, Fenway Partners, First Albany Corp., iD Ventures, and Robotic Ventures. Greiner later
said, “When we started the company we were un-fundable from a venture capital point of view. It
was really not until eight years in that we even tried to get venture capital funding. I can say that I
have been turned down by almost every major VC in the country, except for the five really
visionary, farsighted ones who joined us.” 10 Over the next six years, iRobot raised almost US$ 38
million in venture capital.
In 1998, iRobot won a DARPA 11 contract for the tactical mobile robot program. The work on this
program eventually led to the development of an autonomous mobile robot, called the iRobot
PackBot (PackBot). The PackBot resembled a small tank and had the ability to climb stairs and
work under water. (See Exhibit I for a picture of the PackBot). In 2001, the PackBot was used
for the first time in a real-life environment when it was used to search the rubble of the World
Trade Center in New York City, after the September 11 terrorist attacks.
The PackBot design was later improved to detect bombs and booby traps in hostile situations. The
robot was fitted with still cameras, live video cameras, and a robotic arm. It had the ability to
transmit information about what lay ahead of it, and could also explode improvised explosive
devices (IEDs), detect land mines, and retrieve hazardous materials. In June 2002, the PackBot
was used in Afghanistan to search caves for hostile forces and to detect hidden stores of
ammunition.
In September 2002, iRobot in collaboration with the National Geographic Society 12 developed a
robot to explore one of the shafts of the Great Pyramid of Giza in Egypt. In the same month,
iRobot introduced the Roomba, which became the first robot to be mass marketed at an affordable
price.
iRobot continued to develop several innovative robots for the US military as well as the consumer
market. In April 2004, it entered into a contract to build a Small Unmanned Ground Vehicle
(SUGV) for the U.S. Army’s Future Combat Systems program.
In November 2005, iRobot raised US$ 103.2 million through its IPO and began trading on the
NASDAQ under the symbol ‘IRBT.’. The IPO was successful and in the initial weeks of trading,
the share price touched a high of US$ 34.16, much to the surprise of some market watchers. Eliot
Menendez, an analyst, said, “A lot of people didn’t expect a robotics IPO would do so well.” 13
As of 2008, iRobot claimed to have seven products in its line-up of commercial robots and about
eight types of military and industrial robots. (See Exhibit II for details of iRobot’s products). By
then, around 60% of iRobot’s revenue was derived from the sale of commercial robots, and the rest
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10 “Leading with Resilience: iRobot’s Helen Greiner,” http://leadership.wharton.upenn.edu, April 2006.
11 Defense Advanced Research Projects Agency (DARPA) is an agency of the United States Department of Defense. It
mainly funds small short duration projects to help develop new technology for use by the US military.
12 The NSG is one of the largest non-profit scientific and educational institutions in the world. It publishes several
magazines including its flagship publication, The National Geographic Magazine. It also runs a television channel and
extends support to several projects in the fields of geography, archaeology, natural science, environmental and
historical conservation, world culture and history. (Source: Compiled from various sources)
13 Robert Weisman, “IRobot shares jump 11.25% in trading debut,” www.boston.com, November 10, 2005.
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iRobot’s Roomba: Bringing Robots into Homes
from military and industrial robots. By December 2008, iRobot had sold about 2,000 units of the
Packbot at a price ranging from US$ 50,000 to US$ 115,000 apiece. It had also sold more than 2.5
million units of the Roomba.
DESIGN AND DEVELOPMENT
iRobot believed that the Roomba, its flagship product, was the first practical and affordable home
robot. Since its inception, iRobot had been working on developing a robot that could clean floors.
The initial goal was to create a mechanical sweeper that worked well, was easy to use, and cheap.
The eight-member iRobot team consisting of the founding members among others, started work on
the Roomba only in 1999.
While developing the robot, the team never lost sight of the fact that they were building a robot
that was to be marketed as a household appliance. By working with several focus groups, the team
realized that people were quite choosy when buying appliances, compared to purchase decisions
for devices like computers. They discovered that people wanted appliances that were not only
cheap, but also simple and reliable. This provided the team with a totally different perspective
during the development process, which they later said, came as a ‘culture shock.’
The team spent a lot of time studying industrial cleaning equipment, and finally settled on a discshaped
design for the robot, with a low height that would enable it to slip easily under furniture.
The team discovered that apart from the mechanics, the kind of brushes used for cleaning and the
type of plastics used in the manufacture of the robot affected the performance of the robot. There
were long discussions regarding the kind of parts to be used in order to keep the overall cost of the
robot low. Angle later said, “We had to learn about plastics. We had to learn about Far East
manufacturing. We learned that if you haven’t had a sit-down, drag-out, pound-on-the-table
argument over a nickel, you don’t understand consumer products.” 14
The team tried out over 40 brushes of different lengths, curvatures, and density of bristles before
selecting the most suitable ones. The robot was finally fitted with rotating brushes that could pick
up dirt from both hard and soft surfaces.
In the initial stages, the team did not consider having vacuum power for its robot. This feature was
incorporated after a focus group stated that they would pay more for a cleaning robot which could
vacuum. For this purpose, the team sought the services of a vacuum consultant, who informed
them that vacuum cleaners were more art than science. Paul Sandin, a team member said, “It
would’ve been nicer to have some math to go by.” 15
The team therefore had to resort to trial and error to create the right vacuuming technique for the
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robot. While developing the new vacuuming system, the team also had to keep in mind the fact
that the robot had to run on rechargeable batteries. Therefore, although normal vacuum cleaners
consumed a lot of power, the team developed a new vacuuming system that required less power.
The robot had a three part cleaning system. A flapper and brush system was used to trap large
particles, while the nozzle of the vacuum was used to suck up small particles like dust. To remove
debris from hard to reach places like the bases of walls and corners, an edge-cleaning spinning side
brush was used. The collected trash was stored in an easily removable dustbin in the robot’s rear.
To enable the robot to move around, it was fitted with a powerful motor and three wheels -- two
drive wheels and a caster. Each wheel was fitted with a drop sensor. The wheels were made of
soft, knobbed rubber to facilitate progress across any type of flooring. To test the mobility of their
robot, the team ran it over ‘torture tracks’.
14 Lev Grossman, “Maid to Order,” www.time.com, September 14, 2002.
15 “How the Roomba Was Realized,” www.businessweek.com, October 6, 2003.
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iRobot’s Roomba: Bringing Robots into Homes
iRobot also developed the navigation and artificial intelligence software for the robot, taking
insects as inspiration. Brooks felt that robots, like insects, had to be equipped with simple control
mechanisms, which were tuned to their environments. All the robots created by the company used
the AWARE Robot Intelligence System, its proprietary technology. AWARE used several infrared
sensors to monitor the environment, sending the data to the robot’s microprocessor and then
adjusting its behavior up to 67 times per second. This system enabled the robots to make their own
decisions and to find their way around complex environments.
The robot had about as much computing power as a game controller. It did not map out the floor of
the room it cleaned, but relied on a number of simple movements like moving in a widening spiral
pattern, following walls, and rotating in concentric circles and moving away when it hit an object
in its path. For detecting objects in its path, the front half of the robot was fitted with a big contactsensing
bumper.
The robot also had an infrared sensor fitted on the top front center in addition to four infrared
sensors on the bottom (pointing downwards) to stop it from falling down stairs or other elevated
areas. This also ensured that the robot did not damage anything in its environment. Greiner later
said, “The robot (Roomba) is very lightweight, so it’s not heavy enough to cause damage. It first
protects itself with its downward-pointing infrareds. If that doesn’t work, one of the wheel-drop
sensors will detect the edge. And if that doesn’t work, it’s got a high-friction pad on the back that
keeps it from going over. Building in a lot of redundancy, keeping it lightweight, and keeping it
very safe from the beginning of the project have been important.” 16
The robot was also designed to function within infrared transmitter units called ‘Virtual Walls’.
The Virtual Wall units sent out infrared signals that were picked up by the robot through the
receiver on its bumper. When it picked up a signal, the robot would turn around and move away.
This feature enabled customers to set limits on the movement of the robot within a house or room,
stopping it from wandering into certain rooms or areas.
The initial design for the robot had to be reworked almost 20 times before it was perfected. The
complex final design consisted of 100 plastic parts, motors, controllers, sensors, brushes (bristle
and rubber) and a dustbin. The disc-shaped robot weighed 5-lb. 10-oz., and was 3.5 inches high
and 13.5 inches wide. It was named the ‘Roomba,’ as the development team felt that the robot’s
circular motion resembled the Rumba, a dance style (See Exhibit III for pictures of the first
generation Roomba).
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To keep manufacturing costs low, iRobot decided to manufacture the Roomba in Southern China.
This enabled the company to sell the Roomba for US$ 199.99, which was considered a
competitive price.
The Roomba had other features designed to increase its appeal. It was fitted with three buttons for
the customer to input the size of the room (small, medium, or large). When put to work, after a
certain predetermined period of time, the Roomba would emit triumphant sounds signaling that its
work was over. And, if at any time during its cleaning process, it no longer sensed the floor
immediately beneath it or sensed that it was trapped with no means of escape, it would make a
mournful sound to alert its owner.
16 “Is There a Robot in Your Future? Helen Greiner Thinks So,” www.ftpress.com, June 2, 2006.
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BRINGING THE ROOMBA INTO HOMES
iRobot’s Roomba: Bringing Robots into Homes
The manufacture of the Roomba, based on its final design, raised several challenges for iRobot’s
Hong Kong-based contract manufacturer, Jetta Co. (Jetta). The development team expected the
production issues to be resolved in two weeks, but the process took four months. Angle said,
“Every day, there’d be a list of problems 50 items long. The minutiae were terrifying.” 17
iRobot adopted a cautious approach to marketing the Roomba. To reduce the amount of cash tied
up in inventory, iRobot’s first order was for a shipment of 15,000 Roombas, with an additional
10,000 if the response to the product was good. iRobot marketed the Roomba as an ‘Intelligent
Floor Vacuum’ rather than as a robot, to make it more approachable and appealing for an average
customer. It was mainly advertised through a 28-minute infomercial aired on Home Shopping
Network (HSN) 18 . This was considered a risky move, as infomercials were commonly used for
products that were priced below US$ 30.
iRobot found it difficult to find retailers to sell the Roomba. Several retailers, whom iRobot
approached, refused to sell the Roomba. The company then approached specialty retailers like
Brookstone Inc. (Brookstone) 19 and The Sharper Image 20 and managed to convince them to carry
the Roomba. Later, iRobot trained the salespeople at these retail stores to give demonstrations of
the Roomba to the public.
In September 2002, when the Roomba finally became available to the public, it met with a positive
response, and even figured on several ‘Best Product’ lists for the year. It received the Good
Housekeeping Seal 21 in addition to awards like Time Magazine’s ‘Coolest Inventions’ and Popular
Science’s ‘Best of What’s New.’
The Roomba was sold out within a few days of its release. Brookstone, which ran out of Roombas,
was so eager to re-stock them that it footed the bill to fly them in from Hong Kong. The good sales
of Roomba also prompted more retailers to come forward to stock the product. In addition, the
infomercial that was aired on HSN was also successful, and generated sales of 4,000 units in two
days. In the first year, about 200,000 units of Roombas were sold, mostly driven by positive press
reviews and customer buzz.
In 2003, iRobot developed and strengthened its marketing and distribution system. It also roped in
more retailers to sell the Roomba. In March 2003, it recruited an experienced consumer-appliance
marketer Gregory F. White (White) to help market the Roomba.
White decided that iRobot needed to maintain a stock of 70,000 Roombas to properly meet the
demand and keep the retailers stocked. He also spent US$ 7.5 million on purchasing prime-time ad
spots on TV to air Roomba commercials. The marketing tag line used in the ad was: “If it’s down
there, we’ll get it.” By late 2003, Roomba was available in 4,000 outlets across the US, including
several major retail chains.
EXPANDING THE MARKET
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iRobot continued to improve upon the original Roomba. It introduced several new features for the
next generation of Roombas, called the Roomba Discovery Series, launched in September 2004. It
introduced features like a self charging home base (to help the Roomba find the charger and
recharge its battery on its own), dirt sensors (to detect areas that were dirtier), a scheduler, and a
remote control.
17
“How the Roomba Was Realized,” www.businessweek.com, October 6, 2003.
18
HSN is a 24-hour cable shopping network in the US.
19
Brookstone is a chain of retail stores in the US that was started in 1973. It specializes in selling electronic gadgets.
20
The Sharper Image was a chain of retail stores in the US that was started in 1977. It filed for bankruptcy and was
liquidated in 2008.
21
The Seal was given by the women’s magazine ‘Good Housekeeping’.
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iRobot’s Roomba: Bringing Robots into Homes
It also introduced a number of models in different price ranges to appeal to more customers (See
Exhibit IV for information on three generations of Roomba). Angle said, “The key to going
from one or two models to ‘many’ is that all of these robots have common software, common
interfaces, common controllers, so that if you develop for one, you know how to develop for all of
the weight classes.” 22 The newer models ranged from US$ 199 to US$ 500 in price.
By 2004, in addition to retail stores and HSN, iRobot sold the Roombas through websites like
Amazon, eBay, and its own websites, www.roombavac.com and www.irobot.com. iRobot claimed
that by October 2004, 1 million Roombas had been sold.
In an attempt to further diversify the commercial robot line, iRobot introduced a floor washing
robot Scooba (derived from ‘scrub’ and ‘room’) in May 2005. The Scooba had the same physical
appearance as that of Roomba (See Exhibit V for a picture of the Scooba). iRobot teamed up
with Clorox 23 to develop the unique cleaning solution needed for Scooba. Greiner said, “It turns
out the soap for a robot floor-washing system has to be high traction. When you put soap on the
floor it’s slippery, which is exactly the wrong thing. So their engineers and ours worked together,
to make a high traction soap [that] cleans really well.” 24
The Scooba was also positively received. In 2005, it was recognized as one of Time magazine’s
‘Most Amazing Inventions.’ It also won the International Consumer Electronic Showcase (CES)
‘Best of Innovation’ award in the Home Appliance category.
In 2005, iRobot launched an integrated marketing campaign called ‘I Love Robots.’ The campaign
utilized print, cable, television, and outdoor advertising, and direct marketing, and showed people
who owned the Roomba and the Scooba talking about their good experiences with the robots.
White said, “We really wanted an ad campaign that conveyed the excitement and enthusiasm our
customers feel for their robots. The ‘I Love Robots’ campaign showcases that passion first hand,
with people speaking sincerely and unscripted about the robots.” 25
In addition to the US, iRobot attempted to sell the Roombas in countries like Canada, Korea, and
Japan. It also developed a Google AdWords campaign to attract online customers. Roomba
became the 7 th most-searched brand on Google in the US in 2005 and also showed a significant
increase in sales.
iRobot continued to introduce new robots for specific cleaning purposes. In September 2006, it
introduced the iRobot Dirt Dog (See Exhibit VI for a picture of the Dirt Dog), which was
marketed as a ‘workshop’ robot with a powerful brush to pick up small nuts, bolts, and other shop
floor debris. It was to be used in places like garages, basements, and workbench areas, which
needed heavy duty cleaners.
A ROBOT IN EVERY HOME
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According to Greiner, it took black-and-white TVs six years, mobile phones four years, VCRs five
years, and air-conditioners seven years to cross the threshold of the one million sale mark. The
Roomba had surpassed that figure in two years. Greiner said, “All of these devices that people now
consider indispensable were adopted at much slower rates. The question is no longer; will you
have a robot in your home in the future? But instead, How many?” 26
22
Rich Smith, “Fool on the Street: iRobot is Mutating,” www.fool.com, August 16, 2007.
23
Clorox, founded in 1919 in US, is a major manufacturer of household cleaning products, which includes a highly
popular bleach product.
24
“Is There a Robot in Your Future? Helen Greiner Thinks So,” http://knowledge.wharton.upenn.edu, April 5, 2006.
25 “iRobot Kicks Off “I Love Robots” Ad Campaign,” www.allbusiness.com, October 3, 2005.
26 Matt Hines, “Robotics industry hypes drive to market,” http://news.cnet.com, May 10, 2005.
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iRobot’s Roomba: Bringing Robots into Homes
By 2006, iRobot claimed to have sold 2 million units of Roomba worldwide. White said, “Selling
2 million Roomba Vacuuming Robots is not just a milestone for iRobot, but for the robot industry
as a whole. This achievement signifies that more and more consumers are adopting robots in their
everyday lives, thereby liberating themselves from mundane household chores and spending more
time with family and friends.” 27
iRobot claimed that the Roomba was seen not only as a useful addition to a household, but was
even treated as a family pet by certain customers. Nancy Dussault, VP of marketing at iRobot,
said, “When we talked to consumers about their robots, we found they were referring to them as
‘he’ or ‘she’ and, that they often had names for them. Robots were coming into customer service
with beautiful paint jobs. We were shocked.” 28
iRobot also discovered that some of its technically-savvy customers found ways to hack into the
Roomba and reprogram it to bring a thrown ball or play with a cat. Analysts pointed out that the
core engine of Roomba was very good at moving around, and this helped iRobot develop product
line extensions by building upon the platform of robotic locomotion. Using the same core
functionality, customers were innovating to develop new applications for Roomba.
On its part, iRobot realized the value of such hacking, believing that customer innovation would
prove to be an asset to the company. Initially, the company added a serial port to the Roomba,
which allowed customers to plug in and re-program the robot.
Later in January 2007, iRobot introduced a basic version of the Roomba called the ‘iRobot
Create’, which was intended to be a standard hardware platform for developers. Greiner said, “We
have created a robotics development environment that fulfills a need in the industry for a standard
hardware platform on which to develop new mobile robots. We want to put iRobot at the center of
the ecosystem.” 29
The Create platform could be used with a range of programming languages and systems. It was
priced at US$ 129, and contained the Roomba shell and a command system to allow developers to
bring in added functionality. Over time, iRobot added a line of attachments to extend that platform
by including a robotic arm and a holographic projector.
iRobot featured the innovations of its customers on the webpage ‘iRobot Create Laboratory’, and
customer discussions regarding Roomba and Create were encouraged in the forums section on the
website (www.roombacommunity.com). The website also had a section in which iRobot provided
pictures of the internals of the Roomba and invited users to make suggestions for replacing certain
parts.
Industry analysts lauded iRobot’s support of customer innovation on its core platform. They felt
that this would help new product development in the robotics industry and also raise overall
customer interest in robotic products. They also believed that it was a good way for the company
to develop new product ideas, license the best ideas developed, and hire the most innovative
developers, while keeping down R&D costs. An article on iRobot’s efforts commented, “We often
don’t see the game-changing potential of our own inventions, but must leave it to customers to
point it out to us. In letting go of our perceived monopoly on innovation, we unlock our true
innovative potential.” 30
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27
“Sales of iRobot Roomba Vacuuming Robot Surpass 2 Million Units,” www.businesswire.com, May 22, 2006.
28
“How a Little Robot Became a Platform for Innovation,” http://innovations.ziffdavisenterprise.com, July 3, 2007.
29
Priya Ganapati, “iRobot Still Wants to Bat Cleanup,” www.thestreet.com, January 9, 2007.
30
“How a Little Robot Became a Platform for Innovation,” http://innovations.ziffdavisenterprise.com, July 3, 2007.
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iRobot’s Roomba: Bringing Robots into Homes
In 2007, iRobot introduced several new commercial robots. In April 2007, the company released
the iRobot Verro Pool Cleaning Robot. In August 2007, it launched the Roomba 500 Series
Vacuum Cleaning Robots, a new generation of Roombas with some novel features. In September
2007, iRobot unveiled the Looj Gutter Cleaning Robot and ConnectR Virtual Visiting Robot
(ConnectR). ConnectR was stated to be a robotic device that enabled a person to interact with
others through a combination of robotic technology and internet communications.
iRobot followed a business plan wherein it built one robot and then later tweaked it to perform
various tasks or to target different price ranges. Angle said, “The scalability and flexibility of this
model are what permit the acceleration of these robot platforms into the marketplace and further
ensconce iRobot as the de facto standard in robotics.” 31
Analysts who compared the robotic industries of the US and Japan found some profound
differences. While the Japanese were interested in developing robots that looked and acted like
human beings, the US companies were designing robots not as androids but to fulfill specific tasks
like cleaning floors, mowing lawns, cleaning pools, or reading medical patients’ vital signs. Neena
Buck (Buck), an analyst with Strategy Analytics, said, “In the U.S., we want our robots to be
utilitarian, and act as helpers to us. In Japan and Korea, they think of robots as friends and pets,
and as additions to their families.” 32
Analysts observed that while the use of robots was low in Japan, the sale of millions of Roombas
proved that the approach of the US firms toward robotics was more likely to lead to the growth of
the robotics industry in the long run.
COMPETITION FOR THE ROOMBA
The Roomba’s main competition came from vacuum cleaners costing US$ 50 and above. Although
there were also other robotic floor cleaners which resembled the Roomba, most analysts did not
consider them as a serious challenge, mainly because of their high prices. These products were
priced at over US$ 1,000, while the price range for the Roomba extended from US$ 199 to US$
500. In 2003, several companies came out with robotic vacuum cleaners. Electrolux 33 introduced
the Trilobite priced at US$ 1,700, Hitachi Ltd. 34 came out with the Ultra Small Hitachi Home
Cleaning Robot priced at US$ 1,700, and Kärcher 35 launched the RoboCleaner which was priced at
US$ 1,300. Chris Waters, a robotics expert, said, “Right now, it (Roomba) is probably the world’s
least expensive robotics platform. For US$ 199, you get the benefit of a few millions of dollars
spent in development.” 36
In March 2005, Urus Industrial Corp. 37 through its subsidiary Koolatron Corp., began to sell a
product that it called a “smart” vacuum under the Koolvac brand. Koolvac was also sold at a
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similar price point to that of the Roomba. In May 2005, iRobot sued the manufacturers of Koolvac
for undisclosed monetary damages, claiming that Koolvac was “a complete knock-off” of the
Roomba. iRobot won the lawsuit, which made the sale of Koolvac illegal in the US.
31 Rich Smith, “Fool on the Street: iRobot Is Mutating,” www.fool.com, August 16, 2007.
32 Kevin Kelleher, “iRobot and the Frankenstein Complex,” http://gigaom.com, September 30, 2007.
33 Electrolux is a Swedish manufacturer of household products that are sold in many countries across the world under
various brand names. It is the second largest appliance manufacturer in the world and sells refrigerators, dishwashers,
washing machines, vacuum cleaners, and cookers.
34 Hitachi, founded in 1910 in Japan, is a multinational corporation with a presence in market segments like information
and telecommunication systems, electronic devices, power & industrial systems, digital media & consumer products,
high functional materials & components, logistics & financial services.
35 Kärcher, established in 1935 in Germany, is a world renowned manufacturer with a presence in several countries. It
generally sells cleaning systems and equipments, especially high pressure cleaners for cars.
36 Wendy Wolfson, “Hack Your Vacuum Cleaner,” www.informit.com, December 23, 2003.
37 Urus Industrial Corp. is a Canada-based company that manufactures, markets and distributes a wide variety of
consumer items through dealer-distributor network to a number of retailers and mass merchandisers. It also sells
directly to customers through direct response commercials and websites.
9

iRobot’s Roomba: Bringing Robots into Homes
Over the years, some Chinese and Taiwanese companies introduced Roomba clones at low prices.
However, none of these models was successful. Analysts believed that the main reason for their
lack of success was their poor performance and low quality standards. On its part, iRobot seemed
unconcerned by this competition. Greiner said, “We’ve had some knock-offs come in on the low
end -- people who say, ‘Hey, these guys are selling a lot of robots, we’ll just copy what they’re
doing.’ So far, none of them has been successful on the market because they haven’t been very
functional and they don’t have the brand that we have. People go to the stores and ask for a
‘Roomba,’ not a ‘vacuuming robot.’” 38
Even in 2008, aside from conventional vacuum cleaners, the only competition Roomba faced came
from the high-priced robotic vacuums of Electrolux and Kärcher. Moreover, according to
comparisons done by Consumer Reports, 39 the performance of the various extensions of the
Roomba product line was found to be as good as, or sometimes even better than, several higher
priced vacuum cleaners. Buck said, “iRobot is at the sweet spot. Although we expected there to be
much more competition by now, there are significant barriers to entry. There is a lot of intellectual
property that goes into these things and a lot of knowledge that goes into building them.” 40
CHALLENGES
However, the Roomba did have some drawbacks. Some people pointed out that even though it was
effective in cleaning rooms, it took much more time than an average person. Also, setting up the
Roomba took time, and included activities like scheduling, setting up virtual walls, and clearing up
other clutter. Product reviews reported that it took 45 minutes for a Roomba to clean a 10-ft. by
12-ft. room. Reviewers also discovered that the robot covered some areas of the floor a number of
times, while it went over other areas only once or sometimes not at all.
Some reviews also reported that the Roomba worked better on hard floors than on carpets, even
though it was designed to work on all kinds of flooring. A few reviews said that the Roomba was
unsuitable for high pile carpets, and that its brushes generally got clogged with pet hair. It was also
found that the cleaning solution used in the Scooba was harsh on hardwood floors.
Analysts felt that though the Roomba had the potential to complement or eventually replace
vacuum cleaners, it was not being adopted widely as it was being treated as a highly technical
product by the mass market. It was also observed that the robots were usually purchased by
customers not for themselves but as a gift for others. Some customers reportedly treated them as
toys or luxury items. Angle said, “I think there is a little bit of reluctance to believe this is a core
appliance. It’s thought of as a bit of a luxury, so people think it’s a great gift item.” 41
This was also the reason why iRobot’s peak sales occurred in the holiday season. Angle said,
“Typically, the way our business cycle has worked, we lose money in the first half of the year, and
we make money in the third and fourth quarters. We expect that trend to continue. In prior years,
the majority of the profits have been in the third quarter.” 42
Analysts also felt that iRobot’s marketing and distribution network was poor, and that its supply
chain management was slack. They believed that this was affecting the growth of the market for
the robots. Industry observers pointed out several occasions when there had been a shortage of the
robots in the market. As of late 2008, there was a severe shortage of Scoobas in the market.
Charles Vaida, a spokesperson for iRobot, said, “This is an inventory issue. It doesn’t have to do
with any changes in the manufacturing process or a restructuring of our Scooba line.” 43
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38
“Is There a Robot in Your Future? Helen Greiner Thinks So,” http://knowledge.wharton.upenn.edu, April 5, 2006.
39
Consumer Reports is an American magazine that published reviews and comparisons of consumer products and
services. These results were derived from its in-house testing laboratory. It had about 4 million subscribers.
40
“Roomba leads the way for household robots,” www.theage.com.au, January 1, 2007.
41
“Roomba leads the way for household robots,” www.theage.com.au, January 1, 2007.
42
Juston Jones, “Making Robots for the Home or a Battlefield,” www.nytimes.com, August 12, 2006.
43
Priya Ganapati, “iRobot Out of Scooba Robotic Mops,” http://blog.wired.com, October 16, 2008.
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iRobot’s Roomba: Bringing Robots into Homes
Although the Roomba sold well, market penetration, at around 1%-2%, remained low. Analysts
believed that the Roomba, which was purchased by early adopters, had failed to become a
mainstream product. Charles Wolf, an analyst with New York investment bank Needham & Co,
said, “You get your early adopters, but the product (Roomba) doesn’t appear to be appealing to
mainstream users in the same way. So the company faces the classic conundrum of crossing the
chasm if it’s going to be a major product and have more than a 1% share.” 44
Some analysts felt that the introduction of so many product variants was also affecting the growth
of the market. They felt that instead of concentrating on a large number of low volume products,
iRobot should have attempted to increase the market penetration of its most successful product—
the Roomba. The sales of the Roomba were quite low after 2006, when compared to the sales in
the previous years.
According to some analysts, most people were apprehensive about trying out new devices, and this
included robots. They said that to make people interested in such devices, they needed to be shown
these devices in action. They pointed out that there were hardly any retail stores in the US which
had product demonstrations of the Roomba and Scooba. They also felt that the infomercial
approach adopted by iRobot for the Roomba was not the best approach, as customers tended to
view infomercials with distrust.
Some analysts felt that with the availability of a wide product line, iRobot should open its own
retail stores. They felt that this would encourage existing customers to upgrade to the latest
products, and at the same time attract new customers who would never have thought of buying a
robot otherwise.
OUTLOOK
Analysts believed that although the consumer robotics space was growing, it needed more
competition to take off. They felt that the growth was low due to the capital, time, and laborintensive
nature of the industry.
On the other hand, several industry players believed that the robotics industry would show
tremendous growth. Joe Augenbraun, Chief Executive of Home Robots, a start-up in Mountain
View, California, said, “Over time, like the PC or the electronics industry, there will be tonnes of
companies that start focusing on different problems in this space. And things will come out that no
one imagined. And multiple companies will be competing for a slice of it.” 45 Angle also believed
that the robotics industry would in due time ‘support multiple companies.’
iRobot also announced plans to introduce new robots for consumer, military, and industrial
applications. Angle said, “Industrial cleaning, optimizing production and exploration for oil,
mining, landscaping -- they are all great applications which we’re very interested in doing.” 46
iRobot had plans to develop other robots for activities like lawn mowing, bathroom/shower/toilet
cleaning, and laundry folding. According to a study, consumer robot markets for cleaning, lawn
mowing, pool cleaning, and home services were projected to grow to US$ 1.7 billion by 2014,
from US$ 227 million in 2007. iRobot also expressed its intention to develop robots to take care of
the elderly, taking into account their growing numbers in the US and other developed countries.
In September 2007, iRobot reported a net loss of US$ 11.7 million for the first three quarters. (See
Exhibit VII for the Financials of iRobot), There was also a decline in the sale of commercial
robots. The stock price of the company fell too (See Exhibit VIII for the trends in share prices).
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44
Dan Burrows, “iRobot Stock is Overpriced Even after Yearlong Swoon,” www.smartmoney.com, March 14, 2007.
45
“Roomba leads the way for household robots,” www.theage.com.au, January 1, 2007.
46
Candace Lombardi, “iRobot’s Angle on the future: More profit,” http://news.cnet.com, August 23, 2007.
11

iRobot’s Roomba: Bringing Robots into Homes
However, iRobot managed to earn higher revenues in the last quarter of 2007, which enabled it to
end the year in the black. Nevertheless, shareholder unease increased when two of the founders,
Brook and Greiner, left the company in September and October of 2008 respectively. While Brook
left the company to join another robotics company, Greiner did not give any reason for her
resignation.
In spite of all these adverse developments, many analysts felt that the long-term prospects of the
company were good. They believed that the growing profitability of the military robots segment
and the award of several new military contracts to iRobot were favorable signs. But some analysts
also felt that the company should make greater efforts to increase sales of the Roomba.
iRobot undertook several measures to improve margins. It brought in numerous changes to
improve supply chain efficiency, and increased monitoring of its manufacturing processes. As part
of its product line extension, it introduced new robots in the commercial segment. In September
2008, iRobot launched two new line extensions for the Roomba, called the Pet Series Vacuum
Cleaning Robot and the Professional Series Vacuum Cleaning Robot.
The company also started to re-think its retail strategy. In November 2008, iRobot opened a retail
store kiosk in a local mall in Massachusetts, near its headquarters, to demonstrate products and
later help interested customers order the product online. Angle said, “This kiosk delivers
customers a unique experience — they can see, feel, and touch our products before buying — and
as we’ve heard from our customers ‘seeing is believing.’” 47 For this purpose, iRobot revamped its
website by including more information on its products and added attractive graphics, pictures, and
videos.
The opening of the kiosk was also expected to test the strength of iRobot’s brand and the
marketing abilities of its staff. Besides, the kiosk was expected to be a learning experience for
iRobot in formulating its future retail strategy. Matt Palma, Director of Sales, Home Robots, said,
“Our main goal is to really make the customers understand about our product and how they will
serve them. We are hoping to learn from this experience and see what happens from here. If things
go well, this is something that we could expand on in the future.” 48
iRobot reported a net loss of US$ 4.7 million for the first three quarters of 2008. Despite this, the
company was confident that the sales of its robotics products including the Roomba would
continue to grow in the future. Angle said, “The Roomba has shown that there is a very interesting
and exciting market for robots that can deliver the goods. This is here to stay.” 49
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47
“iRobot Open For Business at Burlington Mall,” www.roboticstrends.com, November 8, 2008.
48
Chris Kingenberg, “iRobot launches gadgets at mall,” www.wickedlocal.com, November 13, 2008.
49
Robert Buderi, “A Robot Store in Every Mall? IRobot CEO Discuss Firm’s Efforts to Boost Retail Sales,”
www.xconomy.com, November 12, 2008.
12

Source: www.packbot.com.
iRobot’s Roomba: Bringing Robots into Homes
Exhibit I
Picture of a Packbot
Exhibit II
Details of iRobot’s Products
Military & Industrial Robots Home Robots
iROBOT PACKBOT iROBOT ROOMBA
iROBOT NEGOTIATOR iROBOT SCOOBA
SUGV PROGRAMS iROBOT LOOJ
iROBOT WARRIOR iROBOT DIRT DOG
iROBOT SEAGLIDER iROBOT CONNECTR
iROBOT RANGER iROBOT VERRO POOL
iROBOT TRANSPHIBIAN iROBOT CREATE
iROBOT HIGH SPEED UUV
Source: www.irobot.com.
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Source: www.midtbo.com.
FIRST GENERATION
iRobot’s Roomba: Bringing Robots into Homes
Exhibit III
Picture of First Generation of Roombas
Exhibit IV
The Three Generations of Roombas
The first generation of the Roomba, introduced in September 2002, consisted of three models: the
Roomba Original, the Roomba Pro, and the Roomba Pro Elite. These models had three buttons —
Small, Medium, and Large – which the customers could use to specify the size of the room in
which the Roomba was to operate. The robot used rechargeable nickel-metal hydride batteries.
SECOND GENERATION
The second generation of the Roombas, launched in July 2004, consisted of several models that
were part of the Roomba Discovery series, and included the Roomba Red. The new models came
with a larger dustbin, better dirt detection, and an optional self charging home base. Roombas
generally found their home base through their infrared sensors and got self-charged in about 3
hours.
After pressing the ‘power’ button, the room could be cleaned using ‘clean’, ‘spot’, or ‘max’ (if
applicable) buttons. These models were fitted with additional dirt sensors that allowed them to
detect highly dirty spots and clean them accordingly. They also came with a Scheduler accessory,
which enabled them to commence cleaning of the specified room automatically at the time of day
specified by the owner. The units also came with an infrared remote control.
THIRD GENERATION
The third generation of the Roombas, unveiled in 2007, consisted of several models that were part
of the Roomba 500 series. This series had had all the features of its predecessors. It also had a new
‘dock’ button that enabled the Roomba to connect with the home base, once it finished its task.
Compiled from various sources.
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14

iRobot’s Roomba: Bringing Robots into Homes
Exhibit V
Picture of Scooba
Source: www.woot.com.
Exhibit VI
Picture of Roomba Dirt Dog
Source: www.irobot.com.
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15

iRobot’s Roomba: Bringing Robots into Homes
Exhibit VII
Financials of iRobot
16
(in millions of US$)
Particulars December 2007 December 2006 December 2005
Revenue 249.1 189.0 142.0
Cost of Goods Sold 166.5 119.2 94.3
Gross Profit 82.6 69.7 47.7
Gross Profit Margin 33.2% 36.9% 33.6%
SG&A Expense 79.9 63.4 42.9
Depreciation & Amortization 5.3 6.3 2.7
Operating Income (2.7) 0.0 2.1
Operating Margin -- 0.0% 1.5%
Non-operating Income 3.2 3.8 0.7
Non-operating Expenses -- -- --
Income Before Taxes 0.5 3.9 2.8
Income Taxes (8.6) 0.3 0.2
Net Income After Taxes 9.1 3.6 2.6
Continuing Operations 9.1 3.6 2.6
Discontinued Operations -- -- --
Total Operations 9.1 3.6 2.6
Total Net Income 9.1 3.6 2.6
Net Profit Margin 3.6% 1.9% 1.8%
Diluted EPS from Total Net
Income (US$)
0.36 0.14 0.11
Dividends per Share -- -- --
Source: www.hoovers.com.
Source: www.investorguide.com.
Exhibit VIII
Trends in Share Prices (2005-2009)
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References & Suggested Readings:
iRobot’s Roomba: Bringing Robots into Homes
1. Erik Davies, “Congratulations, It’s A Bot!” www.wired.com, September 2000.
2. Hiawatha Bray, “Firm hopes this robot will really clean up,” www.frc.ri.cmu.edu,
September 23, 2002.
3. Leander Kahney, “Robot Vacs Are in the House,” www.wired.com, June 16, 2003.
4. “Roomba Creator to Discuss Future of Consumer Robots at 2005 International
CES,” www.beststuff.com, January 06, 2005.
5. Matt Hines, “Robotics industry drives hype to market,” http://news.cnet.com, May 12,
2005.
6. Mark Baard, “Roomba Tweak for Neat Freaks,” www.wired.com, June 24, 2005.
7. Michael Kanellos, “Can Roomba maker iRobot clean up on Wall Street?”
http://news.cnet.com, July 27, 2005.
8. Michael Kanellos, “Trick out your Roomba,” http://news.cnet.com, December 09, 2005.
9. Paul Davidson, “Co-founder of iRobot was told ‘that’s too science-fiction,’”
www.usatoday.com, October 25, 2006.
10. Paul Miller, “iRobot Create: Roomba hacking for the everyman,” www.engadget.com,
November 29, 2006.
11. Rich Smith, “Fool on the Street: iRobot is Mutating,” www.fool.com, August 16, 2007.
12. Aaron Ricadela, “Tidying up the New Roomba,” www.businessweek.com, August 21,
2007.
13. Ryan McBride, “Robo nurses: iRobot, others prepare health-care robots,”
www.masshightech.com, December 17, 2007.
14. Katie Baker, “Why Should We Be Friends?” www.newsweek.com, August 09, 2008.
15. Jeff Czyzewski, “Does the Roomba Hold Up To the Competition?”
http://ezinearticles.com, October 25, 2008.
16. Eric Savitz, “Roomba Goes Kaboomba: iRobot Cuts ‘08 Guidance; Says Retailers
Getting Cautious; Replaces CFO; Stock Slides,” http://online.barrons.com, April 30,
2008.
17. William Wong, “Robots Crowd the Aisles in Las Vegas,” http://electronicdesign.com.
December 01, 2008.
18. John Biggs, “iRobot CEO Colin Angle talks about the future of robotics,”
www.crunchgear.com, January 08, 2008.
19. www.irobot.com.
20. www.robotvacuumreviews.com.
21. www.epinions.com.
22. www.engadget.com.
23. www.paradiserobotics.com.
24. www.robotadvice.com
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