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Like the workplace and businesses, the home is becoming a setting where technologists are increasingly creating new ways to automate routine tasks. At the same time, the value of the smart home is growing in the eyes of the largest tech companies as they seek to play a role in more facets of consumers' lives.
That's apparent in the latest M&A news from Amazon: The company is set to acquire iRobot, the Bedford, Massachusetts-based maker of the Roomba robot vacuum. Valued at $1.7 billion, it’s the fourth-largest-ever acquisition for Amazon.
“We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, SVP of Amazon Devices. “Over many years, 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. 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 acquisition has potential benefits for Amazon on a number of levels. To be sure, Amazon has incentive to add a product that is in a popular category in its marketplace. Consumer electronics continues to be a big seller on the ecommerce site, and Amazon already makes many of its own home gadgets like Alexa-powered Echo devices, Ring doorbells and the various Fire TV products. Roomba deals are already a fixture of Prime Day, and iRobot also makes mops, air purifiers and a handheld vacuum that Amazon can add to its portfolio.
A Roomba in action. (Photo via iRobot)
But there appears to be more at play here. Just look at how the Roomba has evolved.
iRobot first introduced the Roomba in 2002, and it became something of an early YouTube star thanks to videos of cats hilariously interacting with it (and running from it). The company has since made plenty of improvements. The latest model has a computer vision-powered operating system that recognizes over 80 objects to avoid around a house, and even has features to keep pets away.
The Roomba updates have a couple of things that are particularly interesting for Amazon:
Voice commands: The Roomba OS understands about 600 voice commands, including many from Amazon’s own Alexa. As iRobot detailed last year, a person can use voice tech via Alexa to send a Roomba to clean around a certain object, schedule a cleaning and provide an update about a robot’s status. It also picks up a hunch that people are away from home, and starts cleaning.
The existing voice-powered capabilities of the Roomba indicate there’s room to go even further with these commands. Even with the features already in place, it’s not hard to see the Roomba essentially becoming a voice assistant that can travel around the house, and perform tasks. Alexa is also becoming an independent communicator between human and robot. It is letting people know about the status of a Roomba, while also telling the Roomba what to do.
Maps and data:As the New York Times reported in 2017, the Roomba creates maps of a home, and collects data to help it navigate as it vacuums. This data can also be valuable to Amazon, not just to improve the Roomba and other robots it makes, but for other home products it sells and even for its growing advertising service.
Subscription: Yes, Roomba has a membership program. The iRobot Select membership for the latest model of Roomba provides accessories that are sent automatically when needed, a protection plan and support. Given the success of Prime, Amazon tends to like memberships and has a good track record in this area, too.
This points to the reason why iRobot would be particularly interesting to Amazon. As with all things Amazon, it points toward the Prime subscription service. Let’s review the company’s recent moves:
- Acquired One Medical, a subscription primary care service, for $3.9 billion.
- Added free Grubhub+ subscription as a Prime benefit.
- Introduced delivery from brick-and-mortar store retailers for Prime members.
While the value of the Grubhub and retail partnerships to Prime are self-evident, it’s particularly interesting that the One Medical and iRobot acquisitions have arrived just weeks apart. They’re in disparate categories, but could be related when considering the role of Prime. It’s not just a service for two-day shipping and returns for ecommerce, but rather functions as the engine of Amazon’s ecosystem, providing the access point for its consumer services and easy repeat buying. The company is increasingly adding new benefits to the membership, in part to increase its value (especially after raising prices in the US and UK this year), as well as make it attractive to new members.
One Medical is a subscription service, and Amazon talked about its desire to invent the future of healthcare. With that acquisition, primary care and telehealth could be another addition to a Prime membership. It’s a big step, given the notorious complexity and entrenched interests within the American healthcare system. but Amazon appeared to be signaling a big play with the acquisition. In the July 21 announcement of the deal, SVP of Amazon Health Services Neil Lindsay said the company sees healthcare as “high on the list of experiences that need reinvention.”
“We love inventing to make what should be easy easier and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” Lindsay said. “Together with One Medical’s human-centered and technology-powered approach to health care, we believe we can and will help more people get better care, when and how they need it. We look forward to delivering on that long-term mission.”
With iRobot, there are signs that Amazon is looking to add smart home as a key tenet of Prime, as well. For one, the Roomba could become a Prime benefit in its own right. With an existing subscription service, there’s an obvious tie-in, similar to Grubhub. The data the Roomba provides would in turn feed Prime's internal systems to learn more.
But Amazon merely partnered with Grubhub, and may have been able to do the same with Roomba, given the existing relationship. With Amazon acquiring iRobot's team and other technology outright, it might also be something more. Recall that in Amazon's announcement of the deal, SVP of Devices Dave Limp uses the word "invent" three times when referencing iRobot, saying that the team has developed advances in "practical" areas "from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin." This could be Amazon-speak. Or it could be signs of a new wave of capabilities coming.
Where could this be heading?
Here's a prediction: Think about it as part of Prime's existing services. Triggered by a command in a Ring doorbell, a Roomba might pick up a package or order at the door. Importantly, the Roomba is also there to receive the delivery while customers aren't home.
Amazon has focused on logistics for the last mile. The Roomba could pick up the last few feet.
With Alexa’s capabilities, it can update the person that the order was received. With further advances, Alexa may also be able to tell the Roomba to perform this task, and others.
Alexa will be the brain of the smart home, while the Roomba does the work.
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On the Move has the latest from Amazon, Lovesac and more.
This week, leadership is changing at GameStop, Sorel and Beautycounter. Meanwhile, key executives are departing at Amazon, Wayfair and Lovesac.
Here’s a look at the latest shuffles:
GameStop CEO fired
GameStop announced the termination of Matthew Furlong as CEO on Wednesday. A brief statement did not provide a reason for the firing.
With the move, Chewy founder and activist investor Ryan Cohen was named executive chairman of the video game retailer. Cohen will be responsible for capital allocation and overseeing management.
It came as the company reported a 10% year-over-year decline in net sales for the first quarter. Meanwhile, the company’s net loss improved by 62%.
In an SEC filing, GameStop further added this “We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders.”
Cohen was revealed as GameStop's largest shareholder when he disclosed a 10% stake in the retailer in 2020. GameStop went on to become a leading name in the meme stock rise of 2021.
Sorel president steps down
Mark Nenow is stepping down as president of the Sorel brand in order to focus on his health.
After rising to the role in 2015, Nenow spearheaded a transformation of Columbia Sportswear-owned Sorel from a men’s workwear brand to a fashion-focused brand that led with a women’s offering of boots, sandals and sneakers.
“Mark led the brand to sales of $347 million in net sales in 2022,” said Columbia Sportswear CEO Tim Boyle, in a statement. “His leadership has been invaluable to this company, and we wish him the very best.”
Columbia will conduct a search for Nenow’s replacement. Craig Zanon, the company’s SVP of emerging brands, will lead Sorel in the interim.
Beautycounter appoints interim CEO
Beautycounter appointed board member Mindy Mackenzie as interim CEO, succeeding Marc Rey. According to the brand, Rey and the board “mutually decided to transition to a new phase of leadership for Beautycounter.”
McKenzie, a former executive at Carlyle, McKinsey and Jim Beam, will lead the company as it conducts a search for a permanent CEO. Additionally, former Natura & Co CEO Roberto Marques will join Beautycounter’s board as chair.
As part of the transition, Nicole Malozi is also joining the company as chief financial officer. She brings experience from Tatcha, Nike, and DFS Group Limited.
Amazon’s North America fulfillment chief departs
Melissa Nick, a VP of customer fulfillment for North America at Amazon, will leave the company, effective June 16, CNBC reported. Nick joined the company in 2014, and oversaw a region that included nearly 300 fulfillment centers. After doubling its supply chain footprint during the pandemic, Amazon recently reorganized its fulfillment operations to take a regional approach, as opposed to a national model that often resulted in items shipping across the country.
Wayfair’s chief commercial officer to retire
Jon Blotner (Courtesy photo)
Steve Oblak will retire from the role of chief commercial officer at home goods marketplace Wayfair. With the move, Jon Blotner will be promoted to chief commercial officer.
"Steve has served as a critical part of our leadership team and played a pivotal role in Wayfair's growth, helping us grow from a $250 million business when he joined to $12 billion in net revenue today,” said Wayfair CEO Niraj Shah, in a statement. “He oversaw countless milestones, from helping to launch the Wayfair brand as we brought together hundreds of sites into a single platform, to launching new categories, business lines, and geographies while overseeing our North American and European businesses, to leading our debut into physical retail.”
Blotner previously oversaw exclusive and specialty retail brands, as well as digital media at Wayfair. Before joining the company, he served as president of Gemvara.com prior to its 2016 acquisition by Berkshire Hathaway.
Lovesac announces CFO transition
Furniture retailer Lovesac said Donna Dellomo will retire as EVP and CFO, and move to an advisory role, effective June 30. Dellomo was with Lovesac for six years.
Keith Siegner was appointed as the next EVP and CFO. He brings experience as CFO of esports company Vindex, as well as executive roles at Yum! Brands, UBS Securities and Credit Suisse.
Additionally, Jack Krause will retire from the role of chief strategy officer, effective June 30. His responsibilities will be divided between CEO Shawn Nelson and president Mary Fox.
“Since joining Lovesac, Jack has played an instrumental role in transforming the Company into a true omni channel retailer by helping expand our physical touchpoints and digital platform as we continue to disrupt the industry,” said Nelson, in a statement.
NRF adds board members
The National Retail Federation announced the addition of five new board members. They include:
- Marguerite Adzick, founder and CEO, Addison Bay
- Harley Finkelstein, president, Shopify
- Ian Kahn, partner, PwC
- Sharon Leite, CEO, Ideal Image
- Carrie Tharp, VP, strategic industries, Google Cloud