iRobot is the manufacturer of the Roomba, a vacuum that autonomously cleans your home. The Roomba builds a map of your home and tracks its own location enabling it to seamlessly navigate and vacuum your home (see Exhibit 1 for visual of how the Roomba maps its location relative to items). Using sensors, the product is able to avoid colliding with walls or furniture, falling off stairs, and also allows it to automatically recharge itself.
The Roomba is part of a rapidly growing sector called the “Internet of Things” (IoT). The IoT creates a network of smart physical products which can “talk to each other” and share data[ii]. Research from Gartner forecast that by the end of 2017 we will have 8.4 billion of such connected items[iii]. The value of products grow exponentially as more items are connected[iv]. The combination of the rapid growth and increasing prevalence of smart devices should make management very interested in opportunities in the home IoT segment, which was worth $9.8 billion in 2016 and has a projected growth rate of an astonishing 60%[v]. The sector is still in its infancy with the products generally working independentlyii . This provides a large opportunity for a company that can connect different home IoT devises to dominate the market by essentially becoming the Google of the home.
Colin Angle, who is the Chairmen, CEO, and founder of iRobot has clearly identified this opportunity by publically announcing Roomba’s short-term goal of selling data maps to Amazon, Apple or Alphabet next 2 yearsiii. This data, which can provide dimensions of rooms, features of a room, and the distance between various furnishings using the Roomba’s sensors and camerasv, is highly valuable, and offers a new set of information previously not collectediii. In March 2017, iRobot also agreed a deal with Alexa to integrate voice to the Roomba’s maps. Right now, Alexa cannot tell what room is a kitchen or a bedroom, and therefore through the Roomba integration, simple voice commands such as “Alexa please switch off my kitchen lights” may be round the corner[vi].
In the medium term, it is clear that the value of this data could be significant when connected with other devices. Angle thinks the Roomba in the future could connect “music, TV, head blinds, stove, coffee machine, fan, game console, smart picture frames or robot pet”[vii]. Guy Hoffman, a Cornell robotics professor believes the Roomba’s data maps can be used to optimize home smart lights by accounting for where windows are located, or optimizing home acoustic or air conditioning air flow systems by factoring in the size, shape, and furniture in a roomv.
When Angle, publically announced that iRobot plans to sell user data this was met by a large backlash by users concerned for their privacy. Media reports such as Forbes and the New York Times reported that users were alarmed finding this “creepy,”i and an “invasion of privacy”[viii]. This led to iRobot correcting its original statement to take a softer stance, reporting that they would only provide data with users consent and would provide it for free rather than selling iti. The company has also published a detailed FAQ on its website to clarify its position and distance itself from a controversial topic[ix]. The UK data protector regulator, the Information Commission Office, released findings that 59% of IoT companies fail to properly communicate the data collected or used to customers[x].
To solve this problem iRobot could take a bold move to price in the data they want to sell. iRobot could consider leasing a Roomba for free, with 100% rights to sell and use the data it collects. With the cheapest Roomba retailing at $300, this could be highly attractive for users, while allowing iRobot to become the “a connective tissue for the smart home” similar to what Google is for the webvi. To make this viable they would need to fundamentally alter their business model – from the data being an incremental addition revenue stream – to being the core asset of the company. Similar to how Apple and Google create platforms for developers to create apps iRobot would need to offer a platform to encourage smart home IoT developers to build products connected to Roomba’s map data to rapidly create new smart home products.
Going forward the question that needs to be asked is can iRobot create a defensible first mover advantage to become the Google of the smart home and if so should it take on this bold move to disrupt the industry?
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[i] Kevin Murnane, “iRobot Clarifies Its Position On How Roomba-Created Maps of People’s home will be Used”, Forber, August 1 2017, https://www.forbes.com/sites/kevinmurnane/2017/08/01/irobot-clarifies-their-position-on-how-roomba-created-maps-of-peoples-homes-will-be-used/#546e1be07d81, accessed November 17 2017.
[ii] Matt Burgress, “What is the Internet of Things? WIRED explains”, Wired, April 21 2017, https://www.wired.co.uk/article/internet-of-things-what-is-explained-iot, accessed November 17 2017.
[iii] Matt Burgress, “The Internet of Things is a Data Farm, Roomba won’t be it’s only Profiteer”, Wired, July 25 2017, http://www.wired.co.uk/article/roomba-data-sell-internet-of-things, accessed November 17 2017.
[iv] Michael E. Porter and James E. Heppelman, “How Smart, Connected Products are Transforming Competition”, Harvard Business Review, November 2014.
[v] Jan Wolfe, “Roomba Vacuum Maker iRobot Betting Big on the ‘Smart’ Home”, Reuters, July 24 2017, http://www.reuters.com/article/us-irobot-strategy/roomba-vacuum-maker-irobot-betting-big-on-the-smart-home-idUSKBN1A91A5?il=0, accessed November 17 2017.
[vi] Brian Heater, “With Alexa Integration and Mapping, iRobot Aims to Make Roomba Center of the Smart Home”, Tech Crunch, March 14 2017, https://techcrunch.com/2017/03/14/roomba-connected-home/, accessed November 17 2017.
[vii] Alex Landa, “How iRobot Plans to Dominate Household IoT”, Northeastern University, August 11 2017, http://www.northeastern.edu/levelblog/2017/08/11/strategic-vision-irobot-will-dominate-household-iot/, accessed November 17 2017.
[viii] Maggie Astor, “Your Roomba may be Mapping your Home, Collecting Data that counld be Shared”, New York Times, July 25 2017, https://www.nytimes.com/2017/07/25/technology/roomba-irobot-data-privacy.html, accessed November 17 2017.
[ix] iRobot, “iRobot Roomba Privacy and Deata Sharing”, https://homesupport.irobot.com/app/answers/detail/a_id/964/~/irobot-roomba-privacy-and-data-sharing, accessed November 17 2017.
[x] ICO Org, “2016 GPEN Sweetp – Internet of Things (with a focus on Accountability)”,https://ico.org.uk/media/about-the-ico/disclosure-log/1625142/irq0648379-attachment.pdf, accessed November 17 2017.