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 smart vacuum cleaners to air purifiers.
It also comes at a time when Amazon is working to move its Alexa-enabled devices from stationary objects like smart speakers to mobile machines that can follow you around your home and respond to your commands in an instant.
It’s clear that Amazon has invested heavily in the future of the smart home, and while the robotic vacuum space is competitive, with this deal Amazon has acquired and strengthened its expertise, Raymond James analyst Brian Gezuale wrote in an Aug. 5 note.
“There are major players in the robotic vacuum space like LG, Samsung, Shark and a host of others creating a competitive market where prices and margins have been shrinking for the last few years with no end in sight,” he wrote.
“The wider smart home ecosystem has an even wider range of competitors. Amazon is small in the robot market with its recently launched Astro product, so in the near term it’s more about vertical integration of the channel as it develops a longer-term plan for the smart home and connected data.
But it’s not just about building smarter devices. The Amazon acquisition is part of its broader strategy to try to ensure that the Prime service is always at the top of consumers’ minds, and by selling more physical products that connect to the platform, it can do just that.
Attracting Prime members
Amazon’s ultimate goal for its e-commerce 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 benefit for the company. After all, Amazon receives your monthly or annual fee, then receives a portion of the products you purchase.
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Amazon acquires iRobot for $1.7 billion. (AP Photo/Eugene Hoshiko)
Amazon’s own products, like Echo speakers, are set to incentivize you to sign up for Prime as well. After all, it’s easy to quickly tell Alexa to buy something for you or play a song through Prime Music if you’re a Prime subscriber.
IRobot also offers more than the Roomba vacuum cleaner. The company also sells its Braava Jet smart mop and handheld vacuum cleaner. The company previously worked on a smart lawnmower, but abandoned the idea.
Still, iRobot’s existing portfolio gives Amazon another way to convince customers to sign up for Prime.
Building better bots
However, IRobot’s products will also help Amazon build its own collection of home robots. Amazon currently offers its own robot called Astro. A kind of Alexa on wheels, the little robot is currently available for purchase by invitation only and costs $999. If and when the Astro becomes available to the general public, it will cost $1,499.
Amazon Senior Vice President of Devices and Services Dave Limp unveils the 2021 Amazon Astro (Photo by Jamie McCarthy/Getty Images)
Astro’s main features include being able to follow you around to let you listen to podcasts and music, carrying small items to people in your home via a small rear-mounted container, letting you manually use it to check on your home, when you are away and act as a sentinel by patrolling your home at night.
So far, however, Astro looks like a half-baked bot with an uncertain direction. Reviews from CNET, The Wall Street Journal, and TechCrunch point to the fact that Astro isn’t all that great at the many things it’s supposed to do. Reviewers point to everything from the bot having difficulty determining the layout of the home to just plain getting in the way.
There’s also the problem that Astro doesn’t do stairs. It cannot be climbed up or down them. So it’s stuck on one floor of your home.
Astro isn’t Amazon’s only 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 as a flying camera. Also available by invitation only, the Always Home Cam costs $249.
While iRobot’s devices are more focused on individual tasks like vacuuming and washing, the company’s technology could prove particularly useful for Amazon as it builds out its home robotics capabilities.
The iRobot acquisition will also be key to Amazon’s data collection efforts. Roombas create maps of your house so the device knows where it’s been, where it’s going and how clean those rooms are, said Ian Greenblatt, who leads JD Power’s technology, media and telecommunications practice.
“It’s another sensor platform, not unlike Ring or Alexa or even your retail purchase history,” Greenblatt said. “You have to keep in mind that all of this together creates a rather three-dimensional image of a person. With Roomba, it’s already moving around your home.”
It’s also worth noting that iRobot devices now support Alexa, meaning you can tell your vacuum to clean an area using Alexa and it will take off and get to work. So it makes sense that iRobots’ own experts are already quite familiar with Amazon’s technology.
After all, the fact that Roomba is mobile is a big deal — even though Amazon has plenty of home bots, this acquisition will help Amazon create “the next generation of home robot companions, among other capabilities,” Greenblatt said.
Any advice? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Ali Garfinkle is a senior technical reporter at Yahoo Finance. Find her on Twitter @agarfinks.
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