iRobot is the largest consumer robotics company in the world. It has hundreds of engineers, and a market cap near $500 million. So how come they didn't figure out laser-guided SLAM-mapping could work on a Roomba, and a startup in Silicon Valley did? Neato Robotics' success in building the first laser-guided consumer product, the XV-11 vac, is a classic tale of Apple-style can-do innovation, the kind that we haven't seen much of from iRobot lately as it has focused on getting its business lines and financial house in order.
The tale is a stunning one. To make its entire business model work, Neato managed to turn a $2,000 laser part into a part costing mere tens of dollars. It took them a few years, but they pulled it off. And now they have a very high barrier for iRobot to jump to get back in the game. It's not like there are any obvious solutions out there or they would have been found already. iRobot's own military division had invested heavily in laser mapping for robots, but for some reason -- presumably that $2,000 cost -- probably convinced Colin Angle that it was a dead end for consumer robots. (I wonder if Colin learned all too well the value of cutting costs in the making of the original $199 Roomba.) In tech products, you have to control costs, but you also have to dream big and deliver. Apple is the role model here, folks. And it's hard to be Apple. Every time you want to invest in an innovation effort with a years-long lead time, you've got money people pushing to pinch pennies. But it's been several years now since iRobot delivered a truly amazing device (the Scooba), and a botched rollout of that product and a lack of iRobot-owned stores to demonstrate its products, and continuing shortcomings of its robots in general have left room for competitors to come in and steal their lunch.
The Roomba 500 series was a major improvement over the previous generation Roomba, and the company has continued to tweak it and tweak it and tweak it to cut costs, improve reliability, etc. But where is the vision for this company for the future. Where is the wow factor? I don't want to be owning Hoover when Dyson comes in and steals their lunch, and I'm worried we are exactly at that point now.
Keep in mind, Neato now has a major competitive advantage -- cheap, reliable, patented 2D laser mapping -- that it can bring to other robots inside and outside of the home. For every future iRobot product in Angle's dreams, they have to ask themselves, can Neato trump us with a laser-guided version?
I don't know if Neato was ever in a mode where they were considering selling out to iRobot, but regardless, it's probably too late now to buy them up. I'm guessing Neato will have an IPO next year or the year after that could give them as much as iRobot has cash in the bank, and then the race will really be on. If they manage to sell just 100,000 vacuums in the next year, they will already be a $40 million company. And I think they are going to sell a lot more than that.
The one thing about this is that competition is good for the industry, and it can be good for iRobot by giving them a swift kick in the pants. The company has a big financial cushion right now, and demand for its Roomba products currently exceeds supply globally. It's time to innovate, lest they become the Motorola of home robots.
Tags:
iRobot,
Neato
9 comments:
Laser guidance/room mapping vs simple bump and turn...
For features vs price, the bump and turn Roomba is the way to go.
Electrolux had an arguably better robot but it costs/costed too much.
(Can you still buy a Electrolux trilobite?)
IR vs laser may be the next battlefield. I expect next gen roombas to be smarter and map using lighthouses and odometers -- but they don't let me into the development lab.
The 500s are getting long-in-the-tooth tho.
Sure, Neato has a nice low-cost laser rangefinder (see their ICRA 2008 paper).
But they're not the only game in town. There are a number of competing devices and technologies that will be hitting the market soon enough, such as depth cameras (like Microsoft's Kinect).
I won't go so far to all SLAM a "solved" problem, especially for small embedded microcontrollers. However, it is a rather mature robotics technology -- I suspect it shouldn't be too difficult for a company with iRobot's resources to respond.
It is definitely an issue but they haven't even launched the product yet. Wait a year and see what happens - will it work reliably, etc. IRBT has had several years to hone many things and selling 1M Roombas throughout the world is a great headstart (it takes more than technology - it takes marketing, distribution, and yes, operations). Right now, Neato is starting from scrath on all of these. And lastly, we know for a fact that is doesn't matter if you make $1B dollars if you don't have large profit, your stock goes no where in the long run. Will Neato make big bucks on this? I think that will take them a long time.
Oh, one more thing about new products for IRBT. You are right about that but in the last Analyst Day presentation in May, IRBT basically said they are planning one or two big (like Roomba) products by the next Analyst Day. They realize Looj is not big so I'm hoping for something cool!
Does laser guidance really meet a customer need/insight?
At my company we do a lot of consumer research to develop insight statements in a particular format.
This is just a guess but I would anticipate this insight statement would test very strongly with the segment of consumers interested in robotic vacuums.
"I try to keep my floors clean because it is the place most dirt accumulates but vacuuming is a brainless activity that takes up my time."
Does laser guidance reduce time to vacuum for the house cleaner? Not from what I can tell - the lack of brushes and elimination of hair removal post vacuuming does.
Does the laser guidance elevate the expectations of the robot over "brainless"? Yes - to the detriment of the perceived performance. Reviews on amazon point out that the advanced guidance system actually causes areas to be missed. Also the expectations of the robot increase as it begins to emulate the work style of the person. I can't compare my vacuuming performance to the Roomba because it does it differently than I. The Neato approach creates the same rows that I might - allowing me to create a comparison.
iRobot isn't asleep at the wheel here. They have addressed the real performance issues (cleaning disruption due to tangles - human assistance in the cleaning process). They are now in a cycle of incremental improvement (evolution) for the robot vacuum cleaner. I hope they improve the vacuum apparatus (This is the place Neato has an advantage) - not the guidance system.
I can't locate the patent that you reffered to in the article, but I suspect it does not prevent iRobot from using laser guidance - just the specific mode of implementation that Neato has used to reduce the cost of the system.
I agree that iRobot needs to continue to introduce innovative products into the consumer market. Vacuuming is not the category that I would expect will have the largest return on investment anymore.
Bring on the lawnmower that both reduces greenhouse gas emissions and frees up homeowner time for other projects!
Bring on remote robotic telepresence to give caregivers a break!
Bring on a completely different way to process dirty clothes!
Bring on a way to pick up all the toys left out at the end of the day by 1 - 12 year olds!
My Roomba finds it way around my house just fine and has changed the way that I spend my cleaning time.
Doug Stone
VP Innovation - Maddock Douglas
A couple of thoughts. I have been saying for years that Irobot was too focused on price, and too little focused on a combination of price/features. Price alone has little bearing on whether a particular consumer product is appealing to consumers. The real question is "what do I get for the given price?" It appears that people are not generally willing to pay more than $300-400 for a robot with roomba's abilities. If you improve its utility by adding features such as non-random cleaning, self-emptying dirt bins, ability to clean a larger area, etc., the product becomes more valuable to people.
My sense is that Irobot's lack of innovation in the last several years stems both from its lack of competition, and its focus on the military side of the company. Neither of those factors will be applicable for long, however. There is increasing competition on the consumer side, and in an era of deficit-cutting, the military side might not be as lucrative as it once was.
Re: Douglas A's comment, I think that he gives short shrift to the importance of smart navigation in a robot vacuum. For the following reasons, consumers will prefer the laser guidance approach:
1. The significant reduction in time to clean. From what I have read in the reviews, the Neato vacuum can vacuum a given area four times faster than the roomba. For many reasons, this matters. For one, if you need to vacuum your house on short notice, forget about roomba. You will have to pull out the traditional push vac. It also gets annoying having a (somewhat) noisy device on for an hour-and-a-half when it could be done in twenty minutes. The cleaning time reduction is also what allows the Neato to have a much more powerful vacuum motor to allow more effective cleaning.
2. Greater autonomy. While roomba works fine for an apartment, for someone who owns a house to be able to clean the entire house, more work is required than to simply push "clean." Multi-room cleaning is impossible with the roomba, except to a limited extent if you have the lighthouses. Neato, on the other hand, automatically recognizes different rooms. Further, its ability to know where it is allows it to clean until the battery runs out, go back and recharge, and then clean what it was not able to get to the first time around. Neato makes it feasible for the first time to completely clean your entire multi-room house.
These are just a few advantages off the top of my head. I am sure there are others.
Charlie, I'll believe it when I see it on brand new robots from iRobot. I've been waiting so long for the damn lawnmower robot i've just about quit caring.
Doug, I agree with Sean's comments. It's not the lasers that will sell Neato, it's what the lasers enable you to do - much more efficient cleaning, which then enables a much more powerful vacuum, etc. The robot can even recharge itself and go back to where it left off, so can vacuum your whole house with little interaction from you. That's a good deal more autonomous than iRobot. I also look at my own technolust. If my Roomba died today, I would definitely buy a neato. This feels like Blackberry vs. iPhones circa 2007. I'd much rather own Apple stock instead of Research in Motion, which has struggled to play catchup for three years after getting complacent...
Lousloot, I hope you are right but not holding my breath.
New comment from Doug seems to have gotten lost by Blogger. Posting here:
RE: Thorn - "A good deal more autonomous" does not win here. Innovation would be completely autonomous - change the usage model.
I don't think it is the innovation abyss that your blog post incites. It is not Blackberry vs. iPhone. It is more like Dell vs. Alienware.
Consumer marketplaces do not act on perfect information. Even with the customer review rich online environment we have today consumers will buy what fulfills their unmet needs (including Brand's influence on Satisficing behavior in decision making).
There is a segment who I believe this insight statement would test well on:
"I own a Roomba because I believe that technology is going to free me of mundane chores, but when I replace it I would like other options."
If this segment is large enough to devote time, money and resources to meet their unmet need, then iRobot should react.
Otherwise at $399 for the Neato and $250 for a Roomba I suspect the extra $150 and years of positive customer reviews will be more than enough to drive the segment with the unmet need of "but vacuuming is a brainless activity that takes up my time." to buy the Roomba.
If iRobot wants to disrupt the growth curve of Roomba defectors all they need to do is offer a refurbishment deal where you send in your old Roomba and get a new one for $100. They can factory recondition the returns and sell them all day long on Woot!. They could even get a sustainability/recycling lift from the program.
Re: Sean - I would need to do a data mining exercise on the reviews of the Roomba to be sure, but in my qualitative review of Amazon reviews and Woot! Community I have not really found that anyone finds the multi-room cleaning to be a problem. Battery life comes up a lot - which could be associated with a desire to clean the entire house at one time.
I do agree with you that the first company to crack the total autonomy barrier with a robotic vacuum in the sub $500 range will grab a big part of the upcoming Early Majority (Rogers 1962).That is not the XV-11.
I respectfully disagree that a reduction in cleaning time for short notice company drives any purchase behavior. Noise on the other hand is a factor and I agree that a shorter period of noise is something that consumers would consider in the purchase decision.
As an investor in iRobot I am thrilled that there is competition. I hope that Neato is able to get side by side in every retail outlet with the Roomba. We are in for some tough economic times and $150 is going to matter to many people. People who are saying goodbye to their cleaning service and see $250 as a reasonable cost to meet their new unmet need of "avoiding a brainless task that is a waste of their time."
Roomba has the brand, the industrial design (thanks to a make over by Herbst LaZar Bell) , and meets the fundamental need. A winning combination.
Innovation is a word that is thrown around quite a bit and is often confused with product enhancement. The XV-11 is a small evolution of a product category that iRobot made real. This is not the Wii. This is not the iPhone. The basic usage model has not been altered. The XV-11 does not open the market to an under served mass of customers.
I want iRobot to make incredible products and lots of money. An arms race with Neato is a distraction that will not return as much $ as changing the usage model in another category (health care, lawn care, laundry, bathroom cleaning).
One last thing - very glad to see this forum getting lively again. I've missed the discourse :)
Doug Stone
VP Innovation - Maddock Douglas
Doug, I just have to respectfully disagree about whether laser-mapping is evolutionary or revolutionary. Cleaning a room in 10 minutes or 40 is a big deal because there is so much else that leads to...like the bigger vacuum, which means no bristle brush, which means 10x easier daily cleaning (the No. 2 complaint of Roomba owners) and potentially much greater reliability (the No. 1 complaint; we'll have to see on this one). Why? Most devices reliability is based on MTBF -- Mean Time Between Failures. If the XV-11 only has to work 1/4 of the time of Roomba to clean the same space, it stands to reason that it could be four times less reliable on an MTBF scale and STILL break down less often.
Neato could also easily add the spybot functionality of the Samsung robot, for example, and allow its users to program whole house roving. I could even see Neato partnering with ADT or someone like that for home house monitoring (which people pay a fortune for.) Hard to cover the whole house with a random bounce algorithm, much easier with laser guidance.
-Thorn
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