Irobot: ROBOTS for the HOME
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Licensed to: iChapters User CASE 5 iROBOT: ROBOTS FOR THE HOME Robots have been around for a long time. Detroit has appeared on the cover of Popular Science. It was clear used robots for four decades to build cars, and manu- by then that his future lay in inventions. facturers of all kinds of goods use some form of robot- ics to achieve effi ciencies and productivity. But until The Opportunity iRobot brought its battery-powered vacuum cleaner to the market, no one had successfully used robots in In 1990, Brooks and Angle, who by then had be- the home as an appliance. The issue was not whether it come close working partners with their MIT col- was possible to use robots in the home, but could they league Helen Greiner, borrowed from their credit be produced at a price customers would pay. Until the cards and used bank debt to found iRobot in a tiny introduction of Roomba, iRobot’s intelligent vacuum apartment in Somerville, Massachusetts. The goal of cleaner, robots for the home cost tens of thousands of the company was to build robots that would affect dollars. At Roomba’s price point of $$199,199, it was now hhowow peppeopleople llivedived ttheirheir llives.ivese . AtAt tthathaat ttime, no one possiblee ffororor ttheheh aaveragevev rar gee cconsumeronsus meer too aaffordfford to hhaveava e a cocouldoulld coconceivenceie ve ooff a wawwayy tot bbringringn rrobotsoboto s into domes- robot cleanleaean the hohhouse.usu e.. TThathah t inn iitselftssele f is aann iniinterestingteerrests inng titicc lilifefe iinn aan aaffordableffforordad blle wwaway,y, aandndd iiRobotRoR bob t was still years story, bututt eevenveen mommorerer iinterestingnteresestitingg iiss ththehe eneentrepreneurialnttrepepreenen ururiiaal awawayayy ffromroom didiscoveringsscoovverrini g ththee oononee aapapplicationppliccatiio that would journey of Colin Angle and his company, iRobot. launlaunchch it into tthehe consumer mamarket.rket. To stay alive, the company sought government and cocorporate con- Background tracts for new product development. Over the next decade, iRobot designed and built a vast array of Colin Angle grew up in Schenectady, New York, products, from nuclear waste detectors to toy robots. where he was raised by his mother and stepfather. He Angle and his team believed that diversifying their and his three stepbrothers all became engineers, but product development skills would insulate them Angle was the inventor/builder of the group. Begin- from the risk of any one customer killing a project, ning in his earliest years, he built pinball machines and something that happened frequently in their indus- constructed complex pulley systems in the trees of his try. Angle also had no idea which of the many prod- back yard. While attending MIT in the 1980s, he was ucts they developed would be the one that would drawn to the innovative work of Rodney Brooks, di- propel the company into rapid growth, so he did not rector of the university’s artifi cial intelligence lab. want to focus the company too narrowly too soon. Brooks was a controversial fi gure in the robotics fi eld, Diversifi cation in those fi rst years enabled the but he served as the inspiration for what would be- company to stockpile a range of patents that would come some of Angle’s most practical inventions. As a become the basis for the product for which they student, Angle was part of the group that succeeded became most famous. Angle reasoned that he had to in building insect-like robots that could perform sim- make certain that customers did not end up owning ple tasks on refl ex. In fact, Angle’s creation, Genghis, technology that his company might need in future 463 Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Allen_301590_Case_5.indd 463 12/14/07 4:12:05 PM Licensed to: iChapters User 464 Case Studies product development. For example, in 1992, he sold with a large established company is to take advantage the rights to the underlying technology on a robot of their access to suppliers. The iRobot team had called Grendel to separate it from technology that become experts in sourcing product components would be used to take the company in new directions. effi ciently, so they chose to do it on their own. Prior to this, iRobot did not control the patents for products it developed for large customers, as is typical Developing Roomba with smaller businesses. However, after selling the Grendel rights, Angle decided that henceforth the The engineers at iRobot were unaccustomed to build- company would retain all rights to the technologies it ing mundane products for domestic use, so to avoid developed. As it turned out, a cleaning technology wasting the talents of his most brilliant engineers, Angle that iRobot had developed for Johnson Wax Profes- created a new division in the company that would de- sional and tiny processors developed for Hasbro, the sign and launch these domestic products. Technologies toy company, were critical components of Roomba. developed from contract work now found a home in Roomba. For example, the crop circle algorithm it uses Shall We Dance? came from a technology used to sweep minefi elds. The company worked its way through 20 iterations of iRobot had secured two parts of the three components Roomba, bringing each version home to spouses and of its growth strategy. It had become a fl exible com- relatives to test. One thing was clear: this device had to pany that could develop products in a broad area, and be easy to use. In general, consumers won’t tolerate a it had built a strong base of intellectual capital. Now, steep learning curve, so iRobot’s engineers pictured the only thing missing was a way to bring robots to the something as simple as a large button labeled “clean.” domestic market economically, and that was no easy In fact, they ended up with a button that provided a task. Angle had already experienced the agony of dede- choice of “S,”S, “M,”M, or “L,”L, for small, medmedium, or feat on a proposaloposal fforor HasHasbro.bro. In 1996, iRoiRobotbot hhadad llargearge (d(denotingennoto ing tthehe room sizesize).). ThThehe cuccustomersttomo puts developed a ststorytellingtororyttele lingn mmachineacchih nee wwithith chccharactershara acteers tthathaat RoRRoombaoomombab oonn ththee fl oooor,r,r tturnsurrnsn iitt onoon,n, anandnd prpressesessses s the size moved and gegesturedesstured wwhilehiile ttheyheh y tatalked.alkede . It sseemedeeemed lilikeikke bubbutton.tttton. TThThenen tthehe rrobotobboot pplayslaayss a ttuneuune anandd sststartsarrt sweep- this could be ththehe nenextextx bbigigg ttoyoyy uuntilnttilil ttheyheey shsshowedhowo edd HHasbroasa brbro iingng tththee fl ooororr iinn ever-evvere - wwiwideningdeeniing ccircles.irrccless. WWhWhenhenn it rruns into managementt what it looked like inside. It was a masmas-- ssomething,omething, it heads off in a different directiondirection.. The cir- terpiece of engineering,ngineering but the microprocessors cost cle algorithm alternates with a wallwall-and-furniture-hug- and furnitu $60 each, the fl ash card cost $400, and the parts all to- ging algorithm and straight lines. Sometimes at random taled ran about $3,000. Hardly a likely candidate for it will simply go in one direction until it runs into the next Christmas season! But Angle had learned a lot something. It runs on a nickel-metal-hydride battery about the consumer products industry from this expe- that gets recharged on an overnight charger. It also rience and what it would take to develop successful comes with an invisible wall that projects an infrared products for the toy industry. It was all about cost— beam if you need to keep the robot confi ned to a par- saving pennies so that the toy company could meet its ticular area. It even has three different backup systems competitive price point in the market. iRobot became to keep it from falling down stairs. an exclusive partner to Hasbro, and over the next two From its experience with Hasbro, iRobot had years, it proposed dozens of new toy projects, most of learned to be extremely stingy on costs, down to the which were turned down because they were too expen- penny; they knew that a price tag of $199 would sive to make. Finally, in 2000, iRobot saw one if its keep competitors at bay for awhile. creations, My Real Baby, hit the store shelves. It was, in fact, this new understanding of the con- Market Entry sumer products business that inspired the idea for Roomba. Originally, they had considered partnering iRobot’s shrewd entry strategy saw Roomba hitting with a large vacuum cleaner company like Hoover, the market just in time for the Christmas season but one of the reasons a smaller company partners through such gift outlets as Sharper Image and Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Allen_301590_Case_5.indd 464 12/14/07 4:12:05 PM Licensed to: iChapters User Case 5 iROBOT: ROBOTS FOR THE HOME 465 Brookstone. These stores are willing to demonstrate But are consumers willing to go that far with do- products, something that is critical with a new prod- mestic robots? Are they willing to give them deci- uct. Although Roomba was the fi rst product from sion power in the home? That remains to be seen. iRobot, sales were $15 million in 2002 and soared to In November 2005, iRobot’s PackBot robots $50 million in 2003. This was accomplished on fi ve opened trading on the NASDAQ exchange, mark- rounds of venture funding totaling $27.5 million. ing the fi rst ever opening by a robot and the fi rst iRobot also hired a Boston public relations fi rm profi ts (in 2004) for a company in business for to conduct a media blitz to create customer aware- 15 years.