The world’s most popular robot vacuum cleaner company has filed for Chapter 11 bankruptcy. iRobot, the makers of Roomba, has been in this category since its inception, but its star has declined in recent years. The company plans to sell its assets to its main supplier, China’s Picea Robotics, in hopes of preserving its business.
Everyone has a strong opinion as to why the Robot has fallen from grace. Independents blame lax regulators on both sides of the pond (and their hatred of big tech) for blocking Amazon’s acquisition efforts in 2023. Those on the hardware side of the line say iRobot’s refusal to adopt LiDAR goes so far. this year He left his rivals behind.
Then there are geopolitical experts, who can point to China’s industrial policy, subsidies and regulatory environment being favorable compared to the US approach. After all, iRobot’s US gear is made in Vietnam, which is now subject to a 46% import tax. As BBC News reportedly, that added about $23 million to iRobot’s costs and raised the price of its hardware.
The real answer is that iRobot’s demise was caused by a perfect storm of all these factors piling up at the company. More importantly, iRobot’s situation is not an isolated one, and should be a warning to all American technology brands. It’s also a lesson in why companies need to address existing threats when they have the time and money to do so.
For example, when iRobot perfected the Roomba concept, it wasn’t long before the first copies hit the scene. iRobot had the product and the know-how, but that only goes so far against well-motivated copycats. Think of the first Samsung Android handsets, and how quickly they went from iPhone imitations to class-defining devices – and how hard Apple fought in court to stop it.
Even before this year’s payout, iRobot has struggled to compete on price in a way we’ve seen in other sectors. Remember Fitbit before Google bought it, happily selling $80 fitness trackers for years until Xiaomi swiped the bottom half of its business. Even though the first MiBands weren’t very good, you could buy three for the price of one Fitbit Charge. Yes, the argument about quality and reliability is important, but it’s often not as pronounced or compelling as a competing product sold at a fraction of the price.
iRobot should have made more of an effort to offer a dirt-cheap model to undercut its competitors, or it could have come out on top altogether. Earlier today, I checked out local listings for Roombas and their closest competitors. Next to each other was the Roomba 405 Combo with Dock and the Roborock Q7 L5+ – both of which can tap and mop the floor. The former currently retails for $400 directly from iRobot, while the latter currently retails for $220. I’m sure many buyers would notice the price difference and opt for the cheaper model.
I won’t throw too many Told You So is over the iRobot fence for not integrating LiDAR right away. Its omission was a mistake, but you can see why it was embarrassed to leave its existing setup. But the company had forgotten one important mantra about the tech world, Andy Grove’s quote that “only the paranoid survive.” Even the best, most advanced Roombas of the past five years have felt a generation behind rival brands.
And, at the risk of sounding like a marketing whiz, it wasn’t clear what iRobot, or Roomba, stood for. When companies flooded the market with cheap models, iRobot needed to clarify what it was it meant when buying a Roomba over a standard model. What has it done, and can it offer beyond name and history that has made it stand out against cheaper competitors? Companies like Apple and Dyson command a premium, but you almost always know what you’re getting for your money.
All I can say is that it’s good that no other American company is in the same situation right now. I for sure I can’t think of a controversial US automotive company that has historically rejected LiDAR for its private services. One that has a dominant brand, or an identity that is very close to the identity of its CEO. The one staring at the salvage barrel of better equipped and often cheaper Chinese alternatives. Because that company may be facing the same fate in a decade or so.
