Here's the Latest Dirt on iRobot and Its Roomba
IRobot makes machines for all sorts of customers -- including the Looj for gutters, the Mirra pool scrubber, the U.S. military's Packbot IED-disarming robot (ubiquitous in Iraq and Afghanistan) and the Seaglider robotic submarine. But most consumers associate it with just the Roomba. And for good reason. According to data from S&P Capital IQ, when viewed from a financial perspective, iRobot basically is Roomba.
Last year, iRobot's Home Robots division (of which Roomba is the largest part) accounted for nearly 88 percent of iRobot revenues. The company sold nearly $428 million worth of vacuum cleaners -- vs. only about $50 million worth of robots for defense and security. So it's not overstating to say that the company lives and dies by the success of the Roomba.
What's Bad News for iRobot ...
From one perspective, that's very bad news for iRobot. Because as one recent review details, the competition among floor-cleaning automatons is heating up.
Consumer Reports -- the go-to source for unbiased product reviews -- has yet to publish a comprehensive review of robotic vacuums. But in March, consumer products review site TopTenReviews.com published ratings for 10 floor-cleaning robots, including P3 International's V-Bot ($107), the Neato XV-21 ($429) and iRobot's Roomba 650 ($399.99).
The best of the bunch was the XV Signature Pro ($399.99), manufactured by privately held Neato. According to TTR, while Roomba beat out the competition on performance, it lagged Neato on the design of its model and the features.
And now the Roomba faces a challenge from Dyson, which is usually rated really good, but really pricey in consumer surveys. (Bargain seekers are urged to buy Hoover or Miele, which was rated one of Consumer Reports' five recommended bagless vacuum models in the magazine's already-out November issue.) Dyson says it's sunk 16 years of research into a plan to displace Roomba as the go-to choice for a robotic vacuum.
... Could Be Good News for You
Granted, Roomba has upped its game in the six months since the TTR report came out. As it turns out, the Roomba 650 that TTR rated a runner-up to Neato is now two design cycles behind Roomba's top-of-the-line product, the Roomba 880 "for pets and allergies." IRobot releases its Roombas in upgrade cycles denoted by series, e.g., the 600 series that TTR reviewed, the 700 series that followed and the new 800 series -- boasting a more powerful vacuum and no brushes to get tangled up with long pet hair.
Dyson won't introduce the 360 Eye until early next year, and then only in Japan, with other markets later in 2015.
Most important for consumers, though, is the likelihood that increased competition -- from Dyson at the high end and from various lower-end rivals -- will prompt iRobot to improve its robo-vacs and maybe even curtail the skyrocketing prices.
Roomba: Between a Rock and a High Price
Sure, the $1,200-plus price tag that Dyson reportedly plans to hang on its 360 Eye may not pressure iRobot to reduce prices much. But the introduction of a "cyclonic action" robo-vac could challenge the Roomba maker to add battery life and suction power to its highest-end Roombas. At the same time, the abundant options among lower-priced robo-vacs could prevent iRobot from raising prices as it improves its products.
After all, according to TTR, there's only about a 19 percent gap in quality between the Roomba 650, rated 9.5 on a 10-point scale, and a P3 V-Bot, rated 7.68. But the V-Bot costs only $107. That's 73 percent less than a Roomba 650 -- and 85 percent less than Roomba's 880 model and 91 percent discount to the predicted cost of a Dyson 360 Eye).
Theoretically, you could buy two V-Bots, get 15.36 points' worth of "quality" -- and save $186 on the cost of a Roomba 360. But would you? Tell us below.
Motley Fool contributor Rich Smith has no position in any stocks mentioned, but The Motley Fool recommends iRobot. Try any of our Foolish newsletter services free for 30 days. For more on futuristic technology, check out our free report on the Apple Watch to learn where the real money is to be made for early investors.