On Friday, Amazon announced it was buying Roomba for $1.7 billionVacuum cleanerManufacturer iRobot. That’s right, Amazon will make money from selling these devices. But the real value lies in the robots’ ability to map homes. As ever, Amazon’s focus is on data.
Smart homes aren’t actually particularly smart. It only knows about your Philips Hue bulbs and internettelevisionRight in your living room because you’ve told it so much. It certainly doesn’t know the exact location of the device in that room. The more it learns about a particular space, the more tightly it can orchestrate the way they interact with you.
The smart home is clearly a top priority for Amazon. Its smart speaker Echo still outsells rivalsappleAnd Google, which sold an estimated 9.9 million units in the three months through March, according to analytics firm Strategy Analytics. In addition, the company bought video doorbell maker Ring for $1 billion in 2018 and wi-fi company Eero a year later.
Astro, Amazon’s high-profile home robot launched last year, is still only available in limited quantities. This robot is also, at least in part, about understanding the inside of your property, and now that task will fall to iRobot.
Even more frightening, these maps also provide marketers with a wealth of data.The size of your house is a good proxy for your wealth. A floor full of toys means you may have children. A home that doesn’t have a lot of furniture is one where you can try to sell more furniture. You may have noticed that this is useful information for a company like Amazon, because Amazon is a company in the business of selling.
What’s more, the acquisition looks like a small deal for the retailer, which had $61 billion in cash at the end of June. The $1.7 billion deal represents a 22% premium to iRobot’s stock price before the deal was announced. Less than a year ago, iRobot was valued at $2.5 billion. Also, it doesn’t take much time to pay the target company’s capital costs. It expects profits to be only around $78 million next year, but it also has $389 million in sales, marketing and administrative costs, a number that Amazon can certainly bring down with its existing sales channels.
Amazon isn’t the only company trying to map your home. In June, Apple also introduced a tool for the next version of its mobile operating system, iOS, that leverages the latestiPhoneBuild a 3d model with a laser scanner on it and name it “RoomPlan”.
Amazon’s 2017 acquisition of Whole Foods gave it a deeper understanding of the grocery industry. Announced last month to acquire One Medical Ltd for $3.5 billion. transactions provide a wealth of medical data. Now iRobot can let Jeff Bezos and his company know what’s in your home.