iRobot's Decline: How They Lost Their Way

The Decline of iRobot: From Robotics Pioneer to Bankruptcy

The story of iRobot, the company responsible for popularizing robotic vacuum cleaners, exemplifies a uniquely American business trajectory. Established in 1990 in Bedford, Massachusetts, by MIT roboticist Rodney Brooks alongside Colin Angle and Helen Greiner, the firm ultimately filed for Chapter 11 bankruptcy protection on Sunday, concluding a 35-year journey. This path led from the innovative visions of artificial intelligence researchers to household floors and, ultimately, to acquisition by its Chinese manufacturing partner.

Early Innovation and Growth

During the 1980s, Brooks, the initial director of MIT’s Computer Science and Artificial Intelligence Lab, observed insect behavior and gained insights into how uncomplicated systems could generate intricate actions. By 1990, these observations were channeled into a company that would eventually distribute over 50 million robots.

The Roomba, introduced in 2002, achieved remarkable success, becoming a household name and even inspiring internet memes – and serving as an unexpected mode of transport for pets.

Financial Success and Expansion

Financial backing quickly materialized, with the company securing $38 million in funding, including investment from The Carlyle Group. This was followed by a successful initial public offering (IPO) in 2005, raising $103.2 million.

By 2015, iRobot’s financial position was strong enough to establish its own venture capital arm. This move prompted TechCrunch to comment that “robot domination may have just taken another step forward.” The company planned to invest between $100,000 and $2 million annually in seed and Series A robotics startups.

The Amazon Acquisition Attempt and its Failure

In 2022, Amazon expressed interest in acquiring iRobot for $1.7 billion, which would have represented Amazon’s fourth-largest acquisition to date. Angle, the company’s CEO since its founding, stated the deal would facilitate “creating innovative, practical products” and provide “a better place for our team to continue our mission.”

However, European regulators intervened, voicing concerns that Amazon could potentially restrict competition by limiting or degrading access to its marketplace. Consequently, Amazon and iRobot mutually decided to terminate the agreement in January 2024, with Amazon incurring a $94 million breakup fee. Angle subsequently resigned, and the company’s stock value plummeted, resulting in a 31% workforce reduction.

Bankruptcy and Restructuring

Angle expressed his disappointment regarding the company’s fate in a statement to TechCrunch. He asserted that the outcome was “profoundly disappointing – and it was avoidable,” and characterized it as “a tragedy for consumers, the robotics industry, and America’s innovation economy.” He attributed the downfall to regulatory opposition to the Amazon acquisition, which eliminated the most viable path for the company to expand and compete globally.

Prior to the bankruptcy filing, earnings had been declining since 2021 due to disruptions in the supply chain and increased competition from Chinese manufacturers offering more affordable robot vacuums. A $200 million investment from The Carlyle Group in 2023 proved insufficient to prevent the inevitable.

The Future of iRobot

Shenzhen PICEA Robotics, iRobot’s primary supplier and lender, will now assume control of the reorganized company. iRobot stated that the restructuring plan will allow the company to continue operating without disrupting app functionality, customer programs, partnerships, supply chains, or product support.

The company also pledged to fulfill its obligations to employees and make timely payments to vendors and creditors throughout the court-supervised process.

According to a statement from spokeswoman Michèle Szynal, the restructuring will not impact business operations or customer service. iRobot remains dedicated to delivering intelligent home innovations and maintaining its current product offerings.

However, legal disclosures acknowledge the uncertainties inherent in bankruptcy proceedings, including potential supplier issues and the overall success of the restructuring plan.

What This Means for Roomba Owners

Even if iRobot were to ultimately fail, The Verge reports that Roomba vacuums would still function using their physical controls. Owners could still manually start and stop the device.

The features that provide a more advanced user experience – such as app-based scheduling, room-specific cleaning instructions, and voice control via Alexa – would be lost.

Update: This article has been updated to include comments from iRobot and Angle, the company’s co-founder and long-term CEO.