iRobot: Finding the Right Market Mix?

Abstract

iRobot is among the first companies to introduce robotic technology into the consumer market. Home care robots have been its most successful products, with over 5 million units sold worldwide and accounting for over half of its total annual revenue. The focus on home care products differentiates iRobot from all the other manufacturers in the robotics industry, which are mainly focused on manufacturing robots for the automotive sector. At the same time, iRobot also has a long-term contractual agreement with U.S. government to produce military robots. Serving two entirely different markets – consumer and military – gives iRobot: (1) the ability to leverage its core capabilities and diversification, and (2) a hedge against slower demand in one sector. By introducing robotics to the consumer market, iRobot has created a “blue ocean.” However, the company has numerous competitors with more experience in the consumer marketplace. Long-term success in the consumer market will require iRobot to develop more “blue oceans.” Does it make sense for iRobot to continue to develop new consumer products or would they be better off focusing on the military and aerospace marketplace?