Data treasure or demographic change? - Two theories as to why Amazon is buying iRobot
16 Aug 2022
Since Amazon announced its intention to by iRobot, much has been written about why the tech & e-commerce giant wants to add a robot vacuum company to its portfolio. Currently, there are two main theories:
- Amazon wants to buy iRobot for its “data treasure”, meaning the Data it has already collected in close to 40 million homes.
- Amazon wants to buy iRobot as part of their strategy to address ageing populations and shortages of labor due to shrinking workforces. Home automation is a cornerstone of that strategy.
Theory No. 1: Data treasure
Theory No. 1 seems probable at first, but there are some serious flaws in it. They have to do with the true value of data that has already been collected. The problem: data that was collected in the past for a specific use case does not easily lend itself to another purpose. In other words: iRobot did not collect data for the past 20 years because they anticipated to be bought by Amazon one day. The data they collected was meant for THEIR use cases, engineered to solve THEIR problems – not Amazon's.
And while Amazon might find some value in the data by applying data exploration and data mining techniques, the data will never be as valuable as for the use cases originally collected for. Looking forward, this might change. When Amazon starts to engineer processes to use the sensors of iRobot devices, these machines might actually collect data that can serve other purposes. But then there are serious legal hurdles to overcome when wanting to use this data across platforms and offerings. For the EU, GDPR would need to be observed, while in the US the California Privacy Act is gaining traction.
Theory No. 2: demographic change
Theory No. 2 seems to hold water since it is aligned with iRobots own analysis and customer strategy. In 2018, iRobot CEO Colin Angle told “Süddeutsche Zeitung” that in an ageing society “we need robots so that people are able to live longer independently”. The alternative, according to Angle, would be more and more elderly homes. These are increasingly costly due to shortages in the workforce – while the quality of life suffers. Hence, Angle sees automation as the solution to that problem.
This aligns well with Amazons overall strategy to push into growing markets such as healthcare, another sector that is heavily impacted by ageing societies. The current all-cash acquisition of primary-care company One Medical for 3.9B USD is just the latest serious move to enter this industry. Forbes recently called Amazon’s growth in healthcare “unparalleled”.
Personally, I believe that the data of the past was not the main motivation for Amazon to buy iRobot. At best, it sweetened the deal. But the possibility to tap into the elderly care market through home automation as well as having a platform to build robots that can navigate homes are incredibly valuable for the future, and most likely a good investment.