US-based iRobot, which was once considered one of America’s biggest consumer electronics companies, filed for bankruptcy last week. Now, Colin Angle, the co-founder and former CEO of the Roomba robot vacuum maker, has revealed what went wrong for the company. Angle claimed that unfair competition from Chinese companies played a major role in iRobot’s recent bankruptcy filing but also emphasised challenges such as supply chain disruptions and rapid technological shifts that impacted its market position. He explained that the company filed for Chapter 11 bankruptcy as it struggled to keep up with rivals who had advantages over iRobot. Angle, who founded the company in 1990 with fellow MIT scientists, noted that these new competitors grew quickly by using their home market as a base.In a recent episode of the New York Times’ Hard Fork podcast, Angle said, “It’s certainly the advent of this new type of competitor, the Chinese fast follower who had access to the Chinese marketplace, which iRobot effectively did not. I also think that the marketplace was not a level playing field.”Roomba vacuum robots became quite popular in American homes after their launch in 2002. By 2018, their advanced models could empty themselves and clean specific rooms using mapping. The company’s sales peaked at nearly $1.6 billion in 2021.However, after filing for bankruptcy, iRobot is now being acquired by Picea Robotics, a Chinese company that manufactures and lends money to them. This shift underscores the ongoing challenges and opportunities in the industry, which should resonate with professionals tracking market dynamics.
How Chinese companies took the lead over iRobot in the robot vacuum market
“For a small period of time, iRobot was the leading manufacturer of vacuuming robots in China. Then it stopped, because China decided that this was a market of interest, and they were going to ensure that Chinese companies were advantaged to succeed there,” Angle explained.Angle noted that China, “for various pragmatic and political reasons, gave a protected market to cut your teeth on for the competition,” including companies like Roborock, which put iRobot at a disadvantage in China’s huge market. It’s important to note that Roborock has now become the world’s leading robot vacuum brand.In a bid to boost consumer spending following the pandemic slowdown, China offered incentives that would encourage its people to purchase local products. This included up to 20% discounts on electronics. These policies show the support that Chinese authorities offered to their tech companies.Meanwhile, Picea Robotics has become a major player in the robot vacuum industry, working with brands such as Shark and Anker, alongside iRobot.“It’s a cage match, and it certainly got hard, and it got increasingly competitive,” Angle added.While Chinese competition hurt iRobot’s global sales, Angle believes Amazon’s failed bid to acquire the company made matters worse.In 2022, Amazon’s attempted $1.7 billion acquisition of iRobot was a significant event in the industry. The regulatory bodies’ blocking of this acquisition not only impacted iRobot but also indicated a change in the industry that investors and analysts need to be aware of.According to Angle, this failed purchase didn’t just damage iRobot; it hurt consumers and the entire home robotics industry.“The tragedy of the blocking of the transaction is we did it to ourselves. And the net result, which I have argued, was done with eyes wide open, was putting the consumer robot industry in a box, gift wrapping it, and handing it to someone else,” Angle explained.
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