It's annoying that the article doesn't actually explain why they are getting out of the 'warbot business'.
'The big buys are over' does not explain why it is a good time to sell the division. If it's true, then it would be a terrible time to sell off a division since you'd get very little money for it. Presumably Arlington Capital Partners think that it is a good business to be getting into, even with the associated chaos and confusion that's inevitable when a company sells off a division of itself.
IMO it's also unlikely to be a reputation issue either - not many people know that Roomba also sells to the military, and besides, their robots aren't exactly killbots, they are saving the lives of their users. If anything, it should be a positive role.
Perhaps it is because the company wants a single focus? But even then, if a division of your business is large enough to sell and survive on its own, then you should also be able to keep it and run it separately from your house-cleaning division, with no downsides.
The shared research and development of both divisions must be an advantage, but the news article doesn't even mention that selling the division would lose these advantages.
So tell us again, Washington Post, why is the maker of Roomba vacuums getting out of the warbot business?
I think it is far more likely that the problem is that the Pentagon doesn't want to buy enough platforms -- weaponized or not -- to make the market worth their time. Better to sell off 1/16 of the business for some free cash flow and focus on the larger consumer market. After all, iRobot began as a DARPA contractor and already experimented with weaponized remote platforms; they aren't averse to making tools for war, they just obviously don't see enough cash in it.
This is what I am getting from the article but seems very short sighted... Working on development and R&D with the government is more likely to enable IRobot to be competitive in the real robotics industry that is finally springing up in the next decade or ao
I also found the article to be too vague in explaining what from the headline appears to be the central point of the article.
From what little was said seemed like activist investors had decided that they were better positioned as a cleaning product company than as a true bros based robotics company...
Guess in the long run this is why google went the Alphabet route.
It says in the article that activist investors (Red Mountain Capital Group) pushed for the breakup. The defense business wasn't growing fast enough for the pump and dump traders. It's a textbook short-term move: cleave off the slow and stable part of the business, get a higher multiple for the remaining faster growing part of the business. Just make sure you exit your position before the high growth portion of the business slows. Then you will wish you had an anchor of stability...
America's wartime footprint grew smaller. You can't grow a business in a shrinking market.
Essentially the govt/military market is too erratic for sustained business growth. Anyway that's what the employees at Roomba said when I was interviewing.
As a data point, from their last annual report: "Our home robots revenue represented 91% of our total 2014 revenue compared to 88% in 2013. We anticipate that our revenue for the next few years will be primarily driven by our rapidly growing home technology business and that our home robots revenue will comprise approximately 90% of our total revenue in the near term"
It appears that they do not expect too much revenue in that area any time soon.
I wonder how many people would not want to work for a company also producing warbots. I certainly wouldn't, but I'm not sure how common this sentiment is.
I'm sure that some people dislike any military connection, but the "warbots" that iRobot was making weren't Dalek-like monsters like the term suggests but rather robots to find mines, aid in search and rescue operations, and things like that.
I would! I interviewed, but they were already shrinking that division so no jobs there.
And the military robots are far more interesting. Instead of a simple cheap wheeled thing for kitchen floors, they are talking tracks and legs and flying! All the cool stuff is in military/industrial.
Probably not many. Most people realize that even if you make advances in only commercial technology, it eventually ends up as part of the war machine anyway. Not working on "better" weapons isn't the answer you're looking for.
I saw an interview with old Mikhail Kalashnikov once, they asked him if he regretted designing the AK47. No he replied, I designed it to fight fascism and defend the motherland.
One other thing to consider is the cost of doing defence business. The ITAR is no joke and puts a large amount of process and overhead on development and company operations. If the defence business a small part of your overall revenue, it might just not be worth it to deal with it, especially with defence contracts "drying up".
Maybe right now but not forever. Mass production makes things cheaper. Mules (and horses) were abandoned decades ago (almost a century now!) in favor of tractors. Because tractors were cheaper.
You have to feed a mule even when you don't need it. You have to house it in a climate-controlled building. You have to clean up after it. You have to medicate it, raise it for years until its useful, bury it when it dies.
No, animals are vastly more expensive propositions. Especially in a war zone.
I'm not convinced. Fuel and electric power are hideously expensive in a war zone. Even if the robot cost only thousands of dollars, running it will cost tens to hundreds of thousands.
A delicate mule is that times 10. Farmers turned to machines because they were vastly easier to maintain and use. Hay, oats, water .. all harder to ship than gasoline or diesel. All temperature-sensitive and can spoil.
The guys were making bomb disposal robots not predator drones I don't think activists had any effect on their prospect, and could we please stop calling them "warbots"?
Selling of a chunk of your company for a short term cash flow might be a good reason.
However there might be a more straight forward one as working with the military isn't easy or cheap, they are your most picky costumer and unlike people who order Roomba's from Amazon actually know how to formulate contracts and keep you honest.
Military contracts come with years of support and services and while they can be very lucrative they also can have a very negative effect on the company as a whole.
When you sell something to the military you are usually bound by a contract to continue supporting that product for say 10 years.
This means that during these 10 years you can't discontinue that product or have to keep a large stockpile of replacement units and parts and more importantly keep the in-house knowledge required to support it which means keeping the personnel who were involved with the project originally or ensuring that every bit of the knowledge is transferred this isn't cheap and in the tech industry isn't easy.
Military contract pretty much mean that you have to magically increase the average employee retention period for more or less the duration of the contract, in many other cases the contract might actually force you to transfer some knowledge and skills to sub-contractors that would provide the global service the military might require which means some of your IP can leak.
There's a good reason why so many companies are either 100% dedicated to the defense industry (and many of those burn out quite quickly because of how demanding those contracts are) or have their defense oriented subsidiary very well isolated from the main corporate entity.
That's because when you sell to the military it might actually restrict the potential market as the contract might specify exclusivity or give the DOD oversight on all your future deals (to prevent technology transfer to non-friendly actors), when you are a tech company that can be an issue because quite often there will be quite a bit of lateral technology sharing across the company (one of the additional reasons why big corporations tend to keep their military subsidiaries very separated).
Which now could mean you are restricting your commercial products from being sold as they now might require a DOD oversight as well; a possible example in iRobot's case might be that the same algorithm that allows your Roomba to detect objects such as cats and babies is the same algorithm that is used by their commercial bomb disposal robots to detect road side IED's so now the DOD might either force them to modify it sufficiently or restrict sales of the Roomba's to "friendly" nations.
Dumping their military/leo department in some one else's lap releases them from most of the commitments, protects their future IP from oversight and gives them a short term cash influx that they might need.
Trying to find some ideological reasoning behind this is just silly.
I have a feeling that the market will actually expand dramatically, as the costs of the tech underlying 'ruggedized' versions start to fall along with the consumer models.
However, the buyers in the expanding market won't necessarily be nation states, but instead local law enforcement (eg. SWATs), security companies, and PMCs.
As such, the split off division will likely be a nice acquisition for a company already serving one or more of those markets.
It's good to see this happen. In this day and age i think all of us and especially scientists should be more morally conscious about the ethical implications of their work and not sell themselves when their research and tech are financed by war money or when their work becomes intellectual property of companies that deal in war. It's a double edged sword I know, but it's such a great shame. End rant.
Ex Army Bomb Technician (EOD) here, now doing enterprise java / intranet stuff. Disclosure: I also used to work for one of iRobots competitors, Roboteam.
My speculation is that they also sold because they lost a 25 million dollar contract to Roboteam. It's a 7 year contract to the airforce for 200+ robots. IMHO, unless more services drop out of the joint robotics program, as the airforce did, it will likely be the last large government robotics contract for a very long time.
Just to give further explanation to everyone commenting on the 'warbot' phrase... The robots iRobot makes for use in war, are designed to save lives. Not take them. They saved my life, as well as the lives of several coworkers, on many occasions. They are designed to dismantle IEDs or road side bombs as you may know them. The number one killer in Iraq and Afghanistan.
If I can send a $150,000 piece of equipment down range to handle an IED with a skilled operator at the controls, instead of risking human life to make the route / area safe for passing friendly troops, local nationals, or coalition troops, instead of risking my life... I'm going to it every single time.
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[ 3.5 ms ] story [ 62.7 ms ] thread'The big buys are over' does not explain why it is a good time to sell the division. If it's true, then it would be a terrible time to sell off a division since you'd get very little money for it. Presumably Arlington Capital Partners think that it is a good business to be getting into, even with the associated chaos and confusion that's inevitable when a company sells off a division of itself.
IMO it's also unlikely to be a reputation issue either - not many people know that Roomba also sells to the military, and besides, their robots aren't exactly killbots, they are saving the lives of their users. If anything, it should be a positive role.
Perhaps it is because the company wants a single focus? But even then, if a division of your business is large enough to sell and survive on its own, then you should also be able to keep it and run it separately from your house-cleaning division, with no downsides.
The shared research and development of both divisions must be an advantage, but the news article doesn't even mention that selling the division would lose these advantages.
So tell us again, Washington Post, why is the maker of Roomba vacuums getting out of the warbot business?
From what little was said seemed like activist investors had decided that they were better positioned as a cleaning product company than as a true bros based robotics company...
Guess in the long run this is why google went the Alphabet route.
Essentially the govt/military market is too erratic for sustained business growth. Anyway that's what the employees at Roomba said when I was interviewing.
It appears that they do not expect too much revenue in that area any time soon.
And the military robots are far more interesting. Instead of a simple cheap wheeled thing for kitchen floors, they are talking tracks and legs and flying! All the cool stuff is in military/industrial.
There are always two sides to every coin.
Autonomous vehicles are another matter, but robots that walk have limited use cases.
You have to feed a mule even when you don't need it. You have to house it in a climate-controlled building. You have to clean up after it. You have to medicate it, raise it for years until its useful, bury it when it dies.
No, animals are vastly more expensive propositions. Especially in a war zone.
Selling of a chunk of your company for a short term cash flow might be a good reason.
However there might be a more straight forward one as working with the military isn't easy or cheap, they are your most picky costumer and unlike people who order Roomba's from Amazon actually know how to formulate contracts and keep you honest.
Military contracts come with years of support and services and while they can be very lucrative they also can have a very negative effect on the company as a whole.
When you sell something to the military you are usually bound by a contract to continue supporting that product for say 10 years.
This means that during these 10 years you can't discontinue that product or have to keep a large stockpile of replacement units and parts and more importantly keep the in-house knowledge required to support it which means keeping the personnel who were involved with the project originally or ensuring that every bit of the knowledge is transferred this isn't cheap and in the tech industry isn't easy.
Military contract pretty much mean that you have to magically increase the average employee retention period for more or less the duration of the contract, in many other cases the contract might actually force you to transfer some knowledge and skills to sub-contractors that would provide the global service the military might require which means some of your IP can leak.
There's a good reason why so many companies are either 100% dedicated to the defense industry (and many of those burn out quite quickly because of how demanding those contracts are) or have their defense oriented subsidiary very well isolated from the main corporate entity.
That's because when you sell to the military it might actually restrict the potential market as the contract might specify exclusivity or give the DOD oversight on all your future deals (to prevent technology transfer to non-friendly actors), when you are a tech company that can be an issue because quite often there will be quite a bit of lateral technology sharing across the company (one of the additional reasons why big corporations tend to keep their military subsidiaries very separated).
Which now could mean you are restricting your commercial products from being sold as they now might require a DOD oversight as well; a possible example in iRobot's case might be that the same algorithm that allows your Roomba to detect objects such as cats and babies is the same algorithm that is used by their commercial bomb disposal robots to detect road side IED's so now the DOD might either force them to modify it sufficiently or restrict sales of the Roomba's to "friendly" nations.
Dumping their military/leo department in some one else's lap releases them from most of the commitments, protects their future IP from oversight and gives them a short term cash influx that they might need. Trying to find some ideological reasoning behind this is just silly.
However, the buyers in the expanding market won't necessarily be nation states, but instead local law enforcement (eg. SWATs), security companies, and PMCs.
As such, the split off division will likely be a nice acquisition for a company already serving one or more of those markets.
My speculation is that they also sold because they lost a 25 million dollar contract to Roboteam. It's a 7 year contract to the airforce for 200+ robots. IMHO, unless more services drop out of the joint robotics program, as the airforce did, it will likely be the last large government robotics contract for a very long time.
If I can send a $150,000 piece of equipment down range to handle an IED with a skilled operator at the controls, instead of risking human life to make the route / area safe for passing friendly troops, local nationals, or coalition troops, instead of risking my life... I'm going to it every single time.