iRobot Corporation

63 South Avenue
Burlington, Massachusetts 01803
U.S.A.
Telephone: (781) 345-0200
Fax: (781) 345-0201
Web site: http://www.irobot.com

Public Company
Incorporated: 1990 as IS Robotics, Inc.
Employees: 276
Sales: $142.0 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: IRBT
NAIC: 335212 Household Vacuum Cleaners

iRobot Corporation is a Burlington, Massachusetts-based developer and manufacturer of behavior-based, artificially intelligent robots for consumer and military uses. The company's proprietary technology, AWARE Robot Intelligence Systems, allows the robots to maneuver around obstacles. For consumers this has resulted in the development of home cleaning appliances, the Roomba Vacuuming Robot and the Scooba wet hard floor cleaning robot, of which more than two million have been sold around the world since the Roomba debuted in 2002. They are available online and at more than 7,000 retail locations. For the military market, the technology has been applied to the creation of the PackBot Tactical Mobile Robot, used to perform battlefield reconnaissance and bomb disposal missions. More than 500 Pack-Bots have been sold, and have been used by the U.S. military in Afghanistan and Iraq. In addition to its Massachusetts headquarters, the company maintains offices in California, Hong Kong, and Virginia. iRobot grew out of the work done at the Artificial Intelligence Lab at the Massachusetts Institute of Technology (MIT). It is a public company listed on the NASDAQ.

FOUNDING IN 1990

iRobot was founded as IS Robotics, Inc. in 1990 by Dr. Rodney Brooks, head of MIT's Artificial Intelligence Lab, and two of his students, iRobot's chief executive officer, Colin Angle, and chairman of the board, Helen Greiner. Brooks was born in Australia in 1954, and despite having limited access to technology, he grew up intrigued by it, especially computers. Undeterred, he fashioned his own rudimentary computer out of old telephone switchboards and light bulbs, and programmed it to play tic-tac-toe. He attended Flinders University in South Australia, studying mathematics because the school offered no classes in computer science. He finally left home to study computer science at Stanford University, and after receiving a Ph.D. in the subject in 1981 he began teaching at Stanford and then in 1984 traveled cross-country to accept a post at MIT.

Here at the Computer Science and Artificial Intelligence Lab he became deeply involved in robotics. Unlike most researching artificial intelligence, however, Brooks did not attempt to build robots by mimicking the way humans think, creating symbolic representations of the world. Rather, he sought to make robots that thought more along the lines of an insect, designed to produce specific behaviors layer by layer. For example, the basic layer of some of the early robots the lab created was simply the ability to stand. The next layer of competence permitted it to walk, followed by the ability to avoid objects, and so on. Should one layer be disabled, a lower level of competence was unaffected. Such robots may not have thought like humans, but they could be constructed to be highly useful.

Two of Brooks's most gifted protégés were Angle and Greiner, friends since their freshman year, who were drawn together by their interest in robots. Greiner was raised on Long Island, her mother a math and science teacher, her father a businessman who had studied chemistry in college. She began playing daily games of chess with her father at the age of five and early on displayed a penchant for mathematics and mechanics. At the age of 11, in 1977, she saw the film Star Wars and was fascinated by the R2D2 droid. Disappointed to learn that it was all a filmmaker's trick and that an actor was responsible for bringing R2D2 to life, she decided that she would eventually attend MIT in preparation for one day building a real R2D2. Several years later she was indeed accepted at MIT, where she earned an undergraduate degree in mechanical engineering, followed by a master's degree in computer science. She also served an internship at NASA's Jet Propulsion Laboratory in Pasadena, California, working on space repair robots.

Like cofounders Brooks and Greiner, Angle also displayed early mechanical aptitude, nurtured by his engineer stepfather. While earning a bachelor's degree in electrical engineering at MIT, he achieved a notable success in robotics. He built a six-legged robot called Genghis, which relied on 34 sensors and a pair of microprocessors to walk and avoid obstacles. He then went on to graduate school to study computer science and work with Brooks and Greiner at the Artificial Intelligence Lab. He next built a planetary rover called Attila, a robust version of Genghis, boasting a dozen microprocessors and 150 sensors.

After graduating from MIT Greiner cofounded California Cybernetics in January 1990 to develop robots used to manufacture automobiles, but she was soon lured back to Massachusetts to join Brooks and Angle, the latter still working on his master's degree. The two had tapped their credit cards to launch IS Robotics, which initially operated out of Angle's apartment in Somerville, Massachusetts. Although ostensibly a research company, the goal from the outset was to build robots that everyday people could use.

Angle, despite his 22 years, soon took over as chief executive, with Brooks serving as chairman and chief technology officer. Greiner was responsible for writing grant and project proposals. Angle and Greiner, along with six employees, worked for $30,000 a year putting in 18-hour days, their effort supplemented by interns from MIT who were paid minimum wage. The company relied on off-the-shelf products from RadioShack and Angle and Greiner made an occasional visit to the MIT machine shop to turn out their own custom parts. Initially, IS Robotics focused on refining Angle's Genghis robot, which was supported by funds from NASA's Jet Propulsion Laboratory. At the time, NASA was considering whether to equip Mars exploration robots with wheels or the kind of legs Angle's prototype had employed. In the end the agency opted for wheels, but IS Robotics, if nothing else, gained much needed lab equipment out of the contract. It also led to the introduction of Genghis to the market in 1991. The insect-like robot was a notable achievement, worthy of receiving a place in the Smithsonian Air and Space Museum, but it was hardly a commercial success. About 60 robots a year were sold for $3,000 a piece, mostly to universities.

COMPANY PERSPECTIVES

iRobot delivers innovative robots that are making a difference in people's lives. From cleaning floors to disarming explosives, we constantly strive to find better ways to tackle dull, dirty and dangerous missions—with better results.

FIRST MAJOR RESEARCH
CONTRACT: 1992

Of those early years, Greiner told the Wall Street Journal, "There were times when we didn't know how we were going to meet payroll, but a grant or project would always somehow come through." The first significant break came in 1992 when the company secured $500,000 from the Japanese government to develop minuscule medical robots, less than 1 centimeter in size. The following year, a $50,000 contract was received from the U.S. military's research and development unit, the Defense Advanced Research Projects Agency (DARPA), and the Office of Naval Research to develop a minesweeping robot to operate underwater, where the use of legs, not wheels, were an advantage. The company studied the way ghost crabs were able to maneuver beneath the waves despite the pull of tides and currents. This work resulted in the 1996 introduction of Ariel, a robot capable of detecting and eliminating mines in surf zones.

IS Robotics also began to find commercial applications for its expertise. It landed a contract with oil services company Baker Hughes to develop a wireless robot that would traverse an oil well bore to perform repairs. After Baker Hughes dropped out, Halliburton stepped in to provide funding.

By the mid-1990s many of the components IS Robotics used decreased in price dramatically, making it possible to pursue more mainstream robots. The company began working on a robot that had a face, resulting in a prototype called IT (Interactive Technology) that could respond to people. IT was shown to Hasbro in 1996 in hopes of developing a doll with the toymaker, but the parts were still far too expensive to consider making a child's doll. Nevertheless, a relationship was established and in 1998 Hasbro began funding a research and development team to work on possible projects. The researchers, while not at a loss for intriguing ideas—interactive board games, and "intelligent" balls and bats—still struggled with the concept of cost control. The group eventually developed an interactive doll, My Real Baby, which finally made its way to the market in 2000. A number of proposed features never left the drawing board in order to create a product that retailed for $100, but My Real Baby was still programmed to respond to petting by smiling and could also display unhappiness. Sales proved disappointing, however, and the product was pulled, unable to compete with cheaper, less sophisticated dolls. Nevertheless, IS Robotics learned some valuable lessons about the give-and-take of low-cost production.

Military work remained a key source of revenue for the company in the late 1990s. In 1998 IS Robotics won a DARPA contract for the Tactical Mobile Robot program, with the resulting research leading to the development of the iRobot PackBot. The robot would find its real-world application in the days following the terrorist attacks of September 11, 2001, when it was dispatched to search the rubble of the World Trade Center. Several months later PackBot was sent into the caves of Afghanistan to seek out combatants and ammunition stores. Later in 2002 a similar robot was used by the National Geographic Society to explore the Great Pyramids of Egypt, an event televised around the world.

Along the way, IS Robotics was able to attract the interest of venture capital firms, including Fenway Partners, First Albany, and Chicago's Robotic Ventures. Ultimately the company completed five rounds of venture funding, raising $27.5 million. In 2000 the company changed its name to iRobot Corporation, an allusion to science fiction writer Isaac Asimov's short story collection I, Robot. The company's founders had not lost their desire to develop robots for the masses, however. The dream finally came true in 2002 when iRobot introduced the Roomba Vacuuming Robot, the world's first affordable home robot, a sleek silver disk dedicated to the mundane task of cleaning floors. Priced at $200 it became a surprise hit of the 2002 Christmas season.

In 2002 product sales accounted for nearly $7 million of iRobot's $14.8 million in total revenues. A year later product sales soared to $46.9 million and total revenues reached $54.3 million. In 2004, iRobot introduced the Roomba Discovery series, a unit that featured a self-charging home base as well as Dirt Detect technology. Product sales grew to $82.1 million, total revenues topped $95 million, and the company turned a modest profit of $219,000. Over the course of the year the company reached a milestone when Roomba sales reached the one million unit level.

KEY DATES

1990:: Company is founded.
1991:: First product is introduced.
1998:: Hasbro, Inc. funds toy research.
2001:: PackBots are used for first time.
2002:: Roomba is introduced.
2005:: Company is taken public.

With Roomba becoming an accepted product, iRobot introduced another consumer product in 2005, Scooba, the first hard floor washing robot. The company worked with The Clorox Company to developed the specialized cleaning solution that the $400 unit relied on. iRobots also continued to develop robots for the military market. In 2004 it received a contract from the U.S. Army's Future Combat Systems program to develop a small unmanned ground vehicle. The company also began working with farm equipment manufacturer Deere & Company to develop an intelligent unmanned ground vehicle called R-Gator, which also had military applications. While Consumer products accounted for almost two-thirds of the company's revenues, the sale of military robots was actually faster growing, driven primarily by the war in Iraq and the enemy's use of deadly improvised explosive devices (IEDs). The Pack-Bot proved effective in locating and safely disposing of these explosives. Aside from the simple humanity of not putting soldiers in harm's way, the use of military robots made economic sense. According to the New York Times, "The Pentagon today owes its soldiers $653 billion in future retirement benefits that it cannot presently pay. Robots, unlike old soldiers, do not fade away. The median lifetime cost of a soldier is about $4 million today and growing, according to a Pentagon study. Robot soldiers could cost a tenth of that or less."

PUBLIC OFFERING: 2005

In November 2005 iRobot went public, raising $70.6 million in an initial public offering (IPO) of stock, the proceeds earmarked for research and development as well as possible acquisitions. At the end of the year revenues reached $142 million and the company returned a net profit of $2.6 million. The future appeared bright for the robot developer. Roomba and Scooba were solid household appliances with a great deal of worldwide sales potential. According to the trade group the International Federation of Robotics, $3 billion was expected to be spent around the world on domestic-service robots from 2005 through 2008. A robotic lawnmower was in development and other household appliances were also believed to be in development. Along with the increasing use of robots by the military and law enforcement, the prospects for the future of iRobot appeared bright. The prospects that R2D2 would come to life, however, still remained in the realm of science fiction.

Ed Dinger

PRINCIPAL COMPETITORS

Electrolux AB; Samsung Electronics Co., Ltd.

iRobot Corporation

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iRobot Corporation

63 South Avenue
Burlington, Massachusetts 01803
U.S.A.
Telephone: (781) 345-0200
Fax: (781) 345-0201
Web site: http://www.irobot.com

Public Company
Incorporated: 1990 as IS Robotics, Inc.
Employees: 276
Sales: $142.0 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: IRBT
NAIC: 335212 Household Vacuum Cleaners