Interested in robots? I am. I've been following robotics companies for over 30 years. But this is a tough business to be. Many early companies have gotten their heads handed to them, but I think the revolution in consumer robotics is just getting underway. And to me that spells opportunity -- if you know which companies to look at, that is. One of my favorites is actually pretty well known for its house cleaning robots. You know those little, flat, round vacuums that zoom around your living room picking up dirt, without you having to push it around? The company that produces these nifty tech gifts is iRobot (IRBT).
The company, though, isn't limited to just neat consumer gadgets. It is also producing robots for our military. A week or so ago, The Associated Press broke a story that: "The Pentagon plans to purchase up to 3,000 additional robots to be used by U.S. soldiers in Iraq and Afghanistan to detect explosive devices and roadside bombs." It's a little more complicated than that, but this would be a big contract for the company, worth around $180 million based on iRobot's selling price of $60,000 per PackBot. That's almost as much as the company's entire revenues in 2006. One thousand PackBots will be ordered this year, with 2,000 more to follow over the next five years. (Did you know that the Department of Defense is planning to be in Iraq and Afghanistan until 2012?)
One thousand robots, or $60 million, is still a big order, but iRobot may have to split it. Foster Miller, a subsidiary of Britain's QinetiQ Group, makes the Talon bomb disposal robot with similar capabilities at about the same price. There's even a chance Exponent's MARCbot could get some of the business, even though it is not as advanced as the PackBot, as it is cheaper. Still, even sharing the contract will generate a nice chunk of change.
One company that is not likely to get a share of this contract is Robotic FX, formed by an ex-iRobot employee. They make a tactical surveillance robot called Negotiator that looks like the PackBot, but they claim will sell for only $20,000. iRobot has sued them in Federal and state court for patent infringement and misuse of confidential information.
Another threat to iRobot that I am watching is the new armed robot from QinetiQ's Foster Miller. Only three of these bad boys have been deployed so far, but they are designed to wheel into combat or door-to-door searches and shoot people. According to National Defense magazine, the U.S. Army started putting Foster Miller's SWORD armed robots into combat a couple of months ago, and it can get rid of roadside bombs in addition to (or possibly at the same time as) shooting people.
iRobot does not make an armed robot, and they've never talked about a development program. The Army says that reaction by soldiers has been so positive that they want 20 more SWORD robots immediately, part of an 80-unit purchase authorization. According to the Pentagon, robots will be 33% of our combat forces by 2015, as part of the $127 billion Future Combat System Program. I suspect this is a direction that iRobot has to go in order to keep up with competition.
