iRobot Corp. (Nasdaq: IRBT) made the right decision.
And the Pentagon just proved it.
The small-cap robotics leader knows only too well it needs to increase its private sector sales as America works to cut defense spending.
That’s why iRobot Corp. has reorganized to target the health care, retail and security industries.
For investors, the timing couldn’t be better.
After all, the Defense Department has announced several new robotics breakthroughs in recent days.
This shows the U.S. military is still completely committed to using robots to win the War of the Future.
But now that American troops have left Iraq, the Pentagon’s top brass is pinching pennies like never before. And yet… it has new robots to brag about.
In a moment, I’ll tell you all about them. But first…
Breaking Down iRobot’s (IRBT) Change of Course
You may recall that iRobot’s stock recently sold off when the company said it expected slow sales of “warbots” till the end of the year.
Just a week later the company also revealed it will reorganize in an effort to expand into new target markets to boost sales.
iRobot will keep its current two main divisions in place. One centers on home robots, and to date has moved some 7.5 million units.
I’m talking about robots like the Roomba that vacuums your floor and the Verro that cleans your pool.
Military sales will also have its own division. So far, iRobot has sold 4,500 warbots.
Today, iRobot plans to pursue different markets as it shifts its focus to a third unit − emerging technologies.
You see, iRobot has always been something of a bipolar firm. Its machines can clean the floor or dispose of bombs − but do little in between.
With that in mind, iRobot invested $6 million last year in InTouch Health. That firm provides “distance medicine” so doctors can consult with patients in a wide range of venues.
But Angle believes Ava can do much more than that. He told the Boston Globe he wants to pursue “mobile, connected robots for security and retail.”
All three sectors are “multi-billion-dollar markets ripe for disruption with our technology,” Angle told the paper.
Look at it this way: a version of Ava could sell goods at the mall by day then guard the stores at night.
Clearly, it’s too soon to predict if Angle will execute against his new strategy.
But if he does, iRobot could add strong new revenue streams to a company stuck between military and home sales.
This is the kind of move iRobot shareholders need to see.
It means the company understands the broad challenges it faces and has a plan to deal with them.
Robots are Better than the Real Thing
Ironically, despite tight budgets, the Pentagon seems increasingly committed to using even more advanced robots.
Take the case of the Cheetah. It’s a cat-like bot that can gallop at 18 mph on a treadmill.
That gives it the land speed record for robots with legs. In fact, that’s 50% faster than the previous record set by the Massachusetts Institute of Technology back in 1989.
It’s no wonder the company named the bot after the world’s fastest animal.
The mechanical cheetah may eventually reach speeds of 40 mph, just over half the highest speed of the biological cat.
But the real cheetah gets tired. Not so with a bot − it keeps working till it runs out of juice. You can watch aYouTube video of it in action here.
More breakthroughs are in the works. Boston Dynamics is pursuing a prototype human-like robot.
Called the Atlas, the bot can walk upright. It also can use its hands for balance while squeezing through narrow passages on surveillance or emergency rescue missions.
Meanwhile, the Navy also is developing a different humanoid bot for key rescue missions. These entail fighting fires on board ships.
Scientists at the Naval Research Laboratory have high standards for the firefighting bot. They want it to move on its own through narrow passages and to use the ladders unique to ships.
They’re designing the bot with lots of advanced sensors − navigation, gas detection and infrared vision that sees through dense smoke.
The bot’s arms should allow it to throw chemical grenades that suppress fire.
Naval researchers foresee a day when the bot can understand and speak natural human language.
At a minimum they want it to respond to hand gestures so it can accurately interact with humans in a crisis.
Now you know why I keep saying we are in the very early stages of the robotics revolution.
Then again, this is the Era of Radical Change.
Robots are riding an unprecedented wave of high-tech innovation. In the near future, they will fly planes, drive cars, and help colonize planets.
Along the way, they will make savvy investors lots of money. In the meantime, key an eye on iRobot.
It’s one of the few robotics “pure plays” out there.