Everyone loves the idea of a robot that cleans for you. But not everyone is enamored with iRobot's ( IRBT) vacuums -- or its recent stock performance. iRobot is the Massachusetts-based robotics company that leveraged 20 years of expertise in military robots to produce Roomba, the first self-guided vacuum priced below $500. The company has sold a million-and-a-half home robots since 2002, marking a strong entrée into the consumer market that paved the way for one of the most successful IPOs last year. But 2006 is proving a mixed year for the Roomba. As of Friday, the best-selling Roomba on Amazon.com -- the Roomba Red, which at $150 is the lowest-priced model the company sells -- stood at No. 47 in Amazon's kitchen and housewares sales rankings. Other vacuums ranked higher, including a Eureka Boss Smart-Vac in fifth place and a Black & Decker ( BDK) DustBuster at No. 10. Both of those better-selling vacuums also carried higher ratings from Amazon customers than the Roomba did, garnering four-and-a-half out of five stars, compared with Roomba's four stars. Four out of five isn't bad, but among Amazon's 50 best-selling housewares items, only two had fewer than four stars. Other models, such as the $249 Roomba Discovery, were rated three-and-a-half stars. Most of the user ratings on Amazon, as well as those on other review sites like Cnet.com, are positive, with such comments as "I love my Roomba" and "This vacuum is a life-saver." One recent reviewer proclaimed, "This has become a part of our family and we have named her Ruthie." But some of the neutral and negative reviews display a vulnerability of the Roomba: Many consumers expect more from a robotic vacuum cleaner than they do from a traditional vacuum. And when Roomba shows quirks and even weaknesses that other vacuums don't, people will speak up.
Among the complaints: The Roomba doesn't work on thicker carpets, and it gets stuck when it encounters area rugs, especially those with tassels. Other people were disappointed they had to Roomba-proof the room, removing cords, toys and other small objects that traditional vacuums simply push aside. Some discontented users reported that Roomba scratched their hardwood floors. Some of those who did experience problems were soured even further by what they considered nonresponsive customer support. "I no longer sing the praises of this product like I used to," wrote one Amazon user. "It's a shame ... I was its #1 fan." Nearly every product has its fans and its detractors, so why does this matter? Because iRobot is planning to boost sales and marketing costs for Roomba and its upcoming floor-scrubbing kin, Scooba, to as much as 19% of company sales this year, from 15% in 2005. Early adopters of new technologies are often technophiles who understand that cutting-edge products like the Roomba will have some glitches. More mainstream consumers simply expect the products they buy to work as well as what they've used in the past. If iRobot doesn't work out the kinks that even many of its early fans acknowledge are there, it could curdle the appetite for robotic household appliances for some time to come. Analysts are staying cautiously optimistic on iRobot's growth. "If anything, iRobot's revenue growth could easily exceed our forecast if all the pieces come together," said Charles Wolf of Needham & Co., which helped underwrite iRobot's IPO and has a $35 target on the stock. "The risk to the story is that, while the company is increasing expenditures to grow revenues, such growth may not materialize." Investors are already feeling a bit edgy about iRobot. After its initial public offering last November, iRobot's stock soared from its offering price of $24 to a peak of $37.90, an increase of 58% in two months. But a disappointing fourth quarter drove the stock down as low as $25.49 last month -- a beating that has yet to heal. The stock closed Monday at $26.20.
In the fourth quarter, iRobot posted a profit of $15,000, or less than a penny a share. It earned $408,000, or 1 cent a share, in the year-ago period. iRobot is a clever company with a good deal of promising technology in development. Just last week it announced a new version of its military PackBot that includes a "disruptor" -- a device capable of firing a slug of water strong enough to disable an explosive device without detonating it. The concern for investors isn't whether the company's products aren't working -- no company, large or small, is better positioned to make household robots a mass-market phenomenon. The concern is whether the management has the skill to reach that goal without turning that "disruptor" on iRobot's stock price. That's why it's worth watching how iRobot responds to complaints about the Roomba's performance, as well as its own customer service. The Roomba, with its buggy tendencies, is doing well in the quirky niches of late night, but prime time is another game altogether.