iRobot (NASDAQ: IRBT) recently announced development of the Ava 500, a new telepresence robot. The small cap robotics company has partnered with Cisco Systems (NASDAQ: CSCO) to create what can best be described as a Roomba with teleconference capabilities.
The device has a 21.5 inch HD screen and can self-navigate to designated locations, establishing an artificial presence of users on the opposite end.
There is a ton of hype surrounding the Ava 500 right now, with some news outlets touting it as the “next revolution in robotics”. Proponents of the new technology are suggesting that the Ava 500 will see huge success in the enterprise market by allowing off-site parties to easily navigate the workplace.
Yet despite my bullish sentiments towards iRobot in the long term, I can’t help but completely disagree with all this.
All Hype
The Ava 500 is a novelty and nothing more. It offers no extra convenience in the enterprise space and is simply not worth the investment.
Harsh, I know, but you need to call it like you see it. The price for the Ava 500 has yet to be officially announced but its counterpart in the medical industry, the RP-VITA, is subject to a lease of up to $6,000 per month.
Of course, the Ava 500 does not require advanced medical capabilities like the RP-VITA and will carry a lower price-tag. However, the RP-VITA’s high expense and leasing system are indicators of how pricing for the Ava 500 will pan out. Consumers are likely looking at anywhere between $2,000 and $3,000 per month considering cost of production per unit.
And despite all the hype, I’ve only come across one argument justifying the economic benefit of the Ava 500 and it’s a weak one: The technology would cut business travel expenses.
But it’s just not true. This notion assumes that the Ava 500 offers an innovative kind of telepresence that will serve as a substitution for direct human interaction. Frankly, I just don’t see this being the case.
The Ava 500 offers no additional convenience or substance to teleconferencing. Ironically enough, the great thing about teleconferencing is that you can transcend physical boundaries. You don’t need to travel in order to talk to someone – you just need to connect to their mobile device.
Potential customers are going to have a difficult time justifying the expense considering that the Ava 500 must travel to them while they already have a teleconference-capable-tablet at their immediate disposal.
Simply put, there is going to be very little demand for a self-navigating teleconference screen.
And even if companies do end up finding these aspects useful, the Ava 500 comes with physical limitations that completely nullify the purpose of the product.
First, the Ava 500 moves at a terribly slow pace – the time it would take to navigate an office building is painstakingly inefficient.
More importantly, it seems that iRobot forgot about elevators and doors – the Ava 500 has no physical extremities available to navigate these obstacles. When you need someone to open doors and push buttons for a self-navigating robot, it completely defeats the purpose of the technology in the first place.
Considering the product’s limited mobility, I wouldn’t be surprised if employees eventually decide to just carry it by hand.
The bottom line is that if you are needed on site, you are needed on site. And if you can accomplish a task off-site, you can do so through a tablet or portable device.
Heck, if you really needed a mobile telepresence unit, you could just have an intern duct tape an Ipad to his forehead – it would be cheaper and more efficient.
Product Diversification
But despite my scathing review of the Ava 500, iRobot still has a great thing going with these portable systems – it’s just not in the enterprise market yet.
iRobot’s RP-VITA is a cleared FDA Class II device which offers acute care and remote consultation for medical professionals.
There are a few important differences between the functions of the RP-VITA and the Ava 500.
First, the RP-VITA offers medical applications not available on standard tablet devices. The RP-VITA offers more than just a video conference – it offers real time access to clinical data.
The medical profession also requires more mobility than most enterprise workplaces. Doctors and nurses constantly move from room to room while office professionals generally remain stationary. The ability to visualize a patient and physical charts for diagnostic purposes is critical, while the ability to visualize your colleagues is more or less a social convenience.
Additionally, the system allows for the presence of off-site specialists who are consistently needed in hospitals.
Mobility and physical presence are simply far more important in the medical industry than in your standard workplace.
But in the end, it doesn’t matter very much whether or not the Ava 500 sees large scale success. The research and development costs fronted by iRobot are separate from the unit’s main function of telepresence – Cisco Systems payed for the top half.
iRobot will continue to make use of the base of the unit, the Ava Mobile Robotics Platform, for additional functions. Potential applications for the platform include mobile security, material transport, mobile kiosk, factory inspection, and retail communication.
iRobot is no one-trick-pony – the company has already diversified it’s product base into home, defense, maritime, and commercial markets.
The company is currently up 70% year to date and I expect to see that growth continue long term. However, when the Ava 500 hits the market in early 2014, be prepared for disappointing sales figures.
Turning progress to profits,
Jason Stutman
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