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EScroogeJr (< 20)

thoughts beforemthe conference



January 07, 2007 – Comments (0)

Tomorrow, IRBT will present its new robot at the CES conference. Shareholders will be watching carefully for any clue as to the company's future strategy.

What possibilities do I see?

1. A multi-purpose robotic arm. It is installed on a moving platform (something like Roomba, but probably heavier),and is long enough to reach nearly every point in the apartment. The robot does not do much (writing software is tricky), but developers have access to the API, and sooner or later someone is going to write a program for each task the robot can accomplish. The robot costs from $1000 to $3000.

Consequences for stock price: IRBT is worth buying up to $100 per share.

Probability: 0.01%

2. A single-purpose arm. Same as above, but the robot is programmed to perform a specific task (e.g. window cleaning). The robot is less versatile and costs under $1000.

Consecuences for stock price: buy up to $50 per share.

Probability: 0.1%

3. An extended Roomba. The old familiar freesbbe on wheels is upgraded with a moving arm or tacticle that is several inches long and is capable of removing an object on Roombas path and putting it back after the floor is cleaned. The device costs under $500.

Consequences for stock price: IRBT is a buy anywhere under $30. The vaccuming market becomes IRBT's monopoly, but more importantly, it shows investors that the company is on the right track.

Probability: 1%

4. A new product on the Roomba platform (lawn mover, floor waxing robot, industrial cleaning robot, etc).

Consequences for stock price: a temporary spike to $25-30 on the new product hype, but then the price will retreat as investors realize that IRBT is not addressing its main problem. Buy under $20.

Probability: 5%

5. A "platform" product. A Roomba Create Kit that lets other designers build applications around the Roomba platform.

Consequences for stock price: stock will remain essentially flat. The market already expects it, and feels extremely skeptical. The kit will fail to become a widely-adopted platform due to the extremely narrow range of abilities of Roomba, which can only move about a room and make sounds.

Probability: 70%

6. A new version of Roomba called a DirtCat or whatever, that does essentially the same things, with a few bells and whistles added.

Consequences for the stock price: stock will continue to slide to $12, where it will fill find a new support.

Probability: 20%

7. Something else that I haven't thought of. This is always a possibility that should be taken into account. I will give it the remaining probability of 3.89%.

I have already commented on the mechanical challenges faced by IRBT. I don't think they are capable of making a robotic hand with 3, 2, or even 1 finger, or even a moving lever with a pressure sensor that will enable Roomba to push aside objects on its path. Until they acquire some mechanical engineering capacity, I will presume that all that new R&D staff is working on newer versions of freesbees on wheels or on the new swarmanoid algorithms for the military robots. So, we willl most likely see another freesbee. Since the invitation video has advertized the new product as the bane of the Robosapien, I don't think it will be a modification of Roomba. Also, as I commented in my previous post, I don't expect a robotic lawn mover. So I agree with thorn_stevens and predict a Roomba Create Kit. (Not that I think that this toy will leave the Robosapien particularly worried.)

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