Colin Angle, CEO of iRobot, says he finds reward in producing products that save lives.

There aren't too many companies that can say they make both vacuum cleaners and explosives detectors.

After more than a decade of losing money, iRobot Corp. finally turned a small profit in 2003 on the back of that dual market. Founded in 1990 by a trio of robotics researchers, iRobot floundered about for years in search of a market for its technology. The company was building impressive robots, but it was having a hard time figuring out how to make money from them.

The PackBot is being used by U.S. forces in Iraq and Afghanistan to detect car bombs before they explode.

With the new millennium, the company found two such markets. The Roomba vacuum cleaner took off with consumers, selling about three million units to date. The PackBot line gained cachet with the U.S. Army for its reconnaissance and explosives-disposal capabilities, with more than 1,200 now operating in Afghanistan and Iraq.

Both successes added up to the company, based in Burlington, Mass., finally escaping the red and becoming the de-facto leader in the nascent field of commercial robots. The success has also put chief executive officer Colin Angle into the unexpected role of advice giver to his fellow robot makers.

Angle discussed iRobot and the industry with CBCNews.ca at this week's RoboBusiness conference in Pittsburgh.

Which came first — military or consumer — and which comes first now?

The company has evolved its business model many times since its inception. Probably about 14 or 18 business models came along and were discarded as they were found to be little more than a subsistence existence.

Our long history has allowed the military contracting part of the business to slowly grow because it's not something that happens quickly. It's a relationship about who they can believe in, who can they rely on, do they have all the processes in place.

In 2002, there was an inflection point in both sides of the business. We had gotten to the point on the military side where we had a platform — the PackBot platform — that reliably could carry audio-video equipment around the battle space, and could climb stairs and was rugged enough to throw out a window. Afghanistan happened and we sent our stuff over because you can't have a conflict like this and not invite us, which is what it's all about. We proved our worth … and they took it to Iraq and Baghdad.

The [improvised explosive device] threat started to emerge as the number one way that our soldiers are being killed. The application of our robots in Afghanistan … created a pull of robots into the military for [explosive ordnance disposal] work, and the more robots you have the more new things you come up with for them to do.

That has accelerated the Future Combat System and the Army acquisition thinking with respect to these robots.

So 2002 as an inflection point led to a period of relatively high growth. We're predicting 20 to 25 per cent growth this year, and that's in line with the military.

The story of the consumer is quite different. First we learned how to clean over the course of three years, then we learned how to build low-cost over the course of three years. Then we were around the dot-com boom and suddenly we were fundable and were able to raise venture capital for the first time, which gave us some discretionary resources to develop new products. One of the things we developed was the Roomba and when we launched it, we went from zero to hundreds of thousands of robots sold. Thirteen million dollars of revenue at the beginning of 2002, 2003 was in the forties, 2004 was much, much higher. It was hockey stick growth.

From a revenue perspective, about 55 to 60 per cent comes from the Roomba and home robots and 45 per cent comes from the military. They're growing at comparable rates because they're now both at scale.

So the consumer side has the slight edge?

It has a slight edge in revenue, but there are margin pressures. Raw materials like nickel and so forth can really impact that business because it is so price sensitive. The military side is lower margin but less price sensitive.

What have you learned from each market? How are they similar and how are they different?

The consumer marketplace is very, very price sensitive. Everything needs to be engineered in an integrated fashion. There's no opportunity to put any fat into the design and still make money.

Both of them, however, are utility-driven businesses. If the Roomba doesn't actually clean your floor, we don't sell them. In the military, if the robot doesn't provide a tangible benefit to the soldier, such that the soldier is demanding to take the robot, then sales don't happen either. The customer is the true driver in both of these businesses. It's purely a utility sale as opposed to an entertainment or gadget sale because you don't buy vacuum cleaners on a whim, nor do you lug around a 40-pound robot for giggles. Both of the industries have had to be driven by that.

It's a hard industry, building robots. The manufacturing is incredibly difficult. The performance criteria … when you take something with thousands of moving parts and then have the constraint of being waterproof and being able to be thrown out of a building. If I were prone to jealousy, I would think about how comparatively easy the computer industry was. General purpose machines that plug into the wall that work most of the time, and where there was nothing else like them before. They're doing tasks that are not easily compared to other things, like word processing versus writing with pen and paper or a spreadsheet compared to a calculator with a printer on it.

For us, it's a hard slog.

Is it like biotechnology, where there's a long development cycle with no obvious payout at the end?

In biotech, if it succeeds there's a tremendous profit opportunity for quite some time. On the robot side of the equation, it's a slog. Victory means you get a moderate margin return and you're working to sell each one of them. It's not a trivial thing but it can work. We've sold three million vacuums and there are more than 5,000 robots in the U.S. Army now. By focusing on making a difference in the utility level, there is the satisfaction and payoff of actually helping people, and that's personally satisfying.

What about hitting profitability a few years ago? That must have been fulfilling.

Hitting a profit was a milestone. Hitting real profit is the next challenge. It's how do we grow the business so that we have a bottom line that warrants more respect and legitimacy in the business world, and that allows us to aggressively do new things? There's never enough money to do everything you want. Give me five minutes and a piece of paper and I'll write you more ideas than I could do in a lifetime.

When you achieve profitability that means you get to exist on an ongoing basis, but we're far from being done with where we need to be.

IRobot seems to be on its way, but what about the rest of the robot industry? Are they on par with you or are they further back?

There's a substantial revenue gap between iRobot and many of our peers. The medical robotic industry is off and running, the mining and agricultural robots — the low-volume, high-value robot companies in those industries, as well as the vehicle industry — those guys are making the most money right now. We're building the most robots as the next-tier player, and then there's a lot of white space.

When I talk about the emerging industry, I'm legitimately trying to be helpful and give these companies more of a focus on the business aspect of what they need to be thinking about in evaluating their business choices. It's so easy to be enthralled with the coolness of what the robot industry could be and lose sight of the realities of what it takes to get there.

Going back to the military, why do they seem to always be the first to adopt new technologies, such as robotics?

The military has a very well-understood and dramatically important mission to protect our livelihood. We, as a country, have been willing to use technology as a placeholder for the size of our standing army, even if it's an expensive proposition to do so. There's cultural motivation within the military to think about, is there a better way to do something or how can we solve this problem?

Also, there is a well-developed mechanism in the United States for funding advanced development. There's the Defense Advanced Research Projects Agency funding military technology and the Pentagon and the Armed Services having budgets to look into doing fundamental research as well as applied research to tackle challenges. You can be a smart person with an idea and get money from the government to go do research for the military. It's much harder to be a smart person and get money to do real in-depth research outside of a university, and that matters.

Is the model then to get military funding to do early-stage research and then go for the real money in consumer markets?

If you look at our company today, revenue is strongly contributed to by both divisions. The earnings power of the business, at least in 2007, is more strongly driven by the military side than the consumer side. The real earnings power is in the strength of the product and creating the value that they deliver, regardless of the side of the house that they participate in.

How have your PackBots improved from what they started out as?

The PackBots that we're now shipping have a hundred improvements from where we first started. The first category of improvements is in basic reliability — what fails in the field and how do we fix it? Then there are more customer-driven improvements, like the things the PackBots find and want to push out of the way, but they're heavier than what we modeled. So how do you make the arm stronger? How do we increase the radio range? How can we use standard rechargeable lithium batteries as opposed to the things we're creating to drive the robots? It's a big deal.

We had the PackBot controlled by these really clever, six-degree-of-freedom pucks — these little handles on the control station. While the pucks gave you great control, there was a fair amount of training to learn how to use them. So how do you fix that? Well, let's go hire a game designer, attach a [PlayStation 2] controller and tell him, "if this were Halo, how would it work?" Listen to what he says, implement it and then give all the soldiers game controllers and leverage into the thousands of hours of training and you radically simplify using these robots.

The basic military uses of robots so far are for explosives disposal and reconnaissance. Are you planning on expanding beyond that?

We started with cave exploration, then went to bomb disposal, then what we found was another need from the field, that they needed to get out into the streets of Baghdad to find car bombs before they were used against our soldiers at checkpoints. Military police needed to be able to guarantee that a car was not a bomb before it came to them. The stand-off inspection robot therefore became a new application, so we added bomb-sniffing capabilities.

Now, xBot is a program to give unexploded ordnance and explosive device remediation capabilities, not just to bomb-disposal teams, but to regular infantry. Later this year we're going to start shipping our SUGV, the Future Combat System's Small Unmanned Ground Vehicle, and that's to give building-clearance and robot point-man capabilities to the infantry. That last new application dwarfs all the others because it starts to have robots used in the day-to-day tactics of the regular infantry, which dwarfs the [explosive ordnance disposal] teams in size.

How do you characterize the auto industry's robot developments? They seem to be very different with what the companies here at RoboBusiness are doing?

The automotive industry is investing in technology that's really going to make a difference for them. We're a long way away from automatically driving cars but we're already seeing automation increase the safety of cars, from cars that parallel park themselves to adaptive cruise control, so that when you're coming up on someone from behind the car will maintain a safe distance. These types of technologies make it more safe and fun to drive a car. Cars are becoming more and more robotic and the robot industry is going to find itself with some very substantial customers in the auto space.

What about Japan versus the United States? Is there a big difference in how the two countries approach robots?

Over time, the difference is going to diminish, but the U.S. robot industry is very benefit-oriented so it's not so much about making humanoids. It's about vacuum-cleaning robots, car robots, oil robots. What's the benefit and what should it do?

The Japanese industry is a lot about cool. [Sony's] Aibo and [Honda's] Asimo, dozens and dozens of dynamically walking robot projects were developed so that … large consumer electronics firms could [show they can] put together an impressive robot. Why is Matshushita cooler than Sony? Well, just look at their robots. It's bragging rights and it became a huge thing. The population got into it.

It's misdirecting the Japanese into a world of show rather as opposed to a world of utility. That's not a stable place. There's fantastic engineering and we're [eventually] going to see more and more practical robots coming out of there.

Some of your rivals have suggested the big brand names in vacuum cleaners are gunning for you. Is that true?

Oh yeah. There will be some more traditional vacuum cleaner company entry into the field but we'll see how they stack up. My hope is it helps legitimize the industry and make more people believe robots can work, and that'll be good for everyone.

Sort of like when Apple's iPhone came out and BlackBerry maker Research In Motion was saying, 'this is great for us?'

We will compete aggressively against them but a rising tide will float all boats and this is an industry with massive unaddressed market potential. That's going to be a good thing.

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