iRobot 2005 Annual Report Download - page 13

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Strategic Alliances
Our strategic alliances are an important part of our product development and distribution strategies. We
rely on strategic alliances to provide technology, complementary product offerings and increased and quicker
access to markets. We seek to form relationships with those entities that can provide best-in-class technology
or complementary market advantages for establishing iRobot technology in new market segments.
Among the strategic alliances we have established with commercial entities are the following:
Deere & Company. We have entered into a strategic business agreement with the commercial and
consumer equipment division of Deere & Company to explore and potentially collaborate on multiple
projects involving technology and product development and commercialization efforts. We have collabo-
rated with Deere & Company on the development of the R-Gator unmanned ground vehicle. Deere &
Company has provided funded research and development, access to its M-Gator military utility vehicle
platform and certain other technology, and we have provided robot technologies, including our AWARE
Robot Intelligence Systems. Technology jointly developed under the agreement will be owned by both
Deere & Company and us, and technology independently developed by either Deere & Company or us
will be owned by the developing party. We and Deere & Company expect to produce a limited number of
R-Gator prototypes for evaluation by potential government contractors. Net proceeds from sales of the R-
Gator generally will be shared equally between us and Deere & Company, subject to recoupment of each
party's respective contribution to the project.
To facilitate management of the R-Gator project and additional collaborative activities, we and
Deere & Company have established a joint management committee to develop proposals for projects,
oversee and report on the progress and fulfillment of projects, and seek opportunities to further the goals
of the strategic business relationship through joint demonstration of technology and products at trade
shows, industry days and internal management reviews. We believe that our strategic alliance with
Deere & Company will lead to technologies, and later products, that are directly applicable to serving
markets such as agricultural and construction equipment, in which we believe autonomous vehicles can
play a significant role. Under the agreement, we have agreed not to work with any third party on projects
competitive with certain Deere & Company products if Deere & Company makes minimum annual
payments to us under the agreement of at least $2.0 million, or as otherwise mutually agreed.
The Clorox Company. We have entered into a joint development and license agreement with The
Clorox Company, whereby Clorox is the exclusive provider of the cleaning solution for the Scooba floor
washing robot. Our alliance with The Clorox Company allows us to integrate their cleaning technology
and know-how into our floor washing robot, improves consumer perception and awareness of our brand by
association and through joint marketing, and provides a necessary product component at an affordable
price.
Our strategy of working closely with third parties extends to the design of our products. By offering
extensible platforms designed to carry payloads, we have designed and manufactured our products to leverage
the work of those individuals and organizations that offer specialized technological expertise. The PackBot,
the Roomba and the Scooba robots are designed with open interfaces that allow third-party designers to add
sensors or other functionality to our robots.
Sales and Distribution Channels
We sell our products through distinct sales channels to the consumer and government and industrial
markets.
Consumer
We sell our consumer products through a network of national retailers. In 2005, these products were sold
by 19 retailers representing over 7,000 stores in the United States. We also offer our products through the
iRobot on-line store on our website. Internationally, our products are sold in over 40 countries, primarily
through in-country distributors who resell to retail stores in their respective countries.
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