iRobot 2012 Annual Report Download - page 54

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• We restructured our maritime business, which operated in North Carolina as part of our defense and security
business. Although we believe that there is a future for unmanned underwater vehicles, the product market has not
materialized as quickly as we expected. As a result, we have closed our North Carolina office, shut down our
maritime product business and relocated our maritime research to our headquarters in Bedford, Massachusetts as a
way to efficiently continue to pursue this business in a cost-effective manner.
• We wrote-off certain non-performing assets and inventory to levels that support our reduced revenue outlook for our
defense and security business.
• We increased our investment in marketing programs in our home robots business, which resulted in greater brand
awareness and revenue growth in that business. We expect to continue investing in marketing programs in 2013.
• Together with InTouch Health, we jointly introduced the RP-VITA, the first autonomous navigation remote
presence robot to receive U.S. Food and Drug Administration clearance for use in hospitals. The RP-VITA, which
will begin shipping in early 2013, combines the latest in autonomous navigation and mobility technologies
developed by iRobot with the state-of-the-art telemedicine and electronic health record integration developed by
InTouch Health.
• In October 2012, we acquired Evolution Robotics, Inc., developer of the Mint and Mint Plus automatic floor
cleaning robots. This acquisition expands our technology leadership through a combination of intellectual property,
engineering talent and new products that will broaden our global portfolio of practical robotics solutions.
Strategy
Our goal is to design and market innovative robots that make a difference and are adaptable for use in a broad range of
applications. We strive to drive innovation, serve as an industry catalyst and change the world by fueling the era of robots. We
intend to increase the penetration of our products in existing markets, expand existing products into new markets, and develop
and launch new products into current and adjacent markets. Our strategy is to maintain a leadership position by delivering
robotic technology-based remote presence and automated home maintenance solutions that delight our customers and anticipate
their needs, while extending our technical leadership in the areas of robot autonomy, manipulation and platforms. Remote
presence is the core of our military robots which save lives by keeping warfighters and public safety workers at safe standoff
distances from hazards while they perform dangerous, difficult and persistent missions. With increasing levels of autonomy,
continued mobility improvements, more sophisticated sensor suites and advanced human interfaces, remote presence systems
will expand in effectiveness and efficiency and reduce the requirements for actual physical operator presence and control. In
the area of automated home maintenance, we seek to improve the quality of life with robotic solutions requiring as little human
physical intervention as possible. Key elements of our strategy include:
Leverage Common Platforms and Software. By committing long-term to a given platform and providing incremental
upgrades, we create a valuable installed base that supports third-party development and greatly simplifies service and support.
When entering new product areas that cannot be serviced with existing platforms, we intend to develop a multi-generational
platform strategy that allows for rapid learning and long-term incremental improvements. Through the use and development of
a common software architecture, we intend to create a robot intelligence system of enduring value and build a formidable
advantage that stifles competition. Our common software will allow high reuse, reducing development costs of new systems
and payloads, as well as reducing development timelines.
Continued Growth through Profitability, Operational Excellence and Customer Focus. We intend to consistently
improve our profitability through disciplined allocation of resources and by reducing costs of materials, adjusting prices,
optimizing our product and channel mix and focusing on our discretionary spending. We will continue to focus on improving
the scalability and efficiency of our supply chain process and on mitigating single source supply exposure. We will identify,
develop and enhance product features and functionality while also aggressively focusing on product reliability.
Leverage Research and Development Across Different Products and Markets. We leverage our research and
development across all of our products and markets. For example, we use technological expertise developed through
government-funded research and development projects across our other product development efforts. Similarly, expertise
developed while designing consumer products is used in designing products for defense and security applications. This strategy
helps us avoid the need to start each robot project from scratch, developing robots in a cost-effective manner and minimizing
time to market.
Continue to Strengthen Our Brand. Our robots' performance and uniqueness have enabled us to obtain strong word-of-
mouth and extensive press coverage leading to increasing brand awareness, brand personality and momentum. We intend to
increase our investment in our marketing programs to strengthen our brand recognition and reinforce our message of
innovation, reliability, safety and value.
Complement Core Competencies with Strategic Alliances. Our core competencies are the design, development and
marketing of robots. We rely on strategic alliances to provide complementary competencies that we integrate into our products