iRobot 2015 Annual Report Download - page 91

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In 2011, we signed a joint development and licensing agreement with InTouch Health, a leading remote presence
telemedicine solution provider, which resulted in the introduction in 2012 of the RP-VITA, the first autonomous navigation
remote presence robot to receive U.S. Food and Drug Administration clearance for use in hospitals. In 2013, we signed a joint
marketing agreement and have worked in close alliance with Cisco to bring our enterprise-grade Ava 500 Video Collaboration
robot to market. The Ava 500 blends together our autonomous navigation capabilities with Cisco’s TelePresence to enable
people working off-site to participate in meetings, presentations and events where movement and location spontaneity are
important. We continue to explore strategic partnership opportunities for our remote presence technology.
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, Kobra and FirstLook robots are designed with open
interfaces that allow third-party developers to add payloads to our robots, improving their functionality.
Sales and Distribution Channels
We sell our products through distinct sales channels to the consumer, defense and security, telemedicine, and video
collaboration markets. For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, sales to non-
U.S. customers accounted for 56.0%, 60.9% and 59.5% of total revenue, respectively. For the fiscal years ended January 2,
2016, December 27, 2014 and December 28, 2013, U.S. federal government orders, contracts and subcontracts accounted for
5.1%, 4.3% and 6.2% of total revenue, respectively. For the years ended January 2, 2016, December 27, 2014 and December
28, 2013, we generated an aggregate of 26.0%, 29.8% and 33.2% of our revenue, respectively, from our home robots distributor
in Japan (Sales on Demand Corporation) and a network of affiliated European distributors of our home robots (Robopolis
SAS).
Home Robots
In the United States and Canada, we sell our consumer products through a network of national retailers. In 2015, this
network consisted of more than 60 retailers which often sell either one or some combination of our products. Certain smaller
domestic retail operations are supported by distributors to whom we sell our products directly. In support of sales in the United
States and Canada, we maintain an in-house sales and product management team. Outside of the United States and Canada, our
products have been sold in more than 50 countries, primarily through a network of in-country distributors who resell to retail
stores in their respective countries. These distributors are supported by our international sales and product marketing team.
Our retail and distributor networks are our primary distribution channels for our consumer products. We also offer
products direct-to-consumer through our domestic and international on-line stores, representing 6.1%, 6.1% and 5.9% of total
home robots business unit revenue for fiscal 2015, 2014 and 2013, respectively. We have established valuable databases and
customer lists that allow us to target directly those consumers most likely to purchase a new robot or upgrade. We believe we
maintain a close connection with our customers in each of our markets, which provides an enhanced position from which to
improve our distribution and product offerings.
Defense and Security
As noted above, we expect to complete the divestiture of our defense and security business unit during the first quarter of
2016. We currently sell our defense and security products directly to end users and indirectly through prime contractors and
distributors. While the majority of defense and security products have been sold to date to various operations within the
U.S. federal government, we also sell to state and local agencies as well as to international government organizations, research
labs, nuclear and industrial companies and universities. Our military products are sold overseas in compliance with the
International Traffic in Arms Regulations, or ITAR. We have sold our products to the governments of various countries in the
past several years, including the United Kingdom, France, Germany, Sweden, Norway, Italy, Brazil, Pakistan, Israel, Australia,
Republic of Korea, Singapore, Bosnia, Lithuania, Qatar, Taiwan, South Africa and Canada.
Remote Presence
The RP-VITA telemedicine robot, which was jointly developed with InTouch Health and incorporates our Ava mobile
robotics platform, is sold to healthcare customers by InTouch Health. Our Ava 500 Video Collaboration robot, which
Form 10-K