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iRobot Corporation (IRBT), Microsoft Corporation (MSFT): The Robot Doctor, Dr. Kinect, and the Future of Telemedicine

Bomb squads, vacuum cleaners and doctors — what do they all have in common? The answer is iRobot Corporation (NASDAQ:IRBT), an incredibly versatile company that has created bomb-sweeping robots, Roomba automated vacuum cleaners, and virtual doctors powered by Apple iPads. iRobot Corporation (NASDAQ:IRBT)’s new product — the 5-foot-tall RP-VITA, a remote presence robot doctor — is a creation that uses the technology of its predecessors for healing, rather than detecting explosives or cleaning floors. Does the RP-Vita represent a unique turning point in the world of health care, or is it an overpriced, superfluous product that most hospitals won’t be able to afford?

It's Time to Buy These 2 Defense Stocks

How RP-VITA works
RP-VITA is an acronym for Remote Presence Virtual and Independent Telemedicine Assistant. The robot is now available at six hospitals in the United States and one in Mexico City. RP-VITA is controlled by an iPad, and operates like a mobile webcam to allow a remote doctor to remotely interact with patients, doctors and nurses. Using Roomba technology, the RP-Vita can use a map to navigate hospitals autonomously and locate patients automatically. RP-Vita is equipped with an on-board stethoscope as well. The robot and its technical support cost $5,000 a month.

If successful, RP-VITA could be used for a myriad of operations. The robots could be deployed to remote locations where medical facilities are too far away. They could also be used in quarantined environments deemed unsafe for human doctors to enter.

Even though RP-VITA isn’t generating any meaningful revenue for iRobot Corporation (NASDAQ:IRBT) yet, it is an interesting diversification away from its core business of Roomba products. Last quarter, iRobot Corporation (NASDAQ:IRBT) disappointed Wall Street with a 19% year-on-year drop in adjusted earnings to $0.21 per share, although revenue rose 17% to $130 million on the back of strong sales of its home robots (Roomba, Scooba, Mirra, Looj) business. Shares have steadily trended downward over the past month as a result.

However, I wouldn’t underestimate iRobot Corporation (NASDAQ:IRBT)’s ability to bounce back. After all, this is the same company that effortlessly altered its bomb-sweeping technology to clean floors, carpets, pools, and gutters after a major decline in revenue from its defense contracts between 2012 and 2013.

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