Very interesting development — Kiva becoming part of Amazon. (Reported in the March 20 AS Daily.)
As of early April while writing these comments, I am not certain why Amazon would buy Kiva. Just because Amazon, including Zappos, which is owned by Amazon, uses Kiva technology in their warehouses does not mean you are going to buy the supplier of that technology. Neither Amazon nor Kiva have said anything about this as far as I know.
More so, I am curious to hear what Kiva’s current and future (potential) customers think about this. Amazon in most, if not all cases, is a direct competitor of those other Kiva customers. Why would any of those companies want to disclose specifics about their business, planning and operations to their competitor Amazon? Sure, Kiva and their customers can create a lot of safety firewalls around data and information, but it is impossible to ensure absolutely none of the data, or more critically, “ideas and conversations,” do not end up somewhere at Amazon. To me that would be a very difficult hurdle to overcome. Kiva was (and needs to be) a very integral part of its clients’ thinking and strategy to be able to offer the solutions for which they have become so famous.
Kiva offers an incredible solution, you need to see it in person to fully appreciate how it changes everything in a pick-and-pack distribution center environment. Everyone to whom I have shown the video material about the solution is just in awe. Plus Kiva is a U.S. company and manufacturers its robots here in the United States and thus a good example that we can still develop and produce good products right here in the United States.
All this of course is no reason why Amazon would buy Kiva, especially at the price paid which seems astronomical in comparison to Kiva’s current sales. So for sure there are other, yet not disclosed underlying reasons for this. Possibly this could be related to the fact that Kiva had a lot of investment from venture capitalists who wanted to exercise an exit strategy. One of those investors, according to Kiva’s Website, is Bain Capital Ventures — an enterprise the U.S. public has recently learned a lot more about.
I sincerely hope Kiva will not become history. It would not be the first time when a company has acquired a technology just to limit its further growth and distribution, as it simply was “too good” to be kept alive. Kiva is an incredible system and U.S.-made, creating many very good U.S. jobs. Who knows what Amazon will do with it after spending three quarters of a billion dollars to acquire the firm? All we can do now is hope that they will keep up the good work, and it will be Kiva’s customers who are going to have to make some difficult decisions to make this happen.
Albert Saphir
President,
ABS Consulting,
Weston, Fla.