In the past three years, iRobot (NASDAQ:IRBT) has pulled off a truly impressive feat. During that time, the maker of home robotics has increased its revenue by nearly 40% while simultaneously reducing its revenue sources. Specifically, the company eliminated $55 million in revenue and pulled out its very roots by divesting its military segment in 2016 and recently discontinued one of its four product lines in the home robotics category, a gutter cleaning line called the Looj.

IRBT Revenue (TTM) Chart

IRBT Revenue (TTM) data by YCharts.

How then, has the company been able to increase revenue at such a rapid pace? By absolutely dominating in its top product category, that's how!

In 2002, iRobot essentially invented the robotic vacuum cleaning market with the launch of the first Roomba. For a decade and a half, Roomba has been the king of robotic vacuum cleaners, especially in the United States, where it holds a jaw-dropping 88% market share. However, it is no longer the only game in town. Let's take a look at the evidence and decide whether there are any companies ready to challenge iRobot's leadership in the fast-growing robotic vacuum cleaner market.

The top contenders: Ecovacs and SharkNinja

It is hard to fathom that any competitor would be able to overtake iRobot in global market share in the near future. iRobot's current position compared to that of its closest rival is simply too dominant:

Company Global Market Share 2013 Global Market Share 2016
iRobot 66% 64%
Ecovacs Robotics 5% 10%

Data source: iRobot. Chart by author.

However, just because a competitor can't take the No. 1 spot doesn't mean it can't meaningfully affect iRobot's top and bottom lines, and by extension, its stock price. Let's look further at two companies that might have the potential to do just that.

Ecovacs Robotics: Ecovacs is the market leader in China and has doubled its global market share from 2013 to 2016. It's a safe bet that its market share is even higher today. The company lists 20 robotic floor cleaners on its website, and its Deebot D79 was named the best multitasking floor cleaner by Consumer Reports. With its products prominently displayed on Amazon.com as well as at most major appliance dealers such as Home Depot, Walmart, and Best Buy,  Ecovacs is increasing name recognition by the day. 

Ecovacs Robotic Vacuum

Image source: Ecovacs

SharkNinja: SharkNinja is a newcomer to the robotic floor-cleaning market, but it is certainly no stranger to consumers. The company's Ninja Blender has been ranked the No. 1 blender three years in a row in the U.S.,and its upright vacuum cleaners have claimed the No. 1 spot in U.S. market share. Earlier this month, SharkNinja began selling the Shark ION Robot 750. While it's too early to know for sure how big of a splash SharkNinja will make in the market, it's likely the company has big plans. With iRobot's stock dropping 15% after a short-seller said the competitor's entrance to the market posed "a credible threat," it's safe to say shareholders agree.

Can iRobot fend off these threats?

Only time will tell if iRobot will be able to continue growing revenue and earnings at a rapid clip with increasing competition trying to get a bigger share of the pie. We do know that iRobot's management believes its patent portfolio is a huge part of its competitive moat. The other safeguard iRobot may have is a fast-growing market. At a recent investor conference, management stated that the immediately addressable market for robotic vacuums is two to three times the currently installed base and that 700% market growth is expected over the long term. If the market for robotic floor cleaners grows fast enough, it is possible iRobot could lose market share and still grow revenue and profits significantly.

A matter of time

Despite the recent stock movement, it is not all doom and gloom for iRobot. iRobot's robotic vacuums have consistently been at or near the top of Consumer Reports rankings. Management has recently increased full-year revenue guidance by 20%, and with the company's track record of beating expectations, it seems that revenue growth for next year or so is almost guaranteed.

At the same time, competition is increasing as we speak. Robotic vacuum cleaners at lower price points have essentially become commoditized home appliances. Amazon's "robotic vacuums" product selection numbers in the hundreds, and iRobot estimates that 20% of all vacuums worldwide are robotic -- and more than 30% of those are made by its competitors. With that level of competition already existing for lower-end products, if Ecovacs or Shark Ninja can chip away at market share on the premium lines (which management defines as vacuums costing $200 or above), it's only a matter of time before iRobot's absolute dominance comes to an end.

Jeff Vande Hey owns shares of Home Depot. The Motley Fool owns shares of and recommends Amazon and iRobot. The Motley Fool recommends Home Depot. The Motley Fool has a disclosure policy.