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As I Was Saying to My Refrigerator...
Mike Charles is tight with his appliances. When the Stanford University history lecturer runs out of milk, he tells his refrigerator by tapping the keys on its door. The machine, made by Whirlpool Corp., contacts the online grocer Webvan Group and gets a fresh half-gallon of 2% milk delivered to his door within hours. Then there's his washing machine. Charles recently sent it an e-mail because he had spilled part of an Italian dinner on his tie. For $2, the washer downloaded a special pesto-on-silk cleaning program from Whirlpool's smart-products Web site. The result? The washer knew what cycle time, agitation level, water temperature, and type of soap were needed to get rid of the spot. That saved Charles a trip to the dry cleaner and a bill that would have run $7 or so.Speeding the buy cycle. Sound weird? Get used to it. Whirlpool is planning to make Net-savvy appliances commonplace over the next few years. The world's biggest appliance maker has 1,500 people testing its new Web products and is set to deliver some of them to stores before Christmas. If all goes as planned, the Benton Harbor (Mich.)-based company will lead the appliance industry into the Digital Age. "Whirlpool isn't just using the Web like other companies to cost-cut and gain speed, it's using the Web to reinvent the business," says Gary Hamel, a Harvard Business School lecturer.
The Internet is giving Whirlpool and other appliance makers the chance to put some pizzazz into a sleepy, slow-growth industry. For starters, people are likely to buy washers and other appliances more often once it becomes important to have the latest Net features. Analyst Justin Maurer of Merrill Lynch & Co. estimates that people will start buying appliances every three years instead of every nine years--helping to push industry growth up to 20% for the next few years, compared with single digits now.
Hooking products to the Net also gives Whirlpool the chance to create new revenue streams. For example, it expects to sell data to its appliance customers--things like Charles' $2 cleaning program or a 50 cents recipe for osso buco. Whirlpool also plans to take a slice of the e-commerce revenues collected by partners like Webvan. "Everyone has a white box--a refrigerator, an oven, or a dishwasher," says David R. Whitwam, Whirlpool's chief executive. "To differentiate ourselves, we need to go beyond boxes."
Other appliance makers are following Whirlpool's lead. Sweden's Electrolux is experimenting with washing machines linked to the Net that let customers pay each time they take it for a spin--instead of buying the machine. About 9,000 families in Sweden are paying about $1 per cycle to wash their clothes. "We must convince consumers to replace machines more often and that we can add value to them," says Electrolux CEO Michael Treschow.
To outpace the competition, Whirlpool is building partnerships with key tech companies. It has inked deals with Cisco Systems, IBM, Sun Microsystems, and Nokia to develop new services. It just cut a deal with the inventors of Bluetooth, the technology that uses shortwave radio links to allow, say, a refrigerator to talk to a PC in another part of the house. The payoff? Whirlpool Web products executive James Fanning says you could use your office PC to start cooking a roast before you leave for home or get an e-mail if your kid leaves the refrigerator door ajar. Now if only they could get the fridge to clean up the house.By Marcia StepanekReturn to top
James C. Fanning, Director, Home SolutionsThe Project: To build Net-linked appliances that can automatically order food from the grocer or adjust a washing machine's settings for specific stains.The Payoff: Monthly service contracts could add 20% to sales. Instead of replacing appliances every nine years, customers might do so every three years.Return to top