A Fridge at the Heart of the Family?

By William Echikson

Like many Danes, Finn Andersen considers himself a tech buff. The 53-year-old paint wholesaler and his two teenagers children each own desktop PCs and use them to buy books and music online. Still, when a research firm called him and asked whether he wanted to try using an "intelligent refrigerator," Andersen was surprised. "I was sure one of my friends was making a joke," he recalls.

It was no joke, but rather the launch of a serious and ambitious effort by the Continent's largest appliance company, Electrolux, to wire Europe. Last December, Electrolux, in partnership with Tele Danmark, the Danish telephone company, loaned Andersen and 50 of his neighbors in the Copenhagen suburb of Ballerup a Screenfridge. It looks like a basic refrigerator, though large for Europe. It also boasts a touch-sensitive screen on its door connected to a built-in computer, a high-speed Internet link, and a video camera.

KILLER APPS. Electrolux has reason to believe Europeans will be more receptive than Americans to Internet-linked home appliances. One reason is, quite simply, living space. "Californians may have the space to put five PCs in their home, but Europeans certainly don't," says Brian E. Skiba, an analyst at Lehman Brothers Holdings Inc. in London. As a result, PC penetration in Europe already has begun to plateau at much lower levels than in the U.S.; what that means, in turn, is that Europeans are more likely than Americans to reach the Internet through simpler, space-saving devices. E-mail-enabled mobile phones are one response to this dilemma, interactive Web televisions another. Wired kitchens represent a third possibility.

Denmark, a compact, rich country with high Internet and mobile-phone penetration, provided the perfect testing ground for Electrolux. Although Danes don't have bigger living quarters than other Europeans, their refrigerators tend to be larger than the Continental average: big, free-standing items where a week's worth of shopping for a family of four can be stored. In contrast, small tabletop fridges predominate in Southern Europe. Food shopping near the Mediterranean is an almost daily ritual in local, open-air markets, and meals are prepared in small, galley-like kitchens and eaten in separate dining rooms. By contrast, Danes cook and eat in large kitchens near their fridges. "In Denmark and the rest of Northern Europe, the kitchen is the center of the home where everybody meets and eats," says Uolevi Partanen, Electrolux director for the smart fridge experiment.

Ballerup, a bedroom community near the capital, provided a perfect laboratory. Built in the 1960s and now sheltering a population of 45,000, it's a blend of apartment blocks and small, single-family homes, and, despite Denmark's relatively homogeneous society, offers a good mix of rich and poor, urban commuters and suburban housewives. There is even a rural, farming fringe. "Ballerup is a miniature Denmark," says Mads Middelboe, the Tele Danmark executive vice-president responsible for the fridge initiative.

For both the national phone company and Electrolux, the experiment represented an attempt to capture some New Economy allure. As prices for traditional voice calls plummet, Tele Danmark needs to find new ways to drive revenues. "We have to get beyond commodity calls and offer high value-added services," says Middelboe. The more fridges talk to each other or to the Net, the more potential revenues roll in. For appliance-makers, smart machines are designed to help them break out of the low-growth, low-margin business of selling big white boxes. Most consumers replace their fridges once a decade. Even then, their buying decisions are usually based on a quest for the lowest price. "We have to stop being just a hardware maker and become a service provider," says Electrolux CEO Michael Treschow.

Electrolux first demonstrated its Screenfridge two years ago. Originally the device only suggested recipes and launched video demonstrations on how to prepare various dishes. But the company still needed to determine what its customers might want to do with such appliances and how much they would be willing to pay for one.

GLITCHES. Thus, the Copenhagen test. Advertised in local newspapers, the Screenfridge project generated great enthusiasm--more than a thousand families petitioned to take part. "Wow, I said to myself, this would be so much fun," recalls Heidi Andersen, a 29-year-old applicant. The 50 participants chosen conformed to four types: single, married with young children, married with teenage children, and grandparents. The refrigerators were supplied free for a limited period. Nobody was paid to participate.

The results were mixed. While participants found the smart fridge helpful, they weren't eager to pay the full cost of having one. On the plus side, many test subjects found the smart fridge morphed into a popular combination of breakfast table, newspaper, and meeting center. "When my grandchildren discovered it, they suddenly began visiting me more often," says a delighted Jette Kragh, a 59-year-old grandmother. Instead of offering cooking tips and facilitating e-commerce, as first envisioned, the smart fridge evolved into a family meeting point where dads checked the morning traffic, moms listened to the morning news, and kids left computerized Post-it messages. "When we started, we thought this was about shopping for groceries online," says Henning Thomsen, a 34-year-old participant and a technology analyst at the Danish Technological Institute. "It ended up being for everything except that."

On the downside, outfitting fridges with full networking capabilities proved a much more difficult technical problem than anticipated. The Screenfridge, which runs a version of Microsoft Corp. Windows software, does not have a stand-alone keyboard. When Thomsen wanted to type a message, he had to use a keyboard that pops up as an image on the vertical, touch-sensitive screen--making it difficult for a person standing before it to compose a note of any length. The video camera never functioned properly, Andersen adds. And early on, the fridge couldn't even receive e-mail messages, though that problem was later corrected.

The machine never quite fulfilled its promise as a kitchen helper, either. Even though the Screenfridges had a direct connection to a local supermarket, Thomsen and others were discouraged by the $8 delivery fee the store charged. And despite a deal Electrolux reached with e-licious, a cooking Web site, to put thousands of recipes online, few consulted the site for cooking advice. "The one who liked it the best was my three-year-old son," says participant 33-year old Rikke Clausen, laughing as her toddler stands on a stool watching a video demonstration of the correct way to slice an onion.

By far the biggest problem is calculating a price for such a beast. Electrolux hasn't yet decided on a cash figure for the machine or the Net access--or whether it will even proceed with the Screenfridge as a commercial product. But it has hinted that the machine could cost as much as $2,500, about three times the price of a regular refrigerator, and the monthly service fee could be $100 or more, much higher than regular dial-up Internet access. Most participants said they could envision paying a 10% to 20% premium for the machine and a monthly fee of $25 or so. Anything higher and they would balk. That means a speedy rollout would likely require generous subsidies of the machine and a huge bet that monthly subscription payments or e-commerce transaction fees could make up the price difference.

Even so, the Screenfridge may still have an exciting future. Electrolux says prices could come down as production is ramped up. And judging from the reaction of Andersen and others, the experimental refrigerators will be sorely missed. When Electrolux retrieves the Screenfridge, "it'll be like they are taking away a good friend," Andersen says with genuine sadness. If an appliance can evoke that type of emotion, it still has a chance of becoming part of Europe's future.

Echikson covers European technology issues from Brussels.

Edited by George Foy

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