Dyson: the Apple of appliances
WHEN Michael Aldred joined the British home electronics maker Dyson two decades ago, he had a simple goal: to quickly build a robotic vacuum cleaner.
But Aldred and his team kept running into roadblocks.
Their first attempt, unveiled in 2001, was too clunky for James Dyson, the company’s founder. The next prototype involved creating a computer vision system that would allow the machine to skirt independently around furniture; it took more than a decade to perfect.
As smartphones became everyday tools, Dyson’s robotics team again had to rethink the vacuum cleaner, adding internet connectivity so the machine could send notifications – with a heat map of where it had cleaned – to a mobile device. After a nearly 20-year odyssey, the robot cleaner, priced at an eye-watering $1,000, finally hit stores worldwide last year.
“At times, I really asked myself what I had signed up for,” Aldred said in an interview at Dyson’s rural headquarters near the border with Wales. “But James Dyson always told us to focus on the product. Everything else would follow.”
Not many consumer electronics brands would spend almost two decades – and tens of millions of dollars – building a vacuum cleaner that retails for more than a midrange laptop.
But combining an almost obsessive eye for design and engineering, the privately held Dyson has cornered the nonglamourous market of high-end vacuum cleaners, lights and hair dryers – and in the process bucked the technology truism that companies rarely make money in the difficult arena of hardware.
Even as other hardware brands like Samsung, smartwatch maker Fitbit and camera designer GoPro have struggled with physical products because of low-priced copycats and thin profit margins, Dyson has shown an uncanny ability to mint money. Its latest robot cleaner, which is selling briskly, exemplifies that and puts Dyson in rarefied company alongside Apple as one of the few tech companies worldwide to consistently profit from consumer gadgets.
“It is extremely difficult to make money if you’re not in the premium segment of the market,” said Tim Bajarin, president of Creative Strategies, a tech consulting firm. “That’s what Apple and Dyson have done well – being best in breed for technology and industrial design.”
Dyson said its pretax profits rose 41 percent last year to £631 million ($785 million), while revenue rose 45 percent to £2.5 billion, partly because of the weakened British pound. Dyson, 69, who founded the company in 1992, is worth about £5 billion.
The company, with 8,500 employees split mostly between Britain and a factory in Malaysia, is growing rapidly in China, where the country’s emerging middle class remains eager to spend on designer goods, including expensive vacuum cleaners.
“Asia is a huge growth area for us,” said Max Conze, Dyson’s chief executive, who joined from Procter & Gamble in 2010. “Five years ago, 85 percent of what we sold was corded vacuum cleaners. Now, more than 80 percent comes from new products.”
Dyson is indeed moving beyond vacuum cleaners, hair dryers and air purifiers. The company said it would spend more than $2 billion on battery technology, machine learning and other high-tech wizardry to create new products, many of which remain under wraps behind tight security at its headquarters.
At Dyson’s headquarters – chosen for its proximity to Dyson’s original workshop – employees remain tight-lipped, even among themselves, about their projects. During a tour of the company’s facilities, prototypes were covered in tarps while large areas of the open-plan offices were off limits. Photographs of engineers’ computer screens were prohibited, and machinery in some of the research labs was obscured with black trash bags.
“It’s a little like a brainwashing atmosphere,” said Mario Cosci, an electronic engineer who joined Dyson six years ago. “When you work every day with people who are driven, you can’t swim against it.”
Not everything Dyson has tried has turned to gold.
In 2000, the company released a washing machine priced at £1,000, or double the cost of rival products. Despite positive reviews, Dyson pulled the plug five years later after failing to turn the machine into a profitable business. Now, the original washing machine prototype stands unloved in a corridor in one of Dyson’s research buildings.
At many publicly listed companies, such a failure might have cost people their jobs. But at Dyson, where 14.5 percent of annual revenue is earmarked for research and development, engineers took the mistake in stride and began diversifying into other products.
For Steve Courtney, head of Dyson’s new products unit, that included moving into cordless vacuum cleaners in 2005, even though analysts said the machines would hurt sales of the company’s corded products. It also meant releasing bladeless fans four years later that borrowed heavily from Dyson’s vacuum technology – the product range was later extended to internet-connected air purifiers.
And when the company began selling $400 hair dryers last year, its mostly male engineering team not only learned to professionally blow-dry hair to understand how rival products worked, but also again copied the battery, motor and fan technology from Dyson’s existing products.
“We may go through a lot of pain and it may take a lot of time, but then we can transfer what we develop into something completely new,” Courtney said.
“We need big new areas, new markets.”