The Vacuum's Design Moment
MALMESBURY, ENGLAND--That loud sucking noise you hear is the sound of British vacuum cleaner manufacturer Dyson gobbling up the American market: 21 percent, in total dollar sales, the largest piece of the action in upright cleaners. Last year in the United States, Dyson sold 891,000 uprights--the most popular type of vacuum sold in America--a 350 percent jump over 2003. And this year, says founder James Dyson, it's on track to sell "well over a million."
That's a fairly amazing feat for a relatively small private company that entered the U.S. market less than three years ago. Dyson has beaten such established multinational brands as Hoover and Kirby, whose market shares fell to just under 16 percent and just under 14 percent, respectively. Moreover, it did it with high-end, premium-priced products in a market previously dominated by price-cutting. Dysons retail for $420 to $620, compared with the $100 or so your average vac goes for. Even Hoover's top-line WindTunnel sells for only $390.
Nigel Piercy, a marketing expert at Britain's Warwick Business School, credits Dyson with "classic market spacing: You find a space that isn't occupied and take ownership of it" with an innovative product. (Think of Apple Computer's iPod or Sony's Walkman.) Dyson's innovation is a bagless cleaner that uses centrifugal force to spin debris and dirt into a canister. Because they don't have bags and filters that can clog, Dyson says, his cleaners don't lose suction. He spent five years perfecting his idea, building 5,127 prototypes--and fielding rejections from many top makers--before selling a model in Japan in 1986. He began manufacturing under his name in Britain 12 years ago.
"The technology, the engineering, the performance is what we're all about," says Dyson, a tall and trim 58-year-old with close-cropped silver hair, piercing blue eyes, and an aversion to suits and ties. (A former art student, he co-invented a flat-hulled landing craft and the Ballbarrow--a wheelbarrow that glides along on a ball--before turning his attention to vacuum cleaners in 1978.) But Dysons are about style, too. The vacuums, which come in shocking color combinations like silver/gray and yellow, and feature clear plastic canisters that show the amount of dirt collected, have won design accolades, been featured in Manhattan department-store window displays, and been used as trendy props on hit TV shows like Will & Grace . Dyson has succeeded in bestowing fashion-accessory chic on a product that, he admits, people have historically "rather loathed." "Retailers will tell you that the first step toward a sale is getting consumers to stop and look at your product," says Bill McLoughlin, executive editor of trade publication HomeWorld Business . "Dysons look like nothing else."
Dyson also spent more than $20 million on advertisements in the United States that feature the inventor explaining (in his distinctive voice) the technology behind the cleaner. But Dyson claims that advertising sells few of his vacuum cleaners. Ninety-six percent of U.S. sales are generated from recommendations, he says.
The jump in U.S. sales helped Dyson clean up last year: Revenues were up 54 percent to $803.9 million; pretax profits nearly doubled to $194.2 million. But Dyson admits his home U.K. market is maturing: Sales grew just 1 percent while market share slipped from 43.6 percent to 40 percent--though profits gained 10 percent. That makes overseas growth--particularly in the huge $2.14 billion U.S. market for uprights, where 18 million were sold last year--key to Dyson's future.
Dirty business. Dyson's American success hasn't gone unnoticed by competitors. Main U.S. rival Hoover points out that, based on unit sales, it's still king of the uprights, selling three times as many cleaners as Dyson. Nevertheless, Hoover's sales are down, and it recently launched a series of print and TV ads claiming its WindTunnel cleaners pick up at least 56 percent more dirt than Dyson's. Meanwhile Dyson and Oreck, another manufacturer, are suing each other on competing claims of patent infringement.
So is the swanky cleaner worth an extra couple hundred bucks? Well, two thirds of British Dyson owners go on to buy another one. "The loyalty of Dyson customers is amazing," Piercy marvels. Scores of comments posted on an American blog dedicated to Dysons are rapturous in their praise of the product. ("They rock," was how one writer summed it up.) Consumer Reports , however, found that while Dysons are very good machines, other, less expensive brands clean as well or better.
Headquartered in a sleek glass-and-steel low-rise complex on the edge of this picturesque Cotswolds town some 100 miles northwest of London, Dyson has 1,200 employees here, a third of whom are scientists or engineers (manufacturing is handled in Malaysia). Dyson spent $75.5 million on research and development last year and will spend $94.4 million this year, a strong indication of the importance of R&D to a company based on innovation. Dyson's latest machine, launched this month, is the DC15, nicknamed the Ball. To improve maneuverability, it has no wheels, instead pivoting on a plastic ball that doubles as the motor housing.
Eventually, Dyson wants to introduce a robotic cleaner. His team set aside a prototype three years ago because it would have cost between $3,000 and $5,000, but they're working on reductions. "We think we've done that," he says. "But we made a conscious decision not to go into that market yet." For now Dyson is concentrating on solidifying and growing its American beachhead. Says McLoughlin: "Dyson has enormous upside potential to grow." If so, that sucking sound may soon be even louder.
THE DUST BUNNY
English entrepreneur James Dyson invented the bagless vacuum cleaner in 1978. Today, his company, Dyson, is cleaning up in the United States.
Company founded: 1993
Personal history: Born 1947 in Norfolk. Studied at the Royal College of Art. Also designed the Ballbarrow, a wheelbarrow that runs on a ball, and the Sea Truck, a flat-hulled craft.
Pretax profits: Nearly doubled last year to $194.2 million on sales of $803.9 million. Dyson vacuums sell for between $420 and $620.
Newest product: The Ball, a vacuum cleaner that moves along and pivots on a rotating ball.
This story appears in the May 23, 2005 print edition of U.S. News & World Report.