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Q: Refrigerators that send out for milk at the tap of some icons on an LCD screen attached to your fridge's door. Washers that you can program with stain-remover advice and custom cycles that you can download from the company's Web site. It all sounds like something out of the Jetsons. But you guys hope to start moving some of these products into stores by Christmas. What's the strategy here? A: Yes, some of this will be in consumer homes later this year. It's all about making the kitchen the command-and-control center of the home. For most folks, it already is. What we're looking at is making the appliance the information portal when it comes to household tasks and food preparation. It's all about new product offerings that can generate additional revenues over time, in terms of service. Q: Tell me more. How is the Internet changing the very nature of the appliance business? A: Well, for one, this isn't about selling white boxes anymore. One of the opportunities the Net gives us is to sell information as the product and the service, and the white boxes as the means through which folks get the information and the services we sell. It's about information changing the very nature of the business itself. Q: How did you come to this vision? A: We sell a lot of white boxes. We started to think, hard, about the Internet. And we started to imagine this: What if, in three to five years from now, the whole control interface of appliances -- TV sets, home security, whatever -- is run off the Web and not necessarily on the products themselves? Think about it. We're in the business of selling white boxes today. But it was easy to imagine a time when we're not necessarily the ones developing the controls or all the technology on how to run these devices, one of our devices, in somebody's home. We didn't like that thought. To me, that was an awakening thought. So it's motivated us at Whirlpool to look at why we wanted to get into this business of Web-enabled appliances and explains why we think it will grow. Q: Where do you see the demand for these types of appliances coming from? A: Those who like the latest thing but also those who use the Internet as part of their daily lives in all sorts of applications. We also see many uses for these by people who are time-starved. Time-deprived folks are the customers of the future for many of these Web-enabled products, from Net-savvy refrigerators to Web-enabled toasters and ovens and washers. Q: Aren't you also getting in on the ground floor with some of these new Net-enabled housing developments that are starting to be built across the country? You would be one company providing the Net-savvy household products to be built into some of these homes, right? A: Yes. These are some other interesting opportunities that are little windows of the future, I would say. These are the community developments that are popping up now, primarily out West, but all over the country. These developers are setting up exclusive, private Internets for communities in a master-plan environment. These are real estate developments, built from the ground up, with the latest in high-speed data wiring. These are smart homes. We're working with several of these developers today. Playa Vista in Los Angeles and Dell Webb are a couple. These are networked communities, including broadband-enabled communities. These aren't voice-activation but [rather] "always-on" environments. As for us, this isn't just about providing boxes but about providing data. A new revenue stream for us. Q: Services is the new revenue stream? A: Yes. Your whole service portfolio there takes on a different realm of utility to consumers if that whole community is wired. One of the big hurdles that, say, Webvan and Peapod have today is that the ordering process in the dial-up environment is tedious. The first time, it takes 45 minutes to an hour. The second time, it might take less time, but it still takes 10 to 20 minutes. People right now don't see a great time savings. But if you make this Net-access thing ubiquitous in an environment where the entire community, the houses, the schools, the libraries are all wired, along with the retail environment, then the kitchen becomes an information portal, and our service offerings change considerably. Q: Do you think consumers will change their behaviors fast enough to hook up to the Net in this way? A: Having this technology available, we believe, will show folks what is possible. Then it changes people's habits and allows them to change their lifestyles. Actual studies we've used to study broadband access in the house prove this out. Even on PCs, we see a dramatic change in consumer behavior when you bring broadband into the house. They see computers leave the office and come into the kitchen. More and more, it's the kitchen where the people congregate in the home and where the information in the household gets exchanged most often. If you walk down that path and say O.K., now you have an information device in the kitchen that's relevant to my lifestyle, people change their habits. Technology then becomes truly useful.... We're talking about entering partnerships with Sun and Cisco and developers like Playa Vista and Dell Webb to build Internet communities and have them equipped with appliances that consumers can program to cook, wash, order out food, and then be able to do that in person or remotely. It's kind of rebuilding the notion of customer service in the appliance industry. Q: How else is Whirlpool using the Web? A: Well, it's the embedded Web as a customer-service play, providing services through the white boxes that could add value to the product. Then it's the new products that are Net-enabled. And then it's wiring up the way we make the boxes, to cut costs on the assembly line. That's part of the global vision, too. Q: Are you saying that Whirlpool is also using the Web to make stuff faster and cheaper? A: We're starting to do that, yes. Whirlpool is also pursuing a bottom-up Internet strategy. From plant floor to initiation into the home, we're investing in the Net. It's three-pronged: How to e-enable the organization. How to connect to consumers. How to create the integrated home. At the end of the day, connecting the consumer and the integrated home are very important, but they're still big bets right now, which means we'd also better be mining the working capital in our business -- our shareholders -- to fund those big bets. And so for now, the overarching, top-down focus is using the Net to facilitate the transition we're making, from a manufacturer that pushed out products to people to one that acts upon consumer demand, a pull-manufacturer, if you will. There are real switching costs when you go from push to pull. We have a business model whose underpinnings are 95 years old. What we need to be able to do is Webify it, harness up the supply chain and replace inventory with information. For once in the history of technology, we can have a 365-day, 24-hour, 7-day-a-week contact with the consumer. We can actually know what they want. We can actually get real demand and have that drive everything we do, from what we're building to what we're designing and thinking of building, be that product or service. That's where light bulbs go on around here. This is not some esoteric contortion or somebody coming up with this wild stuff. It's a tool. The Net is just a tool. At the end of the day, though, demand forecasts should be an oxymoron in a Net world. Point-of-sale data should be driving what we build. Q: Where does the biggest growth come from in your vision of a Net-wired world? A: For us, in the Internet home. If we can leverage our profound understanding of the consumer in these unique spaces, the kitchen, the laundry room. We don't know about the living room and the family room, but we know a hell of a lot about the kitchen and the laundry room. When you've got 90-some-odd years of figuring out how people interface with not just one machine but with a multitude of machines in a quasi-task-oriented environment, you're pretty smart. And what's interesting is that all the technology companies are doing is literally building solutions looking for problems. In this stage of the e-business revolution, appliance makers and tech companies are all saying: "We can turn your coffee pot on from your cell phone, or in your car. We can control your oven from your PC in the den." That's all so much ridiculous stuff. I say, so what? Who cares? It's like the VCR with the light flashing 12, 12, 12. I just want to be able to play a tape. I think our real value-add is that we understand what really matters to folks in these unique areas in the home. Also, we've got a trusted brand. The fact that we're already in almost one of every two homes in America is a big plus. It makes us attractive to tech companies who now see us as a way to get their own products into people's homes. So we see ourselves as a way for some of these tech companies to team up with us to get us into people's homes and hearts. I think we're very attractive because of what we know about consumers and because consumers trust us. Microsoft, Lucent, you name it -- these tech companies don't have that kind of knowledge about consumers, nor do they have that kind of trust. They need us and we need them. After all, people still use their refrigerator more than their personal computer. Q: Tell me more about the services you envision selling in a Web-wired world. A: With broadband to the home and even communication between devices, you can, maybe, download a recipe that automatically sets the convection oven. Or a cooking show. Or a solution to that ketchup stain on your silk garment. You name it. The Net allows us to legitimately touch our customers consistently and pervasively. In the past, you'd sell them a white box and maybe never hear from them again. Now you can talk to them all the time. It's quite amazing, actually, to think of all the possibilities. |
