Hoover’s FollyHoover’s Folly

Hoover HistoryHoover History

• Founded in 1907 by former janitor Murray Founded in 1907 by former janitor Murray Spanglar, who invented the first “suction Spanglar, who invented the first “suction sweeper”sweeper”

• Offers to let customers try the product for Offers to let customers try the product for free before purchase. free before purchase.

• Used technology to aid war effort in 1942Used technology to aid war effort in 1942• Today’s product selection includes:Today’s product selection includes:

– UprightsUprights– Deep cleanersDeep cleaners– Hard floor cleanersHard floor cleaners– Commercial vacuumsCommercial vacuums

DysonDyson

• Founded by James DysonFounded by James Dyson• Vacuumed his home in 1978 and Vacuumed his home in 1978 and

became fascinated with the problem became fascinated with the problem of suction loss. of suction loss.

• After 5 years and over 5,000 After 5 years and over 5,000 prototypes, he created the first bag prototypes, he created the first bag less vacuum. less vacuum.

• Attempted to sell his technology; Attempted to sell his technology; turned down at every turn.turned down at every turn.

Dyson (cont.)Dyson (cont.)

• Dyson manufactured his own vacuum Dyson manufactured his own vacuum cleaner, the Dyson Cyclone, in 1993. cleaner, the Dyson Cyclone, in 1993.

• Siemens and Electrolux (along with Siemens and Electrolux (along with other companies), tried to stop other companies), tried to stop Dyson from showing how their Dyson from showing how their vacuums lost suction (as shown in vacuums lost suction (as shown in television commercials and Dyson-television commercials and Dyson-sponsored literature)sponsored literature)

Dyson’s EdgeDyson’s Edge

According to this chart, the suction on the Dyson Cyclone remains constant; whereas the suction on other vacuums (regardless of bag use) eventually falls off.

Hoover RationaleHoover Rationale

Hoover’s RationaleHoover’s Rationale

• Hoover rejected Dyson’s technology, Hoover rejected Dyson’s technology, asserting that bags were necessary for asserting that bags were necessary for vacuums.vacuums.

• Bag less technology means that the filter Bag less technology means that the filter must be cleaned every few months; this must be cleaned every few months; this process acted as a deterrent to purchasing process acted as a deterrent to purchasing the technology.the technology.

• Dyson nearly went bankrupt fighting Hoover Dyson nearly went bankrupt fighting Hoover over patent infringement.over patent infringement.

• In 1999, Hoover created a product that In 1999, Hoover created a product that imitated Dyson. After 18 months, Dyson won imitated Dyson. After 18 months, Dyson won against Hoover UK for patent infringement.against Hoover UK for patent infringement.

Hoover VortexHoover Vortex

• Hoover introduced the “vortex” Hoover introduced the “vortex” technology, so similar to Dyson that they technology, so similar to Dyson that they returned to court for patent infringement.returned to court for patent infringement.

• Hoover won the case in 2001. Dyson Hoover won the case in 2001. Dyson appealed and won in 2003.appealed and won in 2003.

• In 1997, ¼ of all vacuums sold in UK were In 1997, ¼ of all vacuums sold in UK were made by Hoover.made by Hoover.

• Now, Hoover has less than 10% of vacuum Now, Hoover has less than 10% of vacuum cleaner market. cleaner market.

Hoover’s Mea CulpaHoover’s Mea Culpa

• Hoover now admits that they should Hoover now admits that they should have bought the technology in order have bought the technology in order to keep it off of the market. to keep it off of the market.

• Dyson’s increased market share Dyson’s increased market share indicates a future of bag less indicates a future of bag less vacuums when the patent expires. vacuums when the patent expires.

Mea Culpa (cont.)Mea Culpa (cont.)

• According to Hoover Europe’s Vice-According to Hoover Europe’s Vice-President Mike Rutter: "I do regret President Mike Rutter: "I do regret that Hoover as a company did not that Hoover as a company did not take the product technology off take the product technology off Dyson; it would have lain on the shelf Dyson; it would have lain on the shelf and not been used". and not been used".

Why Hoover Rejected Dyson Why Hoover Rejected Dyson TechnologyTechnology

• Executives did not believe a bag less vacuum Executives did not believe a bag less vacuum could gain significant market share and become a could gain significant market share and become a threat.threat.

• They believed that consumers would prefer the They believed that consumers would prefer the standard bag to this complicated machinery:standard bag to this complicated machinery:

www.dyson.com

• Hoover’s rejection of Dyson technology was short-Hoover’s rejection of Dyson technology was short-sighted.sighted.

• Hoover should have purchased the technology Hoover should have purchased the technology and either:and either:– Kept the technology out of the mainstreamKept the technology out of the mainstream– Used it to produce superior, bag less vacuumsUsed it to produce superior, bag less vacuums

Hoover’s Current Market Share:Hoover’s Current Market Share:

http://www.nitibhan.com/perspective/2006/02/one_look_at_gen.html

Hoover’s FutureHoover’s Future

• To ensure its survival, Hoover must To ensure its survival, Hoover must stay on top of new technology.stay on top of new technology.

• It must create a department It must create a department dedicated to seeking out this dedicated to seeking out this technology. This department should technology. This department should include:include:– Marketing expertsMarketing experts– Technology expertsTechnology experts– Executives with decision-making powerExecutives with decision-making power

Hoover’s Future (cont.)Hoover’s Future (cont.)

• The appointed experts should The appointed experts should present their findings to a board present their findings to a board capable of determining the potential capable of determining the potential threat of new technology. threat of new technology.

• Had this process been followed in Had this process been followed in regard to Dyson, Hoover would have regard to Dyson, Hoover would have purchased the technology and kept it purchased the technology and kept it “on the shelf”.“on the shelf”.

Works CitedWorks Cited

• (2001 Jan 12). Hoover wins court battle with Dyson. (2001 Jan 12). Hoover wins court battle with Dyson. Retrieved February 8, 2007, from BBC News Web site: Retrieved February 8, 2007, from BBC News Web site: http://news.bbc.co.uk/2/hi/business/1113990.stm http://news.bbc.co.uk/2/hi/business/1113990.stm

• (2006, Sep 26). Dyson bag less vacuum review. (2006, Sep 26). Dyson bag less vacuum review. Retrieved February 8, 2007, from EOpinions.com Web Retrieved February 8, 2007, from EOpinions.com Web site: http://www.epinions.com/content_174097337988 site: http://www.epinions.com/content_174097337988

• (2007). Retrieved February 8, 2007, from The Hoover (2007). Retrieved February 8, 2007, from The Hoover Company Web site: Company Web site: http://www.hoover.com/db/hvrHome.asp http://www.hoover.com/db/hvrHome.asp

• (2005). Dyson Story. Retrieved February 8, 2007, from (2005). Dyson Story. Retrieved February 8, 2007, from Dyson Web site: Dyson Web site: http://www.dyson.com/nav/InPageFrame.asp?http://www.dyson.com/nav/InPageFrame.asp?id=DYSON/HIST/HIDE&sinavtype=inpage id=DYSON/HIST/HIDE&sinavtype=inpage