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A 10-year struggle to clean up in appliance market

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James Dyson has been doing a lot of pondering recently about the differences between washing machines and vacuum cleaners. For a decade, he has nurtured an ambition to become as big a force in appliances to clean people's clothes as those to clear the debris from their carpets.

While his foray in floor cleaners has turned out to be a big success, Mr Dyson has so far struggled to make a mark when it comes to machines for washing.

Aged 59, Mr Dyson is one of Britain's best-known entrepreneurs. He has an army of fans, some of whom are competitors.

Hans Straberg , chief executive of Electrolux, the Swedish company that is the world's second biggest maker of domestic appliances, says Mr Dyson "has done a great job", while Sir Anthony Bamford, chairman and owner of the JCB excavator company, says: "James has been a fabulous success. Britain needs more people like him."

But among the problems Mr Dyson faces trying to make headway in washing machines "“ an industry with global annual sales of some £15bn and with big competitors including Whirlpool of the US and Japan's Matsushita "“ are the fundamental differences between these and vacuum cleaners.

Mr Dyson gained success in vacuum cleaners through high price and stylish machines that featured a new way of sucking up dirt without a bag, which appealed to consumers' desire to try something new.

Washing machines, however, are considered by many to be extremely dull.

Whether they will pay significantly extra for a new design "“ even if its performance is better "“ is open to question.

"I think James will have to do something very unusual if he is to replace the success he has had with vacuum cleaners in washing machines," says Graham White, head of the UK operations of Candy, the Italian white goods producer whose UK brands include Hoover.

Others say that the complexity of manufacturing washing machines "“ which feature a host of sophisticated mechanisms including pumps and motors that have to work reliably "“ is a lot higher than for the relatively simple design of a vacuum cleaner.

Six years ago Dyson unveiled a novel type of washing machine "“ called the "Contrarotator" because it featured two drums spinning in opposite directions.

The machine was very expensive, retailing at more than £500, or twice the price of a standard washing machine sold in the UK.

However, even in the product's best year for sales in 2002, according to market research data, the Contrarotator accounted for sales of only 18,000 units in the UK, out of total washing machine sales of some 2.2m a year. In 2005, the number of Contrarotators sold slumped to 2,500.

Counting only those sales of "up-market" washing machines retailing at above £500, the Dyson product chalked up a creditable 21 per cent share of the market in 2002.

But by 2005 "“ when the machine was quietly withdrawn "“ this figure had fallen to 2 per cent.

Dyson was supplied with the market share data by the FT and says it "does not necessarily agree with" the figures, although declines to give its own estimates.

Mr Dyson insists instead that a new type of washing machine "“ now being worked on by a research and development team at Dyson's headquarters in Malmesbury, Wiltshire "“ will be better than the first one.

Mr Dyson says: "We will develop a new machine and then see how many people want to buy it. I am sure it can be a success."

Mr Dyson had to show a lot of perseverance in vacuum cleaners. In the early 1990s he faced huge scepticism that he would make headway in this field.

But in the past year the company's sales reached £470m, roughly two-thirds of which came from outside the UK, while pre-tax profit for the year was £103m, up 32 per cent on 2004. Almost all the sales come from vacuum cleaners "“ a product in which Dyson has built large sales in the US and Japan.

The recent picture has been less good in the UK, where total sales of vacuum cleaners have fallen in the past two years due to fierce price competition and a squeeze on household spending. Dyson's market share by value in the UK vacuum cleaner business "“ where it is still the market leader "“ has fallen from about 44 per cent in 2002 to about 37 per cent last year, according to industry data.

Four years ago the company controversially closed its UK factory, axing 620 jobs, opting to make its products in Malaysia where manufacturing costs are lower. Even so, staff numbers in the UK (including 420 R&D people) now total 1,400, not far short of the 1,800 the company employed in the UK in 2002.

Mr Dyson describes himself not as an entrepreneur but rather as someone pursuing a "gentlemanly hobby". He adds: "I am basically interested in building new machines for myself. I am not really interested in business for its own sake." But Mr Dyson knows that if he is replicate his floor-care achievements in the different field of washing machines, he still has a lot to prove.

From The FT

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