Taking Stock / One Day Hoover Woke Up

For decades Hoover controlled more than 50 percent of the world market for vacuum cleaners. But even being the strongest brand-name in its sector didn't help the company.

James Murray Spangler, an asthmatic janitor from Ohio, was just plum tired of sweeping and dusting in the rug store where he worked. He attached a fan to a tin can, and then a broom handle and a satin pillowcase to the back of the whole contraption - and in 1907, created the world's first vacuum cleaner.

A year later, Spangler sold the invention to a leather-goods manufacturer named Hoover, who founded the world's best-known manufacturer of vacuum cleaners. Hoover is among the admired clique of companies whose pioneering spirit and market leadership made their names into nouns. The word "Hoover" has indeed become synonymous with the vacuum cleaner, and it's used as a verb, too: to hoover the rug.

Next year, Hoover will be celebrating its centennial. But it will be a grim party. This week Maytag announced that it's seeking a buyer for the industry veteran, after having failed to rehabilitate its fortunes. It can't stand the bleed any more, Maytag said.

For decades Hoover controlled more than 50 percent of the world market for vacuum cleaners. But even being the strongest brand-name in its sector didn't help the company. As it fought a war of attrition against cheap products from China, and watched its margins disappear, four years ago up popped a British inventor named James Dyson, who introduced an innovative, bag-less vaccum cleaner. It looked entirely different, but was horrifyingly expensive, costing three to five times the usual products.

The people at Hoover figured that Dyson's device would be a flash in the pan. But the expensive curiosity won 2.8 percent of the market in 2003 - a 10th of Hoover's market share. In 2004 the Hoover management started to realize their mistake as Dyson's market share climbed to 13.8 percent and they fell to 19.5 percent. Come 2005, it was a knockout: Dyson crossed the 20-percent threshold in market share and Hoover's crumbled to 13.5 percent.

Every household knew what a Hoover was, but Dyson brought innovation, and had a far more effective way to reach consumer awareness: Its vacuum cleaner appeared several times on the TV comedy series "Friends" and "Will & Grace." That did it. Dyson became cool, Hoover became history.

The worst mistake

Dyson, who had invented the bag-free vacuum cleaner, had never intended to set up a vacuum-cleaner manufacturing company. He spent a decade trying to sell his idea to other vacuum-cleaner makers, but nobody bit, because they wanted to keep making their bags.

Hoover, as is the way with old, established companies with practically monopolistic status, made a lot of mistakes in its route to rock-bottom. But the worst mistake was an unwillingness to reinvent itself. Dyson's technology changed the market of vacuum cleaners and Hoover should have leaped forward, adopted the idea and presented innovative products. But because of its giant share of the market, its managers had no desire or ability to go to war. They figured it was a blip, that they could continue milking the market for years to come. They were wrong.

Now look around you. Who are the Hoovers? Which established companies have names that have become synonymous with the product they make or the service they provide? Who are the Dysons who have changed the face of the market with some fresh approach? Can the people at Hoover reinvent themselves and open new marketing fronts against their own selves? If not, the writing is on the wall. One day they'll find that somebody pulled the rug out from under their feet and hoovered up their market.