01

Dyson's Embarrassment

Is Also Apple's

"Disenchantment" is a buzzword among young people today. Originating from Max Weber's concept of "disenchantment of the world," it initially referred to the dissolution of the mystery, sanctity, and allure of scientific knowledge.

Young people are using "disenchantment" to eliminate filters and idealistic expectations of everything, such as the prestige of large corporations and prestigious universities. Nowadays, the wind of "disenchantment" has long blown into the consumer electronics sector.

For example, have you stopped paying attention to Dyson's products for a while? After the explosion in popularity of vacuum cleaners and hair dryers, Dyson's other new products have been virtually invisible on major social platforms.

In Dyson specialty stores visited by Noise Reduction NoNoise, service personnel are generally aloof. Apart from emphasizing Dyson's "black technology," they usually do not actively engage with customers.

In contrast, sales staff of domestic home cleaning brands are much more enthusiastic. At a domestic floor-washing machine store in Wangjing, Beijing, when asked about the differences between their products and Dyson's, the staff told Noise Reduction NoNoise that although Dyson is a British brand, their team has an aerospace background, and their product motor speeds are even "faster than Dyson's." "Apart from being expensive, Dyson is no different from us. Besides, foreign brands are not popular anymore."

▲ An experience event held by Dyson at Shanghai Jing'an Kerry Center

Her enthusiastic demonstration attracted many passersby.

This might be exactly Dyson's current embarrassment. Young people have long abandoned brand biases and turned to more cost-effective domestic products. The consumer electronics market is ever-changing, and no enterprise can rely on its past glory for another ten or twenty years.

Apple shares Dyson's plight. The two brands have often been compared: both are peaks in the consumer electronics industry, with unique product characteristics, leading technological innovations, and highly recognizable design languages; both have stumbled in auto manufacturing and are now similarly besieged in the Chinese market.

In the second quarter of this year, Apple fell out of the top five domestic mobile phone shipments for the first time. Although it returned to the top five in the third quarter, its market share decreased year-on-year. Pressure from domestic brands like Huawei and Xiaomi is increasing. During a live broadcast on November 9, Xiaomi Group President Lei Jun specifically mentioned that about 20% of the one million sales of the Xiaomi 15 series came from iPhone users.

Although we don't know how the conversion data mentioned by Lei Jun was derived or whether it is rigorous enough, the trend of domestic brands' new products collectively taking on an "Apple flavor" this year is evident. The motivation for this "Apple flavor" is, of course, not to "pay homage" but to blatantly compete for a share of the high-end market.

▲ An Android flagship unanimously described as having a "strong Apple flavor"

A frontal assault will only occur when there is a turning point in the battle.

This is also the challenge faced by Dyson. "The aloof British lineage and the prestige of foreign brands are no longer blindly believed in by consumers," believes Liang Zhenpeng, a consumer electronics industry analyst. Dyson's declining trend in China will continue, just as Apple's decline in the Chinese smartphone market is almost irreversible.

For Chinese consumers, the era of blindly worshipping foreign brands is basically over. As former top consumer brands that have enjoyed the benefits of the times, can they return to their peak? A frontal assault will only occur when there is a turning point in the battle.

This is also the challenge faced by Dyson. "The aloof British lineage and the prestige of foreign brands are no longer blindly believed in by consumers," believes Liang Zhenpeng, a consumer electronics industry analyst. Dyson's declining trend in China will continue, just as Apple's decline in the Chinese smartphone market is almost irreversible.

For Chinese consumers, the era of blindly worshipping foreign brands is basically over. As former top consumer brands that have enjoyed the benefits of the times, can they return to their peak?

02

"Self-gratifying" Innovation

Isn't Working in the Chinese Market

Market pressure often immediately translates into organizational restructuring. In July this year, Dyson announced that it would lay off 1,000 employees in the UK, its brand's birthplace, equivalent to one-third of its local workforce. Last month, it was also reported that Dyson Singapore had laid off employees without warning, with positions mainly concentrated in manufacturing and procurement.

Andrew Graves, a professor at the University of Bath in the UK, was not surprised by the layoffs. In a previous interview, he pointed out poignantly that "many of Dyson's new products have not been successful."

Dyson's vacuum cleaners emerged from innovation. In the Dyson headquarters office in the UK, there is a huge slogan: "We want to discover problems that others overlook." And at the reception desk of the Singapore Technology Center, it prominently reads: "As engineers, we have to see beyond existing technology and ask if there is a better way."

▲ Dyson's Singapore Technology Reception Desk

While the spirit of striving for perfection is certainly commendable, it is difficult to say whether consumers are willing to pay a premium for it. In July this year, Dyson released its new over-ear noise-canceling headphones, OnTrac, priced at $500, equivalent to approximately RMB 3,633. Jake Dyson, the designer of OnTrac, once told the media that in the field of over-ear headphones, noise-cancellation effect and comfort are key factors that are easily overlooked. Therefore, they studied 95% of head shapes worldwide to ensure that the headphones meet various user needs.

▲ OnTrac product promotion image

Noise Reduction NoNoise tried to search for this new product on Xiaohongshu and Bilibili but found little attention. The main force in related promotions and reviews of "over-ear noise-canceling headphones" is concentrated on brands such as Sony, Bose, and Apple.

This is not the first time Dyson's new products have encountered a cold reception. As early as 2022, Dyson's Zone headphones had dismal sales. This headphone even integrated air filtration technology into noise-canceling headphones in response to the pandemic, but due to its high price of $949 and poor battery life, sales fell short of expectations.

"Self-gratifying" innovation is no longer effective. Not only headphones but also the declining sales of other Dyson products may reflect the current popular "cost-performance literature": "It's not that Dyson is unaffordable; it's just that others offer better value for money."

Although Dyson still dominates the vacuum cleaner market with sales far ahead of the competition – as of Q1 2024, Dyson's vacuum cleaner sales exceeded 900 million yuan, accounting for 58% of the market, with the second-placed Supor only accounting for 5%. However, for many Chinese consumers, the vacuum cleaner era is clearly over.

As early as 2019, floor-washing machines began to gain popularity in China and gradually entered the mainstream in 2020. The first to enter the market were domestic brands such as Dreame, Roborock, and NARWAL. In contrast, Dyson did not release its first floor-washing machine until 2023. Priced at 5,499 yuan, it boasts optical detection and tangle-free functions that have long been available in brands like Tineco and Dreame. This model was soon taken offline from major official channels.

▲ Dyson's floor-washing machine ranks low on a popular sales list on an e-commerce platform

As of the first half of this year, the top three sellers in the floor-washing machine market were Tineco, Dreame, and Roborock. According to data from Jing Data, in the cleaning appliance market, Dreame had an 18% market share in the first half of the year, followed by Tineco, Ecovacs, and Roborock, with Dyson coming in fifth.

In the entire cleaning appliance sector, Dyson has gradually been outpaced by domestic brands. Coupled with the impact on its revenue pillar, hair dryers, from a large number of domestic "affordable substitutes," Dyson's situation has become increasingly embarrassing.

Previously, a Dyson spokesperson acknowledged that Asian competitors have been able to quickly launch products similar to Dyson's but at lower prices in recent years, posing a threat to Dyson's position in the Asian market.

Some financial indicators in recent years have revealed the challenges faced by the brand: In 2023, global revenue was 7.1 billion pounds, a year-on-year increase of 9%, but earnings before interest, taxes, depreciation, and amortization of 1.4 billion pounds were 100 million pounds less than the peak in 2021.

Of course, some analysts have pointed out that some of Dyson's innovations in the past few years have actually been good, such as hair dryers and bladeless fans. The difficulties Dyson has encountered in recent years are not unique to it but are common to all small appliances.

▲ A Dyson offline store

The analyst told Noise Reduction NoNoise that the lifespan of a vacuum cleaner is typically 5-10 years. During the pandemic, the long-accumulated demand for small appliances was digested, and there will not be a significant accumulation of replacement demand in the short term. Besides, small appliances are not rigid demands. When users find that the user experience lags far behind expectations, they may consider it an "intelligence tax," influencing the decisions of those around them.

He believes that while the outside world is discussing the decline in Dyson's sales, another fact must be recognized: The outbreak of the pandemic in 2020 directly stimulated an explosion in demand for small appliances, making it a banner year for sales. With the end of the pandemic, not only Dyson but also other small appliances have seen a downward trend.

However, some domestic brands have made breakthroughs in new subcategories, such as floor-washing machines. In contrast, Dyson has been slow to react.

As the "Apple" of small appliances, Dyson and Apple face similar innovation challenges.

Peter Drucker made a similar argument in his classic management book "Innovation and Entrepreneurship." He mentioned that the perception that "large enterprises do not innovate" has some truth to it, as almost all major innovations in the 20th century did not come from large enterprises at the time.

For example, Ford and General Motors were pioneers in the aviation and aerospace fields, but today, all large aircraft and airlines have emerged from other startups; in the 1950s, electrical giants entered the computer field, but none of the companies, including RCA, Westinghouse, Siemens, Philips, and Toshiba, were successful. IBM, one of the leading companies in this field, was only a medium-sized enterprise 40 years ago and could hardly be considered a high-tech enterprise.

Just as there are no waves that only rise and never fall. According to Drucker's definition of enterprise innovation, over a sufficiently long timeline, it seems inevitable that both Dyson and Apple will enter a relatively "depressed" innovation cycle.

03

Dyson is Also Strengthening Its Moat

In the years when Dyson's voice has declined, "affordable domestic substitutes" have emerged in large numbers. For example, a domestic hair dryer brand once claimed to have a motor with the same speed as Dyson's but at only one-fifth the price.

Reviews and evaluations of such products emerge endlessly, but they often lead to the same conclusion: Dyson is truly hard to replace.

A well-known consumer investor once commented on the difference between the two: Consumers of domestic affordable substitutes and Dyson are not the same group of people. These domestic substitutes excel at using low prices to increase sales volume but lack the high-end tone in the minds of users, which is precisely Dyson's brand moat.

Domestic brands tend to focus more on marketing and traffic. Some media have reported that a small appliance brand spends tens of millions of yuan on information flow advertising alone in a year, while the company's annual GMV is only 100 million yuan. Behind the "low price and high sales volume" strategy, it is questionable how much technological investment these brands have left.

Another interesting detail is that in 2023, while Dyson's global revenue increased by 9% year-on-year, its R&D investment increased by more than 40% year-on-year. In other words, despite its declining market share, Dyson has never stopped investing in technology. For example, over the past few years, Dyson has developed its robot platform – the Dyson robot operating system. Some models of Dyson hair dryers released this year already use sensor functions from robots.

▲ Dyson's vacuum robot 360 Vis Nav released in June this year

Equipped with multiple latest Dyson technologies

Moreover, Dyson is also actively deploying in the energy storage battery field. In May this year, Dyson invested in a new factory in Singapore to produce patented Dyson batteries for use in the company's new products.

Like Apple, after its car-making dreams shattered, Dyson began to bet on the battery field. Founder James Dyson said that the company would shift its strategy to focus on related technologies such as solid-state batteries, vision systems, machine learning, and artificial intelligence.

Obviously, Dyson's focus is not entirely on the Chinese market. The above-mentioned analyst said that as a completely foreign brand, it is difficult for Dyson to make too many adjustments for the Chinese market. However, to some extent, this also reflects Dyson's strategic resolve. After all, China is only a part of its global market.

"Although Dyson's performance in the Chinese market is not that good, its position as the top brand in global small appliances has not been shaken so far," a home appliance analyst told Noise Reduction NoNoise.

He believes that it is a good thing for domestic small appliance brands to always aim for the world's top brands, but currently, these brands are making spot breakthroughs, relying solely on imitation and learning. Dyson's brand power and innovation leadership, however, is systemic. "From spot breakthroughs to comprehensive leadership, and being able to enjoy brand premium, we still have a long way to go."

So far, Dyson remains an insurmountable peak.

▲Dyson's UK headquarters

We also noticed that at the end of February this year, after releasing its 2023 financial report, Dyson ambitiously announced that the brand is ready to launch its largest-ever lineup of new products in 2024, including expansions in beauty technology, home technology, and wearable devices.

Will the "Apple of the home appliance industry" emerge from this awkward phase of innovation?