One example of Merloni's visionary actions is the development of its electronics supplier, Wr@p. Run by Vitorrio Merloni's son, Andrea Merloni, the company is actually a spin-off of Merloni Elettrodomestici.
According to Andrea Merloni, chairman of Wr@p, about 10 years ago, Merloni Elettrodomestici recognized the importance of electronics in appliances. While the company had been doing research on electronics since the early 1970s, it finally decided to create a business unit within its R&D department that focused just on electronics development. In the spring of 2000, the business unit became so knowledgeable, it spun off to become its own entity, Wr@p SpA.
"Merloni decided to make a spin-off, to put into this new company all of the know-how, the trademark, and people who had the experience of putting digital equipment inside the appliances," explains Andrea Merloni.
He adds that Wr@p currently has two goals. "The first is to continue to service Merloni Elettrodomestici in the department of digital appliances," he explains. ‘We are involved in all of the R&D activities of all of the new products of Merloni because they all have some digital intelligence inside. We take part in the research, engineering, and development, helping Merloni in the purchasing phase of the digital equipment that goes inside the appliances."
The second goal, he says, "is to try to use our knowledge to find some new businesses to explore."
Another focus is to overcome the few speed bumps the digital appliance industry has experienced along the way. "We believe that electronics will become more and more important inside appliances," says Andrea Merloni. However, he adds, "Everybody saw the fridge with the work tablet. I don't think that this will be the answer. It doesn't make any sense."
Offering Substantial Features
Instead, Wr@p intends to focus its development activities on features that can offer something substantial to the consumer, as opposed to a unique technology that is useless, an ideology that echoes Merloni CEO Andrea Guerra's theory of "adding value."
"Looking in the future, I can say that the information we will get from a digital appliance is mostly connected with the function of the appliances-maintenance, working condition, etc.," Andrea Merloni says. "The technology I imagine for the future is a very reliable technology; a technology that works without most of the people knowing exactly what it's doing, but it's doing something. It's sending data from the system's network, or it's giving you just information you need to have."
That does not mean, however, that there aren't new market opportunities out there. "I think that we can enlarge the kind of services, including some technology that connects with the safety inside the house," says Andrea Merloni. "First, because the appliances use water, gas, and electricity, there is some aspect of safety connected with these things. The other area we are trying to manage is the electricity consumption, because more and more people are interested in knowing how their appliances are consuming electricity, how to manage that kind of consumption, and how to reduce the consumption activity in order to reduce the total cost of electricity services."
The electronics supplier is currently working on several advanced projects, including a fully-functioning module that will enable consumers to individually retrofit their digital appliances to the Internet and a call center that will help consumers with service issues. It even has the capabilities of anticipating functional problems of the appliance before it needs servicing.
While the technology is available, according to Andrea Merloni, the channels of distribution, including utilities, are just not cooperating. "We are in a strange phase of the market where everyone is asking for the answer to their partner's problems," he explains. "Everybody is imagining the smart home, or the connected home, but they are thinking about it around the table. Nobody tests it."
He adds: "And nobody really knows what consumers want-what are they ready to use, what they will never use, what kind of interface they prefer. When the mobile telephone business started, nobody was thinking about smart messaging as being a huge business because that was just a feature that was in the telephone. And the smart messaging service is a huge business today. Of course, voice was still the most important feature, but there are other [features] that people really liked, but nobody planned it."
According to Andrea Merloni, with a little vision, digital appliances could offer everyone-manufacturers, suppliers, distributors, and utilities- a huge opportunity. "I think that the future will be small services bundled together to make the difference from a conventional appliance and a new generation of appliances-appliances that can give you information you want to know or you want to use."