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No Place Like Home

E2 Home, is a joint venture between Electrolux and Ericsson. Its mission? To change housework as we know it — and to rethink business strategy in the process.

In 1998, as Swedish appliance giant Electrolux was about to unveil its Screenfridge, the first in a line of intelligent appliances that connect to the Internet, the company realized that it was embarking on more than just another product launch. It was forging a new market for networked home services and appliances — which meant that it needed help. Ten months later, it found a perfect partner in its own backyard: Ericsson, the Swedish telecommunications giant.

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The result: e2 Home, a Stockholm-based joint venture between the world’s largest appliance maker and one of the world’s largest mobile-communications providers. Its mission? To change housework as we know it. “The technology was there, the appliances were there, but we needed a way to connect those two elements — to add value for consumers,” says Per Grunewald, 45, e2 Home’s president.

In the process, e2 Home, which was founded last October, is reinventing the idea of what it means to make and sell appliances. “We’re selling solutions and services, not just things,” Grunewald says. “Instead of selling a washing machine, we’re selling clean clothes; instead of offering a refrigerator, we’re offering food inventory and management.” Toward that end, Grunewald and his 40-person team — an eclectic mix of Electrolux and Ericsson veterans, Web designers, and content experts — are putting the finishing touches on their first suite of consumer-oriented services, which will be rolled out this summer in Denmark in partnership with Teledenmark.

How does a networked home work? At the Screenfridge, families can access traffic reports, order take-out dinners, or buy milk. Eventually, says Grunewald, homes will be much smarter. “You’ll be able to turn on your alarm system remotely, send a message to family members — even get a live Webcast demonstration from the head chef at your favorite restaurant.”

As the appliance industry moves from building products to marketing services, Grunewald and his team are asking themselves a question that is on the minds of many companies in the digital economy: How are we going to make money on this model? One strong contender is the pay-per-use model. This year, Electrolux began testing that concept on the Swedish island of Gotland. The company distributed free washing machines, each equipped with a “smart meter” that monitors the machine’s usage, to some 7,000 households, which pay a service-and-utility charge for each wash.

The response from consumers has been mixed. Still, Grunewald says that uncertainty — about business models, about consumer reactions, about everything — comes with the territory and shouldn’t be a distraction, at least not yet. “Our priority right now is to demonstrate that we can create value for consumers,” he says. “If we can do that, we can make money.”

Cathy Olofson (cathyo@channel1.com) is a frequent contributor to Fast Company. Visit e2 Home on the Web (www.e2-home.com).