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Inside Ikea’s big bet on smart home tech

IKEA is huge. It consumes 1% of the world's wood supply, and sells one billionmeatballs every year. Now it's focusing its resourceson making the home smart. We went to Sweden to talk to the company about its smart home ambitions. This is IKEA 2.0. (upbeat techno music) What are the products in Home Smart today? - Well today, the offeringfrom IKEA Home Smart started off with the wireless charging, which is the Nordmarke,the Riggad, the table lamp, the Hektar table lamp withintegrated wireless charging. We have the Tradfri smart lighting. We have the Kadrilj and Fyrtyr,which are the smart blinds, and we also have the sound products, Eneby and Symfonisk. - [Thomas] The Home SmartInitiative was started in 2012 when Bjorn Block joinedIKEA's lighting division, just as the company waslaunching the Uppleva TV. You remember the Uppleva TV, right? It was a major embarrassment for IKEA and a lesson learnedthat technology is hard. - It's a televisionthat is fully integrated into a piece of IKEA furniture. Take a look. - [Woman] Uppleva comeswith an illustrated instructural manual andall the essential pieces for assembling your furniture and state-of-the-art plasmascreen television set. We also make meatballs. (audience laughs and claps) - We are used to do this type of products, shelves, and couches, and beds, and all the products that you think about when you think about IKEA.

So we then started tothink about smart products in the sense that they have chips in them, of course, there has beena lot just explanation to the rest of our organizationand our colleagues. - We didn't start IKEA Smart Home, we started IKEA Home Smart, because the home comes first. - IKEA designs its productsat its headquarters here in Almhult, Sweden, atown of just 9,000 people. It's 6,000 miles away from Silicon Valley, but it still has to compete with the likes of Apple and Google for the same tech talent. This town is responsible for the 9,500 products IKEA sells, including the 2,000 newproducts swapped in each year. IKEA has the ability topick winners and set trends. In fact, they're probably a big reason your LED light bulbs are so cheap, regardless of where you bought them from. - We set out the journeynot only to go all-in LED, but also to say, "Letsfrom 10 Euros to one Euro." And a few years down theline, now we're there. We're selling a two-pack for one Euro now. - How are you choosing whichproduct range to go into? - When IKEA Home Smart started,we were based in lighting. And then we came from cords, we knew that cords were like a hassle, people hated cords, people hated charging, but it was still a big need. So then we started with that, as you say, not as a proof of conceptbut as a clear product range that we thought, "Okay,so let's try out, also, "our ideas on how to develop "home furnishing withtechnology influences." - It's all about simplicity. Our customers, they arequite new to gadgets.

They are not the techie nerds. They need to be able to understandwhat it can do for them. And not having too many different features and functionalities in a tricky set up. - We would like to go beyond the resident geek of thehome and invite more people, and physical interfaces are afantastic way of doing that. We would like to expand that offering and make it so easy that it finally doesn't feel like technology. - In 2015, IKEA had to choose between two competingwireless charging technologies when launching its firstHome Smart product. - We had to take an early bet and we picked the standard that we thought was going to be the winning one. And we picked Chi and Ithink we actually impacted a few other players justby picking that standard. - Because Apple then choseit, and then it was done. - Apple chose it and when they launched, two years later, when theylaunched the first phone, the iPhone 8 and the iPhone X, with Chi, they had an IKEA logo on stage, saying that they are nowcompatible with IKEA. - Smart home leaders should be concerned about the world's largestfurniture retailer's ability to easily enter the home. A walled garden starts with a seed and more often the not,IKEA is the first company people invite through the door. Here, let me explain. Imagine you're leavinghome for the first time, furnishing a dorm or a shared apartment. You go to IKEA for abed, couch, and a light when you realize that you can buy a Symfonisk lamp that's also a speaker, that works with your free Spotify account. Then for a couple years, you're satisfied that, nomatter what goes wrong, at least you've got yoursound issue handled. And since you need a bulb, you might as well make it a Home Smart.

Soon you'll need your ownplace, a few more bulbs, and maybe a couple Sonos speakers, then the kids arrive andyou buy even more gear until you finally die. That's IKEA's advantage with Home Smart. Don't get me wrong. Right now, Home Smart lags the competition in terms of both functionalityand breadth of devices. Hue still dominates smart bulbs, and IKEA is dependent onGoogle, Apple, and Amazon for their voice assistance. IKEA needs help to growits Home Smart ecosystem. Your speakers aren't smart, for example. I mean, they don't have microphones in it. Why did you choose not to have mics? - I think they're super smart because they play a lot of good music and connects all the music services, but they don't have voicecontrol in isolation. But you can enable them with voice control if you connect them to a gateway. You can connect them to a Echodot, you can connect them to an Alexa, or you can use Siri, and so on. So we enabled voice control but we haven't put in amicrophone into our products. - [Thomas] The Sonos partnership created an overwhelming response forthe Symfonisk lamp and shelf, both of which featureSonos compatible speakers. The range is also thefirst co-branded product ever sold in an IKEA store. It's a true partnership. - The collaboration started in 2016. So we went knocking on Sonos' door because we knew theywere the market leaders and we knew that we needed a partner. Because with the Uppleva case,that was not very successful. - That was the TV, I believe. - [Johanna] That was the TV, exactly, and it was not very successful. We did not have a partner. It was a new product area for us.

 We didn't have any experience. So we knew if we want to besuccessful stepping into sound, we need a strong partner in this. - Internally, IKEA never viewed Home Smart with the same importance asits formal business areas like Living Room, andBedroom, and Bathroom. and frankly, the lack of priority shows. Home smart products aren't terrible; the Sonos compatiblespeakers are pretty good. But IKEA's Home Smartdocumentation is confusing, adding devices to the home drives me nuts and the app is buggy. - In IKEA we have theformula of democratic design; where we have form,function, sustainability, low price, and quality. And obviously here, we're not living up to quality and function in that sense. Our funding has been year on year, saying, "Let's continue this project, "let's see if we're gonna do another year "or two years on it now." - In August, IKEA promoted Home Smart into its own business area and that can have a majorimpact on what comes next. If you're a business area,it comes with a lot of... What can I say, givens. You get a dedicated space in the store, you're on a certain budget,ba-ba-ba-ba-ba-ba-ba. And Home Smart being a businessarea, it's a big thing. - We have a very strict articlenumber frame within IKEA.

If we did not get an article number from that other business area, we could not actually develop the product. - The article numbersis quite a hot currency because we tend to have 9,500articles in a typical store. And even if we introduce2,000 new products every year, this number, 9,500, is not going up. So that means that 2,000 are going out. Seeing where IKEA has movedfrom in 75 years until today, I can't even think of where we're gonna be in 75 years from now. So it might be good toforce ourselves to think in a 5-year or 10-year perspective, but when you go to IKEA, youexperience the whole home. You go through Living Room and Bedroom, you go to kitchens, Children's IKEA. So it's not only a luxury tohave access to the whole home, it's actually our obligation to look at, where should the home be smart? In what rooms, for what activities?

So now being a business unit,it's just being amplified that that is our task,that is our mission, to now look at the Smart Home, not the Smart product category. - [Thomas] IKEA is reinventing itself as a furniture company that understands the role of technology in the home. When IKEA was founded in 1943, the world had more dreams than technology. And now it seems the opposite is true. We have so much cheap technology that any dumbass idea can be mass produced and marketed as smart. If computing is supposed tobe everywhere in the future, then why not from the company that's already everywhere in the home? Hey, thanks for watching! Why don't you Like and Subscribe? Is that how you do it? (laughs) - Oh, my god, Thomas.- You have the most energy we've seen all night.- Yes, I was like, what? - [Woman] YouTuber mode! 

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