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  • - IKEA is huge.

  • It consumes 1% of the world's wood supply,

  • and sells one billion meatballs every year.

  • Now it's focusing its resources on 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 offering from IKEA Home Smart

  • started off with the wireless charging,

  • which is the Nordmarke, the Riggad, the table lamp,

  • the Hektar table lamp with integrated 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 Smart Initiative was started in 2012

  • when Bjorn Block joined IKEA's lighting division,

  • just as the company was launching the Uppleva TV.

  • You remember the Uppleva TV, right?

  • It was a major embarrassment for IKEA

  • and a lesson learned that technology is hard.

  • - It's a television that is fully integrated

  • into a piece of IKEA furniture.

  • Take a look.

  • - [Woman] Uppleva comes with an illustrated

  • instructural manual and all the essential pieces

  • for assembling your furniture

  • and state-of-the-art plasma screen 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 to think about smart products

  • in the sense that they have chips in them,

  • of course, there has been a lot just explanation

  • to the rest of our organization and our colleagues.

  • - We didn't start IKEA Smart Home,

  • we started IKEA Home Smart,

  • because the home comes first.

  • - IKEA designs its products at its headquarters

  • here in Almhult, Sweden, a town 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 new products swapped in each year.

  • IKEA has the ability to pick 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 journey not only to go all-in LED,

  • but also to say, "Lets from 10 Euros to one Euro."

  • And a few years down the line, now we're there.

  • We're selling a two-pack for one Euro now.

  • - How are you choosing which product 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 concept but as a clear product range

  • that we thought, "Okay, so let's try out, also,

  • "our ideas on how to develop

  • "home furnishing with technology influences."

  • - It's all about simplicity.

  • Our customers, they are quite new to gadgets.

  • They are not the techie nerds.

  • They need to be able to understand what 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 the home and invite more people,

  • and physical interfaces are a fantastic 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 competing wireless charging technologies

  • when launching its first Home 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 I think we actually impacted

  • a few other players just by picking that standard.

  • - Because Apple then chose it, and then it was done.

  • - Apple chose it and when they launched,

  • two years later, when they launched the first phone,

  • the iPhone 8 and the iPhone X, with Chi,

  • they had an IKEA logo on stage,

  • saying that they are now compatible with IKEA.

  • - Smart home leaders should be concerned

  • about the world's largest furniture 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 leaving home for the first time,

  • furnishing a dorm or a shared apartment.

  • You go to IKEA for a bed, 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, no matter what goes wrong,

  • at least you've got your sound issue handled.

  • And since you need a bulb,

  • you might as well make it a Home Smart.

  • Soon you'll need your own place, a few more bulbs,

  • and maybe a couple Sonos speakers,

  • then the kids arrive and you 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 functionality and breadth of devices.

  • Hue still dominates smart bulbs,

  • and IKEA is dependent on Google, Apple, and Amazon

  • for their voice assistance.

  • IKEA needs help to grow its 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 voice control 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 a microphone into our products.

  • - [Thomas] The Sonos partnership created

  • an overwhelming response for the Symfonisk lamp and shelf,

  • both of which feature Sonos compatible speakers.

  • The range is also the first 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 they were 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 be successful stepping into sound,

  • we need a strong partner in this.

  • - Internally, IKEA never viewed Home Smart

  • with the same importance as its formal business areas

  • like Living Room, and Bedroom, and Bathroom.

  • and frankly, the lack of priority shows.

  • Home smart products aren't terrible;

  • the Sonos compatible speakers are pretty good.

  • But IKEA's Home Smart documentation is confusing,

  • adding devices to the home drives me nuts

  • and the app is buggy.

  • - In IKEA we have the formula 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,

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