Ikea 2.0: inside the furniture giant’s big bet on the smart home

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Björn Block hurries out of the Ikea Museum and heads toward the company’s headquarters. His stride is surprisingly quick — faster than mine, considering I’ve just scarfed down a substantial plate of meatballs and lingonberries at an upscale version of the company’s blue box cafeteria.

At 45, Block vibrates with the energy of a man half his age. He cuts a frantic figure against the mélange of asphalt, dirt, and gravel paths that crisscross the sprawling Ikea campus. I tell him he walks very fast.

“I hear that all the time,” Block responds without slowing, even as I stop to admire a 10-foot-tall monument to the Ikea Allen wrench.

And his name. What could be more Swedish than Björn and more fundamental to building something than a block? It’s a good thing because the world’s largest furniture retailer is building its home of the future around him.

Block earned a degree in industrial design (with a furniture minor) in Australia and did a stint in Colorado teaching Americans how to snowboard. Now, he is the personal embodiment of Ikea’s transformation from a plodding analog maker of furniture into a fast-moving digital company. He’s in charge of Ikea’s Home Smart business, which he’s been building on a project-by-project basis ever since joining the company seven years ago.

At first, Ikea treated smart home stuff like a hobby — testing the waters with furniture that could wirelessly charge your phone before building an ecosystem of speakers, lights, and blinds with bare-bones functionality. Those successes prompted a decision this summer to promote Home Smart to the same importance as Living Room, Bedroom, and all of the other Ikea businesses that have come to define the company.

Early reviews of the company’s Home Smart ecosystem mirror the typical Ikea experience: great price, questionable quality. It’s an inauspicious start for a company that tried and failed to take on the tech world before. Ikea now faces the challenge of teaming up with Google, Amazon, Apple, and other tech giants while also battling them for primacy in the home.

I am in Sweden to meet with Block and his team to better understand the extent of Ikea’s smart home ambitions. What I discover is a company that’s aware of its missteps, with a clear understanding of how it wants to improve and expand. Ikea believes its advantage in the smart home stems from what at first looks like its greatest disadvantage: Ikea is not a tech company. As a furniture maker, Ikea has a thorough understanding of life at home and a unique ability to marry technology with ordinary furniture. Ikea’s unimaginable scale matches up well with Big Tech. And historically speaking, it’s been a formidable and ruthless competitor in every segment it focuses on. Ikea is now focused on the smart home.

The digital transformation of Ikea could improve the lives of billions. At stake is the democratization of the smart home — intelligent homes that improve the daily lives of everyone, not just the resident geeks who can already afford them.

This is Ikea 2.0.

The original Ikea — Ikea version one, if you will — was founded in 1943. The name is an acronym for Ingvar Kamprad (the founder) Elmtaryd Agunnaryd (Kamprad’s family farm and hometown, respectively). Kamprad, who died in 2018 at the age of 91, remains a Steve Jobs-like figure at the company’s headquarters in Älmhult, Sweden, population 9,000. “The home of the home,” proclaims a large mural as you enter the town.

Älmhult is the antithesis of Silicon Valley. It’s a village in the south of Sweden where shops sell hardy clothes and food to match. There’s no ego on display or venture capitalists in Älmhult, just stubborn practicality. Getting there requires a flight into neighboring Denmark (closer than Stockholm); the drive from Copenhagen Airport takes three hours along roads that are often too narrow to bother with a centerline. It’s a lovely drive in mid-November: white bales of hay dot fields like comically oversized marshmallows, as Falu red cottages give way to crimson forests of birch. My car nearly hits a giant moose.

Ikea HQ is exactly what you might expect: a company store modified to function as the main office for 5,400 employees. Calling the exterior “drab” would be overselling it, especially compared to Apple’s new spaceship or Amazon’s Spheres. You’d never suspect it was responsible for a record $44 billion in sales last year.

The interior looks cozy yet efficient. Oversized tables of custom Ikea designs are accessorized with furnishings from — where else? — the Ikea catalog. Clusters of arrowed signs hang from the ceilings, directing occupants to mundane-sounding places like Meeting cube B1C01-B1C14. In the lobby where Kamprad used to dole out morning hugs, a large LCD screen now greets employees with charts about sales targets as they enter the building. (It is always a reassuring green while I am there.)

During my week at Ikea in Älmhult, I find the enthusiasm utterly infectious. Optimistic employees speak passionately about the company’s ability to improve lives. It’s enough to make you almost forget about the company’s darker side — be it tax avoidance, child-killing dressers, illegal deforestation, environmental concerns over “fast furniture” and home deliveries, or Kamprad’s early association with Nazis, which he later called his “greatest mistake.”

Kamprad’s vision “to create a better everyday life for the many people” is still the mantra at the heart of everything the company does and will do in the future. It’s quoted in casual conversation and printed on posters that adorn the office walls. I hear the phrase “for the many people” repeated word-for-word multiple times each day without fail, despite its questionable syntax. At first, it sounds obsessive. Later, I find it adorable once I understand how deeply the vision permeates the culture. It’s the reason Ikea makes such a wide range of attractive and functional products, priced so as many people as possible can afford them, from a mundane $1.59 toilet brush to a limited-edition $449 daybed by fashion icon Virgil Abloh.

Attaining such low prices requires Ikea to operate on a mind-boggling scale. In 2019, 1 billion people visited an Ikea blue box store where they bought 1 billion meatballs. Nine hundred million Allen keys have shipped from the flat-pack giant, and it’s rumored that one out of every 10 Europeans was conceived in its beds.

Ikea’s size can reshape industry, markets, and society. For example, in 2012, the company committed to phasing out all other lightbulbs in favor of energy-sipping LEDs. It was a risky move, considering cheaper CFL and halogen bulbs were far more popular.

“Most of the industry and most of our competitors laughed at us and said, ‘That’s impossible,’” says Block, who joined the Ikea Lighting business in 2012.

Ikea’s stated goal was simple: drive down the cost of LEDs so that everyone could live more sustainably at home. In 2012, the cheapest LED bulbs cost about €10 (about $11). By 2015, Ikea became the first major retailer to sell LEDs exclusively. (The company sells almost 100 million Ikea-branded lightbulbs each year.) Its aggressive move into LED lighting upended the global supply chain as other manufacturers and retailers raced to compete. The result was cheaper LEDs from Ikea and its larger competitors like GE and Signify, the parent of Philips Lighting.

“Our founder Ingvar said that the value of a bulb, from the customer perspective, was really one euro,” says Block. It took a few years, but Ikea eventually brought the price down: a two-pack now costs €1 — one-tenth of the 2012 price.

By 2018, newly affordable LEDs made up 40 percent of all global residential lighting sales. The shift to energy-saving LEDs that last over 20 years has driven down electricity demand in homes, saving everyone money. In the US alone, annual electricity use from lighting fell 57 percent from 2001 to 2018. If all of the Ikea LED bulbs were to replace incandescent bulbs, the energy savings “is actually equivalent to the whole energy consumption of Amsterdam every year,” says Block.

The accelerated global transition to LED, arguably sparked by Ikea, also had a meaningful impact on the environment. About half of US homes have made the switch to LED bulbs, which has helped cut annual carbon dioxide emissions equal to about 7 million cars, according to a recent New York Times report.

“I think as a big retailer, it comes with a lot of responsibility,” says Block. “You can really have impact.”

Ikea can easily enter homes with inexpensive solutions — it’s in plenty of them already. That’s an advantage in smart home products since the first one in is usually the ecosystem that a consumer sticks with. (Compatibility between systems continues to be a problem.) You start with a cheap Ikea smart bulb and wireless dimmer kit, and soon, you’ve got a house full of Ikea speakers, lights, blinds, and accessories because they all work together.

The cheapest Ikea smart LED bulb cost $12 when it launched in 2017. Today, it costs $8.99, compared to $13.99 for the cheapest comparable Philips Hue smart bulb. Which do you think most people would choose?

On a long enough timeline, the survival rate of any Ikea competitor could drop to zero.

Home Smart. It’s a dumb name, on par with saying “the many people” instead of just everyone.

“It means the life at home is more important than technology,” says Block. “The technology is a tool to make things work, but we’re not launching things just because it’s cool technology.”

Ikea conducts hundreds of so-called “home visits” and interviews each year to better understand how life at home varies by country. Last year, it spent over 300 hours visiting homes, meeting with families, and asking them what works, what doesn’t, and what Ikea can do to help. Employees across Ikea are encouraged to participate in home visits whenever they travel. Ikea also conducted 33,500 interviews for its annual Life at Home report to gain additional insights.

Home visits and interviews in the US, for example, revealed the need for blinds that could be operated on windows so high that they’re beyond the reach of rod extenders. As a result, Ikea developed its Home Smart blinds that can be controlled wirelessly.

Ikea believes its deep knowledge of the home is what differentiates it from every tech company making smart devices today. For example, many tech companies make speakers and Qi wireless chargers. Block’s team has taken a very Ikea-like approach to both product categories that adheres to the company’s “make space, don’t take space” design philosophy. Its Symfonisk speakers are disguised as either a lamp or wall-mountable shelf, while its Qi chargers are integrated directly into bedside tables and desk lamps.

Block doesn’t want to sell a bunch of gadgets. Rather, he wants to make the stuff you already have in your house smarter, a premise that tech companies may find familiar. (Why own both a monitor and a computer when you can just have an iMac on your desk?) “We want you to experience sound rather than the speaker — experience charging rather than a gadget sitting on the bedside table,” says Block.

“A customer doesn’t want the toaster,” says Johanna Nordell, business leader for Home Smart hardware. “They want the toast.”

Ikea speaks about Home Smart with the kind of confidence that often follows failure. Having learned from the trauma of getting things wrong in the past makes them cocksure about the future. The road to 2.0 certainly hasn’t been easy.

The journey began seven years ago with two overlapping but unrelated Ikea events: the launch of the doomed all-in-one smart TV and the hiring of Block into its Lighting business. You probably don’t remember the Uppleva TV unless you’re a super nerd, but no one at Ikea has forgotten it.

2012’s overly ambitious Uppleva (Swedish for “experience”) was Ikea’s first foray into consumer electronics. It was a giant piece of furniture that featured an integrated TV, Blu-ray player, stereo speakers, wireless subwoofer, and internet connectivity. “We are launching a new concept where you, in one place, can buy your furniture and your electronics — designed for and matched with each other from [the] start,” said Ikea’s Living Room boss Magnus Bondesson at the time. It was a good idea let down by poor execution.

Ikea turned to TCL, a leading Chinese maker of televisions, because its Living Room business lacked the expertise to make consumer electronics on its own. TCL operated in the background as a supplier under Ikea’s direction.

The TCL relationship made sense for Ikea at the time; the company had a similar deal with Whirlpool, which had been anonymously producing Ikea’s kitchen appliances for a decade already. (In fact, it still does.) But people tend to care less about the brand of their oven and fridge than their TV. Uppleva also suffered from poor image quality, a slow and clumsy interface, and software that wasn’t upgradeable, according to reviewers. It tarnished Ikea’s brand just as the company was trying to gain a foothold in consumer tech. Uppleva was eventually pulled from shelves — a failure.

“We choose to see the journey with Uppleva as a really good learning case,” says Block, putting a positive spin on the experience.

Block’s first Home Smart initiative arose from the ashes of Uppleva, with constrained ambition: a wireless charging collection launched in 2015. It was three years in the making. “We started off with a curiosity,” says Block. “We wanted to see, what could it mean for Ikea?”

Block received approval and funding for a project to integrate wireless charging pads into a series of lamps and tables. He then faced the daunting task of having to choose from the two wireless charging technologies competing for dominance at the time. He chose Qi, putting the entire weight of Ikea behind the fledgling technology. It would go on to become the industry standard after Apple announced its first Qi-compatible iPhones two years later. “They had an Ikea logo onstage saying that they are now compatible with Ikea,” Block says, beaming with pride as he recalled the moment.

In 2017, Ikea launched the Trådfri (Swedish for “wire-free”) series of smart lights. It was the beginning of Ikea’s smart home ecosystem and the first time “Home Smart” would appear. The company knows lighting and has good brand recognition in the space, so making its bulbs smart was a natural evolution of its in-house expertise. But Ikea doesn’t know software. So in 2014, Block turned to Frog Design and its parent company Aricent (since acquired by Altran) for help with the hardware and software. Ikea doesn’t know voice assistants either, so Block decided early on to make Trådfri devices compatible with Alexa, Google Assistant, and Siri.

Ikea also doesn’t know sound, but the path to launch is first Trådfri-compatible speakers was clear after Uppleva. “We need to team up with the best of the best,” Block says. Ikea partnered with Sonos in 2016 for the 2019 launch of two speakers: a $99 shelf and a $179 lamp. Both are co-branded with Sonos and Ikea logos, marking the first time Ikea has allowed an external brand to be sold in its stores. When sales began in August, the company sold more than 30,000 Symfonisk speakers on the very first day. Sonos officially calls that a “significant” response, but I’ve heard early sales described as “overwhelming,” according to people familiar with the matter. The Symfonisk range is expected to expand rapidly. And given Ikea’s product history, a bedside table with an integrated speaker and Qi charger can’t be too far away.

Both Ikea and Sonos gush over the relationship. Before the collaboration, Sonos couldn’t get its speakers below $100, and Ikea knew nothing about whole-home audio. “We really build on each other’s strengths,” says Nordell.

Case in point: the Symfonisk lamp is covered with soft mesh fabric. At first, Sonos didn’t want it, according to Nordell, worried it might affect sound quality. Ikea thought it was warmer and felt “more homey” than Sonos’ existing lineup of cold plastic speakers. They reached a compromise, leaning on Sonos’ ability to tune the sound and Ikea’s mastery of textiles. The fabric sleeve, currently sold with the lamp in either black or white, can even be removed for washing.

“Can I buy replacement sleeves in different colors?” I ask.

“Not yet,” replies Nordell, grinning. “Let’s see what happens.”

Ikea’s Home Smart ecosystem now consists of lights, blinds, chargers, motion sensors, sockets, and a wide variety of controllers like dimmers, switches, and even a volume dial for its new Sonos-compatible speakers.

“Now we can step into any product area because once you have this ecosystem,” says Block. “Once we started building these capabilities, then there are no limitations for where we can go.”

This was all before Ikea began taking the smart home business seriously.

The smart home is no longer a hobby for Ikea. Home Smart is now a strategic Business Area in the company, one of 10, with Block in charge. He now has significant resources at his disposal, allowing him to staff up and expand rapidly.

It’s a big deal to be named a Business Area at Ikea; others include stalwarts like Living Room, Bedroom, and Textiles. The last time Ikea expanded like this was with Ikea Food in 2006. It only happens about once a decade.

“We didn’t celebrate so much at the time,” says Block of the day he received the news. Instead, his staff asked, “Yeah, but is the money in the bank? Can we access the development money now?” That money has recently arrived. “Now we’re super happy,” says Block.

Before the decision to promote Home Smart — made internally in June, announced in August — Ikea’s smart home activities had been run as projects, requiring a new round of funding each year to continue operating. That helps explain some of its shortcomings.

Moving from a hobby to a Business Area means that Block can now take full advantage of the Ikea supply chain, tapping into the global reach of the Ikea machine. In practical terms, it means more money to improve existing products and develop even more, and also a few pages in the catalog and dedicated space in the stores, including showroom displays that will make it easier to discover and learn about the Home Smart ecosystem. Block’s showroom plans include automated morning or night scenes to demonstrate the lights, blinds, and speakers working in unison.

Getting there wasn’t easy for Block and his team. Ikea is run more like a democracy than a dictatorship. Convincing a company that employs over 200,000 people to embrace even more smart products after the failed Uppleva smart TV doesn’t happen overnight.

A variety of internal “councils” staffed by senior members of the different Ikea businesses keeps the company aligned on priorities. These include a Product Council, Business Council, Trademark Council, and Catalog Council. Block met with them all. Above those, you have boards, like the Supervisory Board that ultimately signed off on Home Smart.

“We’re used to shelves and couches and beds and all the products that you think about when you think about Ikea,” says Rebecca Töreman, the development leader responsible for the Home Smart ecosystem of products. Getting the internal councils behind Home Smart was a laborious process, Töreman says. “It has taken many years to explain what these products are doing.”

That slow, laborious process realigned the company: now, everyone is on board with Block’s plan to digitize the home. After seven years, all of Ikea — not just Björn Block — is now wondering about how technology can create a better everyday life for the many people.

Block’s new goal is to boost the number of smart products found in Ikea stores — but in a way that has a real impact on life at home. “It’s not only a luxury to have access to the whole home. It’s actually our obligation to look at: where should the home be smart?” he says. “In what rooms? For what activities?”

Ikea will collaborate where it needs to, as it does today with Apple, Amazon, and Google to be compatible with their respective voice assistants. It’ll build where it has the expertise, as it does in textiles, for example, having just launched the Fyrtur and Kadrilj smart blinds. And it’ll partner where it has to, as it did with Sonos. “I think in some product categories that we want to explore, we might end up in exactly the same situation as with sound,” Block says, hinting at more major consumer electronics partnerships to come.

Does that mean that Ikea is now a tech company?

Ikea already knows lighting and kitchen appliances, to be sure. And it has decades of experience managing an extensive supply chain that spans the globe. “We have a thousand suppliers today in Ikea,” Block says. “We’re really good at teaming up and partnering and working the supply chain in every aspect.” But Ikea doesn’t have experience working with large volumes of sensors, silicon, and displays; it works with wood pulp, textiles, and glass instead.

The company does know a thing or two about product development: a dozen or so in-house product designers work in Älmhult, and a hundred more designers work around the world. But Älmhult is where Ikea’s 9,500 products originate, 2,000 of which are replaced every year with new designs.

Ikea moves at an unhurried pace, freezing product design 10 months before a couch even goes on sale in order to prepare suppliers, shoot the all-important catalog photos, and ready the in-store experience in some far-off suburb. Product concepts are generally approved in the first year and then it takes another two years to ready them for retail. That’s fine for a furniture company, but it’s slow compared to the likes of Google or Amazon, which follow product development cycles lasting two years or less.

The first products developed for each new Home Smart category, like Symfonisk sound or Trådfri smart lighting, also took three years, but it’s accelerating now that the ecosystem is in place. Block’s team is working at the speed of software to fix bugs, roll out new features, and expand its portfolio of devices. Its new Shortcut Buttons, for example, took about 18 months to develop.

Ikea’s massive prototype shop is so critical to its business that it’s located next to the cafe inside the Ikea of Sweden headquarters. Large glass windows provide lunching employees with a visual reminder that “a prototype is worth a thousand meetings,” a large sign above the entrance proclaims. The prototype shop can’t handle Home Smart products, though; right now, those are produced in China.

Ikea possesses the inherent skills required to operate like a tech company. It just lacked the will to pursue it at the scale of Big Tech until now.

“It takes a little bit more than launching a few products, launching a solution, to start calling yourself a tech company,” Block says. “But I like to say that we are exploring the space, and we’re very proud of what we’re doing. We’re definitely into the tech space, we’re into the digital space, and we really want to be here and really play this because I think that we can also make a difference.”

The Home Smart ecosystem is behind its competition, both in functionality and breadth of devices. Hue still dominates smart bulbs, and Ikea is dependent on Google, Apple, and Amazon for their voice assistants. Ikea needs help to grow Home Smart. “If you look at Google and Apple, for example, I think they’re experts in smart,” says Block. “I think we can only be experts in the smart home together.”

That is, oddly, an opportunity. Tech companies can partner with Ikea, much as Sonos did, to get into more homes, says Jitesh Ubrani, an IDC researcher who specializes in smart home devices. “Ikea’s push into the smart home market stands to be the tide that lifts all boats. That is, until the day when Ikea creates its own competitive smart home ecosystem.”

The low prices on Ikea’s Trådfri smart lighting were popular with early reviewers, but the system was complicated to set up and unstable. Things have since improved. And prices that significantly undercut the incumbent products — notably, smart LED bulbs and blinds — can make Ikea users more forgiving. But many of those early problems still plague Ikea smart homes even today.

The first Trådfri Home Smart products were launched two and a half years ago. They should be easier to use by now. Making the software more user-friendly is partly the responsibility of Ikea’s partner Altran, but development is driven and led by the Ikea team in Älmhult. Software is the root of Home Smart’s problems.

Block knows that Home Smart software has its issues, and acceptance is the first step to recovery. “In Ikea, we have the formula of democratic design where we have form, function, sustainability, low price, and quality,” Block says. “And obviously here, we’re not living up to quality and function in that sense, and we’re on it.”

To prove Ikea’s understanding of the issue, Block arranges for Bilgi Karan, user experience leader for Home Smart, to show me a major overhaul to the way devices are added to the Home Smart network. Ikea calls this “onboarding,” and the new, more intuitive procedure solves one of the biggest pain points with Home Smart currently. I can’t go into detail on what Karan showed me as things might change before it rolls out in 2020. But I can tell you that everything will get dramatically better if Ikea can get the software right.

The new onboarding procedure will eventually arrive on every Ikea smart home product already sold. Because unlike the Uppleva smart television, Ikea’s Home Smart products are software upgradeable.

The idea seemed absurd in my head, but after hours of conducting interviews with cheery Ikea execs, the bed looked tempting.

“You want to?” I ask, motioning at the bed.

“Sure!” Block says immediately.

So we climb on top of the duvet — well, I climb. Block dives. He’s on the left side, head on the pillow; I’m on the right, head on my outstretched arm. A camera hangs directly overhead where rows of Ikea LEDs illuminate the scene. This is where visitors to the Ikea Museum can re-create the cover photo of the company’s 2020 catalog. The museum is a six-minute walk from HQ — three if you’re Björn Block.

The museum was the perfect backdrop to discuss Ikea’s analog past and digital future. Ikea is reinventing itself as a furniture company that understands the role of technology in the home. When Ikea was founded 76 years ago, the world had more dreams than technology. Now it seems the opposite is true. We have so much cheap technology that every dumbass idea has been mass-produced and marketed as “smart.”

Maybe Silicon Valley doesn’t hold the answer to the smart home. Maybe it’s time to give the company that makes “versatile solutions for modern living” a try. After all, if computing is going to be everywhere in the future, who’s more likely to get it right than the company that’s already everywhere in the home?

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