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,

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 major impact 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 business area, it's a big thing.

- We have a very strict article number 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 numbers is quite a hot currency

because we tend to have 9,500 articles in a typical store.

And even if we introduce 2,000 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 moved from 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 to force ourselves to think

in a 5-year or 10-year perspective,

but when you go to IKEA, you experience the whole home.

You go through Living Room and Bedroom,

you go to kitchens, Children's IKEA.

So 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?

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 to be 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!