Product Design

IKEA's new product signals a shift: IoT products you might actually buy

graphic image for Ikea IoT blog; science illustrations with lightbulb and various electronics

Would you try a Trådfri?

IKEA just became the latest large retailer to launch their very own IoT products. They’ve started with (drumroll please)… light bulbs! That’s right, you can now add a smart home lighting kit to your usual IKEA haul of a sofa, meatballs, and a fresh fight with your partner.

While connected light bulbs aren’t anything new, we think IKEA’s launch of Trådfri is a meaningful development. Why?

It’s one of the signs that we might be approaching a tipping point for consumer-facing IoT products. And while IKEA’s getting all the attention, they’re certainly not alone. Everyone from Target to Sears is trying to figure out how to integrate IoT into their product lines.

What strategies are driving the big retailers’ moves in the space?

Strategy #1: Same solutions, sold cheaper.

Make IoT products similar to what’s already out there, but make them more accessible.

Examples:

  • IKEA: Smart lighting kits are nothing new. But IKEA’s are competitively priced, getting fairly good reviews and, perhaps most importantly, available at an IKEA near you.
  • Target: Like IKEA, Target has launched their own connected lighting products (under the private-label brand Threshold).

Outlook: Both IKEA and Target have a lot of catch-up to do in terms of raw functionality: Other connected lighting products (most notably Philips’ Hue system) offer more robust functionality and work with Google Home, Amazon’s Alexa, and Apple’s HomeKit. But IKEA in particular has reach, knows retail, and has a knack for bringing products into ‘impulse buy’ territory.

Strategy #2: We’ll handle everything.

Become the hub of your connected home.

Examples

  • Lowe’s: They offer a wide range of connected home products, from motion sensors to indoor cameras, under their private-label brand Iris. The core of the system is the Iris Smart Hub and its companion app, which let you control all of your Iris-compatible products in one place. And ‘Iris-compatible’ is where things get interesting—the Iris hub and app don’t just work with Iris-branded devices, they also work with a range of products from other companies that have partnered with Lowe’s, including GE, Whirlpool, and Honeywell.
  • Staples tried to make a similar play with their Connect hub, but discontinued sales in 2016.

Outlook: The ‘be the hub’ approach sounds really good on paper: “Forget lightbulbs—we’ll be the center of the whole system!” But in reality, achieving hub status is an uphill battle, to say the least. By aiming to be the go-to interface for the smart home, you’re putting yourself in direct and intense competition with some of the most aggressive, powerful companies in the world, including Apple, Google, and Amazon.

Strategy #3: Just add sensors.

Augment what we already have by integrating IoT into existing product lines.

Example

  • Sears took the approach of integrating IoT capabilities into existing products. You can now buy a connected tool chest, garage door opener, or zero turn mower from Craftsman, and you can buy a connected air conditioner, refrigerator, or washing machine from Kenmore.

Outlook: It’s no secret that Sears’ future as a retailer is in jeopardy. But their private label brands still have lots of loyalty, and this strategy largely seems like an intuitive and savvy attempt to keep those product lines up-to-date (even if I would never pay a premium price for a toolbox that I can lock from my phone).

So, what now?

With Google, Amazon, and Apple quickly taking over the role of home hub, the big brick-and-mortar retail companies will have to find their own roles to play. There are a few possible approaches we’re already beginning to see:

  • Competing to own a niche in line with their core competency IKEA started with lighting—a crowded space, but one that fits perfectly with their broader offering of home furnishing products. Similarly, Sears is staying focused on the areas they already excel in, like home appliances. They stand a better chance of competing in those niche areas than they would if they tried to be the hub of the connected home.
  • Focus on the service layer: Beyond offering stand-alone devices, look for companies to find opportunities to provide services enabled by connected devices. While the future of Lowe’s Iris as a connected home hub is questionable, they are offering what is perhaps a viable service: a subscription for home monitoring, starting at $14.95/month.
  • Focus on incorporating IoT into the business Walmart hasn’t yet offered any of their own IoT products (though it’s likely only a matter of time. In short, rather than selling their own IoT products, they’re focusing on using connected tech to help support the customer experience. (Cue robotic grocery carts.)

As the consumer IoT space continues to grow, it’ll also continue to get more competitive. Companies looking to get involved will have to be intensely focused on finding an opening in the market that aligns with their core strengths (and, of course, adds real value for users).

Need help figuring out your next IoT move? Give us a call.

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