Ikea’s Clever Plan To Sell You a Piece of Furniture With a TV Attached to It, and How It…

Commentary about business and finance.
June 6 2012 1:44 PM

An Ikea Television? Why Not?

Ikea’s clever plan to sell you a piece of furniture with a TV attached to it, and how it might upend the TV manufacturing industry.

The Uppleva
The Uppleva

Product shot from Ikea.

Ikea changed the world of furniture forever by making a slightly lower quality product a lot cheaper. Flimsier material, some assembly required, and rock-bottom prices turned out to be something consumers were hungering for. Now Ikea has a compelling idea for altering the TV set industry by doing something similar.

Over the past decade, television sets have changed nearly as radically as telephones. Just 10 years ago, I was proud that my low-definition cathode ray tube television featured a flat display instead of an old-fashioned curved bubble. When I got my first HDTV a couple of years later, it felt like an extravagance, and high-definition sets were sufficiently rare that there was still little HD programming. I would sometimes find myself choosing between the show I wanted to watch and the show that happened to be on in HD.

By 2005, Slate’s Fred Kaplan was proud to announce that the time had finally come for the mass market consumer to go high definition. He was excited that Sony was offering a 26-inch LCD TV for as little as $2,000. Today you can get one for less than $400 or you can drop two grand for a 55-inch LED backlit LCD screen with 3-D capabilities. Kaplan touted a 42-inch plasma from Panasonic as superior technology and a good value at $3,500. Today they’ll sell you one for $400.

For consumers, it’s been an enormous triumph. But while the smartphone revolution has turned Apple into the world’s most valuable company, the HDTV revolution has been a business fiasco. The tumbling prices are a tell-tale sign of commoditization, the profit killer. Rapid technological progress has run straight into the fact that our eyes can only perceive so much resolution and a screen can only get so big and still fit in your living room. TVs have become “good enough,” and all the gains are now going to price-cutting and ferocious competition.

Ikea’s idea is to embrace commodification and make the TV screen just one part of an integrated piece of furniture. The Ikea Uppleva isn’t a television set as we understand it. Instead it’s a TV storage console that has a television screen built into it. A couple of speakers, a Blu-ray and MP3 player, and a wireless subwoofer are thrown in for good measure.

The Uppleva launches this month in a handful of European cities and should be rolled out to most of Ikea’s European markets by fall. It’ll sell for about $955 depending on the vagaries of exchange rates—more expensive than a standalone television, but a discount for the complete set of furniture. Strikingly, even Ikea’s longer promotional materials make almost no reference to the quality of the television. Presumably that’s in part because they can’t credibly claim that this is the best set on the market. But tellingly, their bet is that most people don’t really care. The race for quality has proven to be a cul-de-sac, with Sony, Samsung, Sharp, and basically all other brand-name TV makers struggling with massive losses. It turns out that any old Chinese manufacturer can make a television that looks amazing by the standards of 10 years ago, and there’s little price premium to be had obtained by trying to go further upscale. Instead of joining the race to the bottom by actually manufacturing a television, Ikea is embracing it and partnering with Chinese electronics company TCL to build the devices.

It’s impossible to imagine that the resulting product will satisfy real home theater junkies. There’s no surround sound or even a center channel speaker. To a serious audiophile, all this integration is a disaster.

But as a business proposition aimed at the average consumer, it might work. If quality has failed as a corporate strategy, then simplicity and convenience might prevail. Ikea promotes superior cord management as a key Uppleva selling point. A superior retail experience might be a bigger deal. Stroll over to the TV section of your local Best Buy or Wal-Mart and the problem for TV manufacturers quickly becomes clear. Your set is being sold in a vast bay of television sets, the one next to the other, all looking very similar. This promotes ruthless comparison shopping and razor-thin margins.

Ikea, by contrast, is just a place you go when you need to furnish a new house or a new room. If those furnishing plans happen to involve buying a new television, and Ikea has a bunch of integrated TV solutions right there in the showroom, you just might decide to buy one. Rather than comparing the Uppleva to someone else’s TV, you’re comparing it to the prospect of picking out a piece of furniture to put the TV on, then going to some other store to pick out your set and other AV equipment. Enthusiasts will certainly want to do that, just as anyone who gets serious about cooking ends up selecting better tools than what’s available in the Ikea kitchen section. But for your basically indifferent consumer who just wants to be able to watch some shows and play some music, it sounds like a great idea. The profit margins can come not from any special attribute of the Uppleva’s technology, but from the overall strength and convenience of the Ikea brand. In a world of good enough technology, the ability to avoid an extra trip may be all the selling point that’s really needed.

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