April 05, 2004

Ikea as the new Microsoft

There are two stories behind the Reuters news piece that will no doubt make the blog rounds until we puke: That Ikea founder Ingvar Kamprad has overtaken Bill Gates as the world's richest man.

One: The dollar has fallen by some 35% against the Swedish krona over the past few years. Remember the jibes by US conservatives that the per capita income of Sweden was that of Mississippi, America's poorest state? No longer. (Don't expect a retraction.) Ah, the vagaries of the currency market.

Two: Ikea is the new Microsoft. And Bill Gates doesn't know it, evidently, because of what he said last week: He said computer hardware will become so cheap as to be practically free, and people will end up paying mainly for software, such as Microsoft's. But Gates forgot about open source: Over the next 20 years, Linux, and not Windows, is going to be the operating system of choice in China.

When it comes to furniture, there is no open source. Ikea just had a huge spurt of growth with the opening up of Eastern Europe after the Berlin wall fell. Well-designed, branded flat-pack furniture is proving irresistible to industrializing countries. China is next: It can't get enough of the stuff.

Room for competitors? Sure, but Ikea does have old-fashioned economies of scale on its side, and is certainly not as vulnerable to disruptive technologies as is Microsoft. In the gold rush that is personal computing, the best way to make money is to sell the computer desk, it turns out.

Posted by Stefan at 08:37 AM GMT

Ugh. Verily is Ikea the Microsoft of furniture. Worse, I think--I do get products from Microsoft I actually really like. I don't think any IKEA product has endeared itself to me, but it's impossible to argue with the price when your parents are generously helping you set up house. Rather like pre-installed software.

Posted by: Saheli on April 5, 2004 05:26 PM

In a reponse that should make Donald Trump whimper in shame, Kamprad vehemently denies he is the world's richest man, pointing out that he donated his stake in the firm to a foundation back in 1982. Well, you decide if Kamprad is #1 or #13 on the list.

Posted by: Stefan Geens on April 5, 2004 05:44 PM

Ikea may prosper in China but it will find the locals a might quicker in imitating what they do than in other markets. There is no monopoly or even quasi-monopoly position in China for private companies. Within a year there will be a dozen me-too Ikeas there undercutting the Swedes.

Posted by: Jame on April 8, 2004 03:32 AM