IKEA: its stores are big and its revenues are big. In the financial year between September 2017 and August 2018, the Swedish multinational retailer earned €38.8 billion in global revenues ($43 billion). This obviously isn’t all profit though, because aside from what must be hefty operational costs, IKEA has just announced that it will “invest significantly” in the development of its Home Smart range, which will become its own business unit within IKEA of Sweden.
For those of us who haven’t got themselves lost in a nearby IKEA in recent years, the retailer’s Home Smart range consists in an expanding number of smart devices for the home, which via the wonders of the Digital Age connect to the so-called “Internet of Things” (IoT). It first launched in 2012, and since then it has seen IKEA sell such products as smart lighting systems and smart speakers, all of which can be controlled via connected smartphone apps.
Yet it seems that such offerings were only the beginning, as explained by IKEA’s manager of “Range and Supply,” Peter van der Poel. “We have decided to invest significantly in Home Smart across IKEA to fast-forward the development. This is the biggest New Business we are establishing since the introduction of Children’s IKEA.”
No doubt this is exciting news for IKEA, but it’s also exciting news for the IoT and smart device industries. Because despite the hype that has been gathering around the Internet of Things since at least 2014, we still aren’t living in a world of “ubiquitous” computing, where every significant device or object is connected to the internet and controllable via your smartphone.
For instance, smart device penetration in American homes was only 15% in 2018, while the global average is 7.7%, with the United Kingdom being the second most IoT-friendly nation with an 8% penetration rate. In view of optimistic projections for future penetration rates, such percentages are disappointing, and if nothing else they highlight the stark gap between expectations and reality that often blights the bullish tech industry.
However, the entrance–or rather the re-entrance–of IKEA into the smart device market could change this imbalance between hopes and realities. By committing so strongly to the smart home market, IKEA is likely to provide it with a significant boost. The Swedish retailer’s global reach is massive: it welcomed almost a billion customers to its 422 stores worldwide last year, while there were 2.5 billion visits to its website. These are the people to whom it can now sell an expanded range of IoT devices, and even assuming that only a percentage of them buy such devices, this will nonetheless go a long way towards spreading an awareness and appreciation of the Internet of Things among the mainstream public.
Of course, while smart devices offer a range of valuable benefits, the potential spread of the IoT by IKEA won’t be without its dangers. Most notably, many cheap IoT devices come with security vulnerabilities, which can be quite easily exploited by semi-competent hackers and by botnets. This means that every IKEA customer who buys a smart device for the first time needs to be made aware of best practices for securing their devices, such as changing factory-set passwords and regularly updating operating software. Otherwise, one of the main achievements of IKEA’s new Home Smart range will be expanding the attack surface for cybercriminals to exploit.