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Ikea moves into the smart home space

Smart Home Ownership Rates
Smart Home Ownership Rates

BI Intelligence

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Ikea is joining the smart home market with a line of connected lights, The Verge reports.

Known as Trådfri, the line — which includes lights, sensor triggers for lights, lighting panels, and a remote control — will be available for purchase in Sweden starting March 31.

For the devices to work, users must purchase a networking gateway from the Trådfri line; this device plugs into an Ethernet port and creates a local network to connect the bulbs. Users can control the lights either through the remote or the associated mobile app.

The prices of the Trådfri products are comparable, if not more expensive, than competing devices, so they'll likely do little to spur mass market adoption. A bulb from the line costs 199 Swedish krona (about $25 USD), whereas a smart bulb from GE costs $14, and one from Philips Hue retails for $20. High prices of smart home devices remain a deterrent to adoption, according to a recent PwC survey.

But here's why the products could see some success at Ikea:

  • Interacting with the Trådfri line in person may encourage Ikea customers to purchase the devices. Consumers don't yet see the value proposition of smart home devices, which serves as another barrier to smart home adoption — 19% of global consumers haven't purchased a smart home device because they're unsure of the benefits, according to the same PwC survey. If consumers can go to an Ikea store and see the lighting products in action, they might be more inclined to purchase them.

  • Consumers shopping at Ikea might be more likely to add smart lights to their cart if they're already spending a significant amount on furniture. Though Ikea's home offerings are relatively inexpensive, customers could end up spending quite a bit on furniture; these customers may be more willing to spend the extra money on smart lights.

Ikea could do well in the smart home space, as it's jumping into one of the more successful segments of the market. As BI Intelligence noted in a prior report, despite a stagnant overall market, smart lights have moved into the mass market phase of consumer adoption. BI Intelligence projects that smart light bulb shipments will reach 50 million by 2021.

Not that long ago, many home-appliance and consumer-electronics makers were gearing up for what they thought would soon be a rapidly growing market for smart home devices.

The instant popularity of the Nest thermostat, introduced in 2011, seemed to confirm their hopes. But those expectations were dashed in the coming years as the market for connected home devices later stagnated. 

Even with these challenges, many of the biggest consumer technology companies are now moving into the smart home market. For example, Apple, which recently released its self-installed smart home ecosystem, called the Apple Home, traditionally doesn't move into a market until it's very mature and only when it can release a perfected product. Further, Google this fall launched the Google Home and its companion ecosystem, hoping to jump into the voice-activated smart home speaker market, which Amazon currently dominates with its Echo product line. 

Nicholas Shields, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the self-installed smart home that examines the demographics of the average smart home device owner and discuss why current smart home device owners are appealing to tech companies. The report also examines the plans of various tech giants in the smart home market and discuss their monetization strategies, and makes suggestions for how these companies can position themselves to make their products and devices more appealing to the mass market.

Here are some key takeaways from the report:

  • Tech companies primarily enter the market to enhance a core revenue stream or service, while device makers desire to collect data to improve their products and prevent costly recalls.

  • We forecast there will be $4.8 trillion in aggregate IoT investment between 2016 and 2021.

  • These companies are also seeking to create an early-mover advantage for themselves, where they gain an advantage by this head start on adoption.

  • Major barriers to mass market adoption that still must overcome include technological fragmentation and persistently high device prices.

In full, the report:

  • Details the market strategy of prominent tech companies and device makers, and analyzes why which ones are best poised to succeed once adoption ticks up.

  • Offers insight into current ownership through an exclusive survey from BI Intelligence and analyzes what demographics will drive adoption moving forward.

  • Explains in detail which companies are poised to succeed in the market in the coming years as adoption increases and mass market consumers begin to purchase smart home devices.

To get your copy of this invaluable guide to the IoT, choose one of these options:

  1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP

  2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of smart homes.

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