Will the pact between Xiaomi and IKEA finally grow the smart home user base or further fuel the discussion on data security and privacy?

A new strategic partnership between Swedish furniture giant IKEA and Chinese technology upstart Xiaomi will have major implications for the smart home. And with the two companies experiencing significant headwinds in their respective industries, it also represents a lifeline for them both.

A Trojan Horse for Smart Home technology

Founded in 2010, Xiaomi is a Chinese technology company that has rapidly flourished into a multibillion-dollar concern. The company prides itself on its “ecosystem” strategy — selling not just smartphones but also a variety of gadgets and household products.

These range from simple pens to travel equipment to electric kick-scooters (where it has a manufacturing monopoly, Xiaomi = Ninebot = Segway) to robot vacuum cleaners to connected home products such as smart lights, speakers or TVs. But yes, their smartphones remain impressive for their ability to straddle quality design, cutting edge features and budget pricing.
I personally have been using the Xiaomi Piston in-ear headphones for years and could not find a better value for money on the market.

Xiaomi began expanding into Western Europe last year, opening up a shopfront or two that looked uncannily similar to your regular Apple Retail Store.

But their latest announcement shows much grander ambitions for growth and market share:

The company is entering into a strategic partnership with IKEA - probably the most obvious partnership that many have been waiting for years. The full range of smart lighting products will be connected to Xiaomi’s internet of things platform starting this December in China, with more markets to follow. The news is not inconsequential; it’s the first time that IKEA has partnered with a Chinese technology company.

According to figures released by the company (as of September 2018), the Xiaomi IoT platform has connected over 132 million smart devices (not including mobile phones, tablets and laptops), and has more than 20 million daily active devices in at least 200 countries.

From December 2018 the smart lighting product range from IKEA will be connected to the Xiaomi IoT platform and can be controlled by Xiaomi products, including their voice assistants and home apps. It’s also possible to pair the lights with other Xiaomi IoT smart devices such as sensors and electrical appliances for “smart scene management”.

If successful, the natural next step would be for IKEA to begin showcasing Xiaomi smart home products in their store showrooms. It’s a tantalizing scenario for mass distribution.

Everyone buys furniture from IKEA whether they’re students or seniors, rich or poor. Ikea is one of the few brands that can count almost anyone as their own target group — independent of all sociodemographic criteria. When you hear the words BILLY or PAX, you instantly think about bookshelves and cabinets. Their products are everywhere because this is a trusted brand where every target customer spends their hard-earned money.

With IKEA show homes for different sizes and uses, Xiaomi has the opportunity to install a multitude of smart home products; customers can learn how it feels to use them in a facsimile of a bedroom or a kitchen or a bathroom. It’s a perfect testing environment, a Trojan Horse to expose Xiaomi to the broadest possible target groups. So far, one of the main reasons why smart home products are still prevalent only with technology-interested users and real nerds, is that you have to experience them to recognize their value. Exactly this experience can offer Ikea in a like-home environment.

And the timing of the pact is vital to both companies. This same month, IKEA’s profits have fallen by 40% as they invest in improving their online business and test smaller city-centre stores. As for Xiaomi, their phone sales plunged from 70 million to 41 million in 2016, knocking it from first to fifth in Chinese market share. Analysts pointed to their lack of a physical retail network as a cause.

Design, technology and price are one thing, but what about data security and privacy?

But what are the implications for data privacy with this partnership? Will IKEA customers be comfortable or happy that information about smart home usage could be filtering through China?

There will be several possible reactions. One group of customers won’t be aware at all. A second group will be aware of the implications, but they won’t care. A third group will be more reflective and hesitant, already being alert to the topic. Which group do you belong to?

The smart home, and by extension broader society, is increasingly caught in a dilemma between increased convenience versus personal privacy. And with IKEA joining hands with Xiaomi, the pressure to choose just got ratcheted up a notch.

Illegitimate child of Business & Technology, adopted by Strategy & Innovation, raised by Leadership & Purpose. Always open. Always social. VIEWS ARE MY OWN

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