Here’s a fun fact for your Friday: Did you know that Scandinavia – famous for its socialist leanings – is actually home to one of the largest privately held companies in the world? It’s a massive global conglomerate with 423 stores across 52 countries in North America, Asia and Australia, in addition to Europe. And in 2018, it brought in roughly $45 billion in revenues.
If you guessed that I’m talking about IKEA – you’d be right.
IKEA is such a major player worldwide that, even though we can’t buy shares, it’s still worth paying attention when the company invests heavily in a particular market. And that’s exactly what it’s doing now.
This month, IKEA announced “the biggest new business we are establishing since the introduction of Children’s IKEA.”
If this new venture compares to Children’s IKEA, well, that’s a pretty sizable department in a pretty sizable store. And this time, IKEA is investing in building out its lineup of “Home Smart” products.
Below are just two examples from its new SYMFONISK line. The lamp and shelf are both also wireless speakers, which you control with an app on your smartphone.
That might sound straightforward enough, and that’s the intention: To be appealing, a smart device has to offer ease and convenience.
But these products are part of a much bigger trend, one that we certainly have our eye on at Growth Investor: the “Internet of Things” (IoT). Now that practically all of us have smartphones, tablets, or some kind of mobile device, they can be remote controls for almost anything. And companies like Amazon (AMZN), Google (GOOGL) – and now IKEA – see the chance to cash in.
Now, if you want to sell IoT products, they can’t just sound “sound cool”…they have to actually be useful. A smart refrigerator sounds fanciful, for example. But if you’re away from home and aren’t sure what you might need to pick up from the grocery store, being able to check that on your smartphone can save you a lot of trouble.
IKEA, though, is keeping it pretty simple, which has always been its strength.
Another example is their new “smart blinds.” They don’t have cords, which are a big safety risk for many homes. And since you can control them from a distance, you can install them on windows you can’t physically reach.
IKEA also has a range of smart lightbulbs and other smart speakers, which it’s slowly been building out since 2012. Now that the company can easily offer products that are compatible with Apple (AAPL) HomeKit, Amazon’s Alexa, and Google Assistant – all the most popular voice-command tools – the sky is the limit.
Now, for a company that’s better known for “assemble yourself” furniture and Swedish meatballs, why would smart devices be a priority?
Well, the Internet of Things is the future. Smart doorbells, smart security cameras, and smart appliances are popping up everywhere. And the trend’s just getting started:
Navigant Research expects smart home products to yield $3.2 billion in global annual revenues in 2019. But in 2028, we’re looking at $14.3 billion annually. In other words, smart-home sales are projected to grow nearly five times in just nine years!
So, clearly, IKEA now wants its slice of that pie. And that’s an easy goal for this retailer: IKEA had almost a billion customers in their stores last year – plus another 2.5 billion online visitors!
But This Goes WAY Beyond IKEA Smart Lamps
One day, entire houses will be smart homes. And from there, we’re looking at entire “smart cities,” with networks for lighting, parking, traffic and waste management, citizen engagement, safety and security – all of them communicating by internet.
It’ll be like how today, you can often get a smartphone app for your home security system and make sure everything’s fine at home while you’re at the beach…but on a much bigger scale.
As an investor, I think we ought to be looking at the 5G wireless buildout as the way to profit from all this.
After all, current networks aren’t quite fast and reliable enough to handle it…not when applications like healthcare and utilities are thrown into the mix.
And if one day, we want self-driving cars to transport us safely – free from road rage and human error – then we will need ultrafast 5G speeds to make that work.
Essentially, whoever controls 5G is anticipated to control the internet several years from now. (Including this new Internet of Things.) So, the long-term investment potential is huge.
Instead of companies like IKEA or even Apple that need 5G networks to sell the corresponding products…
I think more money can be made in the one company that’s involved in the creation of 5G. That will be the stock that lets us cash in on the whole meteoric rise of 5G.
In Growth Investor, we own a little-known electronics company – that is helping some high-profile clients move to 5G. Its customers include the top 25 telecoms…the top 25 tech companies…and 78 of the Fortune 100 companies. I’ve got full details for subscribers in my #1 Investment for the Coming 5G Revolution special report.
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