The Internet of Big Things

Investors in Dixons Retail, a U.K. consumer electronics retailer, and Carphone Warehouse Group, the oddly named chain of mobile phone stores, will rubber stamp a merger of the two at a shareholder meetings today. The alliance is an interesting bet on what might be called: the Internet of Big Things.

The internet of things is when your fridge keeps track of your milk supplies, or you tell your oven that you’re headed home and it’s time to heat up that casserole, or your library lamp senses that there’s no one in the room and it should turn itself and the stereo off. Regardless of whether you view that as utopian or dystopian, it’s coming.

For Dixons, the prospect of lots of clever new gizmos that talk to the Internet and each other spells profit. For Carphone Warehouse, the mobile phone is the likely programming tool most people will use to control all that shiny new technology. Hence the nuptials.

As for other high-street retailers, though, the power of the Internet is potentially disruptive for these two companies; it’s easier for lazy shoppers to buy their gadgets online and have them delivered. So the best opportunity for Dixons is in bigger smart appliances - fridges, cookers or 60-inch televisions - which people are at least more likely to want to discuss with a salesperson, rather than a website. And there’s a fair chance people will prefer to learn about the connected home in a store, where they can touch and feel the appliances, rather than on a computer screen.

Moreover, just as gadget shops were able to boost profits by selling extended warranties, Dixons should be able to sell the security software you need to keep your cooker from getting hacked by arsonists - which is the downside of the coming internet of things.

BY Mark Gilbert, Bloomberg View columnist