The head of the home network manufacturer wants to restructure his company.
(Photo: Devolo/Ronald Koehler)
Dusseldorf Energy transition, climate protection and working from home: there are many reasons why devices for the connected home are currently booming. The heating should know when you are at home, the electricity meter should know when you need electricity and for what. This should save energy and increase efficiency.
The Aachen-based electronics company Devolo has also been producing devices for the so-called smart home for seven years, which users can use to operate the light switch automatically or turn the heating on and off. Everything is controlled via an app on the smartphone.
But instead of benefiting from the demand, founder and boss Heiko Harbers now has to save his company. “We had increasing inventory last year but less sales,” says Harbers. The reasons are similar to those of numerous company crises in the past two years: the corona pandemic and the lack of chips.
The manufacturer filed for bankruptcy a few days ago and started protective shield proceedings. With this variant of insolvency law, the responsibility remains with the managing directors and the company can be restructured on their own responsibility. In addition, the company must not yet be insolvent when registering this procedure. “We weren’t there yet, but it was a prospect,” says owner Harbers.
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Devolo is known for its Powerline adapters. In 2003, the “dLAN” adapter came onto the market, which can be used to have a better WiFi network in the home. The data is transmitted via the existing power grid. To date, Devolo has sold around 40 million units of this product alone.
Since Harbers also wants to position himself in the smart home market, he has already had to invest a lot and has a lot of competition. The home network producer invested a seven-figure sum in this division at the time.
At that time, profits shrank by 83 percent and sales by 14 million euros to 117 million. In addition, large providers such as Bosch and Innogy have also established themselves on the market with smart home applications.
Too many goods, too little demand
However, what now made the protective shield at Devolo necessary were problems in world trade. This alone prevented Harbers from realizing several millions in project sales with industrial companies. “At the end of 2020, the problem of component availability started,” explains the boss. “There are simply very long delivery times when you want to manufacture products.”
So Devolo started ordering the products it needed 13 months in advance. However, with the assumption, says Harbers, that the goods will also be sold. But then the lockdown in retail got in the way of the company.
In Germany in particular, Devolo is heavily dependent on sales in brick-and-mortar stores, such as Media Markt and Saturn. So the goods piled up in the warehouse, because producers in Asia also manufactured devices in advance and sent them to the Devolo warehouse.
Amanuel Dag also noticed the problems with the sale. He is the head of the German-speaking area of the market research institute Contextworld, which analyzes the industry of technology providers and distributors. Devolo is also one of Contextworld’s customers.
However, the smart home market is developing very promisingly
“At the beginning of 2020, a lot of people were ordering hardware, including smart home devices, so there was a lot of production,” says Dag. At the beginning of 2021, it was difficult for many electronics manufacturers to coordinate that a lot of goods had been delivered but there was less demand again. “Then the financial resources can quickly be exhausted.”
But the business with smart home applications, emphasizes Dag, is developing very promisingly. “Especially since working from home has become established, many people have been upgrading their equipment.” Despite the liquidity bottlenecks, Devolo boss Harbers remains optimistic. “Now we have time to restructure the company, position it better and restore liquidity.”
A survey by the Bitkom industry association on the subject of intelligent homes and smart homes in 2021 with more than 1,200 people across Germany harbors hope. 40 percent stated that they use smart home applications. In 2018 it was 26 percent. Almost 70 percent were of the opinion that smart home devices will be found in every household in a few years.
More: Half-hearted start: energy companies criticize the German smart meter strategy