IoT Market Dynamics: An Analysis of Device Sales, Security and Privacy Signals, and their Interactions

We explore the relationship between the Security and Privacy (S&P) of IoT devices and their sales, considering the S&P signals in the context of these sales. We obtained expert S&P ratings of IoT devices from a European consumer association and the corresponding sales data from a leading Dutch online store. We complemented this with additional information like user ratings, the number of reviews and update support duration from two Dutch online stores. Our regression model shows that, holding other variables constant, a one-standard-deviation increase in S&P ratings corresponds to a noteworthy 56% boost in sales. Crucially, we observe a possible correlation between price and demand for S&P; at lower prices, the sales of IoT devices are directly proportional to the S&P rating, but this relationship diminishes as price increases. Further, we find that the presence of update support duration information, intended as a security signal, corresponds to higher S&P ratings and, all else being constant, also corresponds to a 69% increase in sales. While the exact causal mechanisms for the boost in sales remain unclear, our findings suggest positive incentives might be at play for IoT devices offering S&P at affordable prices and presenting relevant S&P information at the point of purchase.