Author(s): Raghu Gopal
On Monday, Samsung announced plans to acquire Harman, a company specialising in hardware, software and services for connected cars, in a deal worth $8 billion. Cars have emerged as a key battleground for companies such as Apple, Google and Samsung as the technology and automotive industries converge.
This is one of several auto-related investments the company has made in recent years. In 2015, Samsung invested in start-up Vinli, which is developing an app ecosystem for cars. Earlier in 2016, Samsung launched Samsung Connect Auto, which offers in-car services, such as Wi-Fi to keep drivers online, and also provides real-time alerts to improve driving habits and enhance fuel efficiency.
Historically Samsung has favoured organic growth, developing new technologies in-house, but there has been a noticeable shift in recent years, as the company made a series of acquisitions to quickly scale up its capabilities in emerging technologies. This includes investments in LoopPay for mobile payments, mSpot for cloud-based services, Viv Labs for artificial intelligence, and SmartThings for the smart home.
Harman is best-known to consumers for making car audio systems under brands such as Harman Kardon and JBL, but its main appeal to Samsung is Harman's connected car business, which supplies telematics and on-board entertainment systems to automakers. Harman is the market leader in connected car solutions, with more than 30 million vehicles currently equipped with its products.
The deal would give Samsung a significant presence in automotive technology with top clients. Harman's existing customers include car makers Audi, BMW, Mercedes-Benz, Toyota and Volkswagen. Although Samsung doesn't plan to make cars itself, the company recognizes the broader shift in the automotive industry where all cars are getting connected and some are going driverless.
Harman will provide Samsung a new outlet for many of its products, giving it leverage in the auto domain.