Samsung Electronics is buying auto infotainment provider Harman International Industries for $8 billion. Samsung is the world’s second largest technology company by most measures. Harman is the industry’s biggest provider of connected car and infotainment solutions.
With the purchase of Harman, Samsung is looking for a bigger role in the automotive sector. While sales growth for cars themselves is modest compared with sales of smartphones or tablets, the ramp-up in cars built with infotainment, driver assists, and telematics will be significant.
Samsung plans to be a player, possibly the player, in the Internet of Things. (Apple might disagree.) Its refrigerators, dishwashers, TVs and soundbars would have internet connections. We’re not just talking about refrigerators good for 20 years with smart tablets in the front panel that may be dated in 24 months, either. The Samsung SmartThings hub may be the de facto standard for controlling disparate protocols (Zigbgee, Z-Wave) and brands for lights, dimmers, thermostats, moisture sensors, door locks, and alarms. Samsung is the leading producer of smartphones and TVs.
Broadly, cars are big things that connect to the Internet. Today, some do connect, although some of those are via occasionally connected smartphones; eventually, as the price of 4G telematics hardware falls to $100 per car, it will be near universal.
Harman is the industry’s driver (so to speak) in helping automakers decide on touchscreens, cockpit controllers, and gesture versus voice versus touchpads; some have several methods implemented, and a couple, such as BMW, have them all. Harman’s auto business lines include:
Samsung is not alone in getting into the connected car business. Mobile (as in mobile phone) chipmaker Qualcomm in October bought NXP semiconductors for $39 billion, giving it entree to the world of chips for connected cars. SoftBank bought ARM Holdings over the summer for $32 billion; ARM focuses on mobile devices. In 2015, Avago Technologies bought Broadcom, chipmaker for iPhones, for $37 billion.
Separately, Apple and Google are working on developing self-driving car technology. Apple appears to be backing off from initial plans to build and sell a car of its own. It may be that the back end effort of manufacturing a car is no easy task. Apple reportedly sought to use BMW and Mercedes-Benz as contract manufacturers and was turned down; it may be hard to have a relationship when everyone involved is a control freak.
Because Harman is so big, having been on its own buying spree over the years, the same umbrella company can offer different brands to different automakers, giving premium automakers (especially) a brand that is all their own. Harman brands currently include Becker, Crown Audio, dbx, Harman Kardon, Infinity, JBL / JBL Professional , Lexicon, Mark Levinson, Martin Professional, and Revel.
If a supplier such as Harman-Samsung can continue to drive prices down, buyers may once again look to install LCD panels in backs seats. Right now, rear entertainment sales have softened, because you can buy two iPads for the price of a rear seat DVD player.