Smart Home M&As
While Samsung Electronics is activating its growth drive for the smart home business based on the Internet of Things (IoT), Google and Apple are becoming new rising stars in this industry. A new market paradigm for smart electronics will be formed accordingly.
Samsung Electronics is participating in a series of IoT-related consortia, and trying to acquire smart home venture companies. As global IT companies including Google and Apple have strong ambitions to enter the smart home market based on their specialties in the smart phone businesses, Samsung is accelerating to not lose its market leadership.
According to the foreign press on July 20, Samsung Electronics is trying to buy SmartThings, a venture company headquartered in Washington D.C., for US$200 million. Samsung Electronics has not considered a major M&A in quite a while. But Kwon Oh-hyun, vice chairman of Samsung Electronics, said at Analyst Day held last November “We will be more active in M&As from now on.” Samsung Electronics has been passive in acquiring other companies. The fact that they are now targeting a smart home company draws attention from many.
Samsung Electronics plans to become “the number one in the home appliance market worldwide by 2015.” Unlike the smart phone market, the home appliance market has stagnated, and it is very hard to change market rankings due to a long product cycle. Accordingly, Yoon Boo-geun, CEO of Samsung Electronics Consumer Electronics (CE), has emphasized, “We will change the paradigm of the home appliance market through destructive innovations.” The best example is the “smart home.”
Samsung Electronics tested smart home technologies at CES 2014 held in Las Vegas last January. Last April, Samsung commercialized smart home products in 11 countries worldwide. Competitors are drooling over the smart home idea as well.
Google, which dominated the mobile market through its Android operating system (OS), is now targeting smart home businesses. Google bought Nest at US$3.2 billion last January. Nest is known to have smart home-related technologies as they commercialized an automatic temperature control system and smoke detection equipment.
As Nest acquired Dropcam, a home CCTV manufacturer, at US$555 million (550 billion won) last month, Google now can expand their businesses to home security, one of the key services in the smart home business.
Apple introduced HomeKit, a smart home platform, at the Worldwide Developers Conference (WWDC) held last June. Partners of HomeKit include Philips, OSRAM, iHome, Haier, SkyBell, August Smart Lock, Kwikset Smart Key, Broadcom, Netatmo, and Honeywell. Honeywell already developed a digital automatic temperature control system based on HomeKit.
Temporary alliances to create IoT standard technology, which is the foundation of smart home and wearable devices, are very active as well.
Samsung Electronics will establish an Open Interconnect Consortium (OIC) with Intel, Dell, Broadcom, and Wind River this coming September. Samsung also decided to participate in the Thread Croup together with Google’s Nest, ARM, Freescale, and Silicon Labs.