Samsung Electronics is entering the connected car market by buying Harman International Industries for $8bn (£6.4bn), calling the automotive electronics “a strategic priority”.
“Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics,” the company says in a statement.
Harman is a market leader in connected car solutions, with more than 30 million vehicles currently equipped with its connected car and audio systems, including embedded infotainment, telematics, connected safety and security. The statement says that approximately 65% of Harman’s $7.0 billion of reported sales during the 12 months ended September 30, 2016 are automotive-related, and its order backlog for this market at June 30, 2016 was approximately $24 billion.
“Although Samsung has been making approaches as a direct partner to car makers for many years, it has, to date, failed to make any traction beyond integration of its CE devices (mainly smartphones and watches), and sales of semiconductor chips and displays,” commented SBD’s Connected Car specialist Lee Colman on his company’s TelematicsNews.com website. “On the face of it, Harman provides Samsung with a firm entry point to the automotive market and the ability to build stronger partnerships.
“Harman was among the first to identify the trend towards commoditized infotainment, as well as the associated risks, from which it’s protected itself through a combination of innovation and acquisitions,” he continues. “It is now uniquely positioned to offer a holistic proposition of hardware, software, services, analytics, firmware updates and even cyber-security.”
Colman concludes by saying that, as a result of this positioning, SBD’s research shows Harman having a significant market share. According to SBD’s USA Head Unit Tracker, Harman currently supplies 26 brands and 35% of models in the USA with advanced infotainment systems. In the medium-term watch out for further acquisitions by Samsung to complement Harman’s infotainment capabilities with sensor/autonomy capabilities from elsewhere.