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Why Samsung is investing $8B in connected cars — and what it means for you

Peter Krass's picture

by Peter Krass on 11/15/2016
Blog Category: advanced-technologies

Samsung Electronics yesterday said it would spend $8 billion to acquire Harman Industries, a Stamford, Conn.-based maker of connected products for automakers, consumers and businesses.

Why is Samsung, the world’s leading seller of smartphones with an estimated 20 percent market share by units, getting into the connected-car business? And what might this mean for you and other solution providers?

Answering the first question is pretty straightforward. Samsung means to become a major presence in auto and other connected Internet of Things (IoT) technologies. “Harman immediately establishes a strong foundation for Samsung to grow our automotive platform,” said Samsung CEO Oh-Hyun Kwon.

You may know that Samsung already sells some connected consumer devices, including “smart” refrigerators and washing machines. It also offers IoT products for business, including smart HVAC (heating, ventilation, air conditioning) systems for office buildings. Don’t forget, Samsung is also scrambling to recover from the mess with its combustible Galaxy Note 7 smartphones.

Harman’s view of the connected car

For Harman, cars are not just vehicles, they’re “your most powerful device”

 As for Harman, it’s a major auto-industry player. The company says about 65 percent of its sales coming from auto products. With Harman’s total revenue for the 12 months ended Sept. 30 at $7 billion, 65 percent of that works out to $4.55 billion. That’s a big business.

To earn that, Harman offers connected-car products include embedded infotainment, telematics, what’s known as “connected safety,” and security systems. The company has also partnered with several auto-industry leaders, including Audi, BMW, Chrysler, Jeep, Mercedes-Benz and Toyota.

Solution-Provider Opportunity?

So what’s it all mean for solution providers? Well, if you’re already in the auto business, you know that IoT is where the market is heading. But if you’re not already offering auto products, this could be a new growth opportunity to explore.

Not convinced? Consider these few points:

> Nearly 61 million connected cars will be built worldwide in 2020, up from 12.4 million this year, predicts Gartner. The industry watcher also expects future connected-car applications to drive a 150 percent increase in demand for contextual information, such as image detection and geolocation, through 2020.

> BMW, Intel and Mobileye are collaborating to bring solutions for autonomous vehicles to market by 2021. Their announcement, made this past summer, calls for truly advanced solutions, enabling not just hands-off driving, but also “eyes off” and even “mind off.”

> Connected-car features are already here for consumers. Lexus, BMW, Toyota are among those offering cars with self-parking systems. Automatic braking systems are now available from Subaru, Mazda, Chrysler and others. And lane-warning and lane-keeping systems are offered by brands that include Fiat, Kia and Volvo.

More is coming — much, much more. Connected cars is a fast-growing, multi-billion-dollar industry. If getting into the market is worth $8 billion to Samsung, what might it be worth to you?

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