Samsung buys Harman to take on the Apple Car

Samsung buys a competitive advantage

Samsung may be down, but it’s not out – it seems deeply committed to the mobile industry and this morning announced a new deal to take on Cupertino: an $8 billion purchase of Harman International.

Drive by

If this deal goes through it will be the biggest acquisition Samsung’s made. It’s biggest was apparently an $800 million purchase of AST. The investment means it has bought itself the chance to become a big cheese in future automotive systems, a direct challenge to Apple’s CarPlay and to Google Auto.

CarPlay is already in use by over 40 automakers with numerous vehicles now being made available with it built-in. Apple’s worked hard to achieve such scale, but now it looks like Samsung has bought it in one -- Harman reached major deals with Fiat Chrysler and General Motors, has $24 billion of orders booked and its equipment is already in use in 30 million cars.

The plan

Samsung says Harman’s experience “designing and integrating sophisticated in-vehicle technologies, as well as its long-term relationships with most of the world’s largest automakers,” will create significant growth opportunities for the combined business. Samsung hopes to bring its knowledge, experience and distribution channels to the deal.

It seems pretty clear that Samsung is now as keen on getting into the connected car segment as Apple has reportedly been. It even created an automotive business division last year, and recently invested in Chinese automaker, BYD.

"The vehicle of tomorrow will be transformed by smart technology and connectivity in the same way that simple feature phones have become sophisticated smart devices over the past decade," Young Sohn, Samsung's president and chief strategy officer, said in a statement.

Android hurt too

Will it be good news for Google’s in-car Android plans? I don’t think so. I imagine Samsung will use connected vehicles as an inflection point through which to increase the presence of its own open source OS, Tizen. It knows it must create its own unique identity if it wants to build a sustainable position in mobile and it doesn’t have that with Android, as everyone offers the same thing and competes on price.

Apple’s uncertainty

It’s unclear what kind of an impact the move will have on Apple. Apple and Harman have an extensive history, way back at the turn of the century Apple CDO, Jony Ive, designed the iSub subwoofer system to accompany the Harman Kardon Sound Sticks. I seem to recall these were designed on the back of a napkin at a meeting, but this may well be apocryphal. Apple may want to consider that by entering the automotive market with CarPlay and Apple Car it may have created a competitor from an ally.

Looking forward

Apple’s continued attempt to expand across multiple industries means it is creating competition in every space in which it operates. This could be great for consumers who should benefit from a range of cutting edge product designs, but Apple won’t win in every sector. I presume that Tim Cook’s company right now is pushing at every boundary in its attempt to identify those it can shift.

Meanwhile, it looks like Apple and Samsung are taking their competition to the streets, quite literally.

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Copyright © 2016 IDG Communications, Inc.

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