Samsung on Monday announced that it wants to buy Harman for $8 billion in an all-cash transaction. The name must sound familiar, as you might already own some of Harman’s audio products. But that’s not why Samsung is going after the company. Samsung is interested in the bigger picture, which includes Harman’s advanced infotainment technology that may find itself at the core of a future Samsung smart car of the future.
No, Samsung isn’t building a car, or not one that we know of. But Samsung is certainly betting big of the future of connected vehicles that will make use of a bunch of components that are normally seen in smarter devices like a computer or a phone. And it’s not just the hardware part. Smart cars will feature all sorts of features and smart functions. And that’s where Harman’s expertise comes in.
“Upon closing, the transaction will immediately give Samsung a significant presence in the large and rapidly growing market for connected technologies, particularly automotive electronics, which has been a strategic priority for Samsung, and is expected to grow to more than $100 billion by 2025,” the company said.
Samsung is looking for the next cash cow now that its mobile division has taken a nasty PR beating, and Harman might deliver it.
The “market leader in connected car solutions,” has more than 30 million vehicles equipped with its car and audio systems, Samsung says. 65% of Harman’s $7 billion in sales for the year ending on September 30th, 2016 are automotive-related. Furthermore, its order backlog was at $24 billion for the car market on June 30th, 2016.
“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,” President and Chief Strategy Officer of Samsung Electronics Young Sohn said. “We see substantial long-term growth opportunities in the auto technology market as demand for Samsung’s specialized electronic components and solutions continues to grow. Working together, we are confident that HARMAN can become a new kind of Tier 1 provider to the OEMs by delivering end-to-end solutions across the connected ecosystem.”
But let’s not forget that Harman runs some of the best audio systems out there, including JBL, Harman Kardon, Mark Levinson, AKG, Lexicon, Infinity, and Revel. That means we can expect even better audio in Samsung’s upcoming line of devices, including its high-end smartphones. “All of these brands will greatly enhance the competitiveness of Samsung’s mobile, display, virtual reality and wearable products to deliver a fully differentiated audio and visual experience for customers,” Samsung said.
The deal is expected to close in mid-2017, at which point Harman will continue to operate as an independent entity, run by the same Dinesh Paliwal and Harman’s current management team.