Following in Google’s footsteps, Samsung Electronics is buying into the home automation market. The electronics giant is acquiring SmartThings, an open platform for the smart home and consumer Internet of Things.
Unlike Google’s move into smart homes with the $3.2 billion Nest Labs acquisition, which is aimed at rolling out new products for the "smart home," SmartThings works behind the scenes. The platform supports an open ecosystem of developers that are hard at work on new types of connected devices and apps in the cloud that aim to change how everyday objects interface. Financial terms of the SmartThings deal were not disclosed.
“Connected devices have long been strategically important to Samsung and . . . we want to improve the convenience and services in people’s lives by giving their devices and appliances a voice so they can interact more easily with them,” said David Eun, head of Samsung’s Open Innovation Center (OIC).
Betting on Billions
SmartThings was founded in 2012 with a mission to give people power to monitor, control, and automate their homes through a single mobile app from anywhere. Currently, the open platform supports over 1,000 devices and 8,000 apps. SmartThings will keep operating independently with the leadership of founder and CEO Alex Hawkinson under the OIC umbrella. The OIC is responsible for bringing software and services innovation to Samsung Electronics.
“As an open, standards-agnostic platform for the Internet of Things, our vision has always been to innovate, build, and make the world smarter, together,” said Hawkinson. “With Samsung behind us, we will be able to attract more device makers and developers to unlock the limitless possibilities of the consumer Internet of Things.”
The opportunity is upon us. According to a new market report published by Transparency Market Research “Home Automation Market -- Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2013-2019,” the global home automation market is set to reach $16.4 billion by 2019.
Two Different Approaches
We caught up with Roger Entner, principal analyst at Recon Analytics, to get his take on Samsung’s buy. He told us the company is positioning itself for what comes next with a buy versus build approach to entering the Internet of Things market.
“It makes a lot of sense for large companies like Google and Samsung to catch up with emerging trends in areas they haven’t focused as much time on as they should have. It’s pretty natural for big companies not to make bets on new technologies in the beginning because the market is so small that it’s not worth it,” Entner said.
“It’s easier for someone else to figure out what sticks and what doesn’t stick when you throw it against the wall -- and buy what sticks. It’s easier to let a dozen startups try and a dozen fail and pick the winner rather than being one of the 11 that lost.”
Google is taking a different approach. Rather than buying a platform, it bought a company with a mission to reinvent “unloved but important” devices in the home, such as thermostats and smoke alarms. Google will work to take the company to the next level with hardware and software investments into Nest that Nest CEO Tony Fadell said will “help save money and keep people safe in their homes.”