Samsung has announced it will buy Harman, the company behind many notorious audio brands such as Harman Kardon, JBL and AKG. The acquisition will be completed mid-2017 and will see $8 billion in cash from Samsung flow to Harman. This is the biggest bet from Samsung on the automotive industry and IoT – and the company’s biggest acquisition, too.
While Harman is widely known through its brands (Harman Kardon, JBL, AKG, Mark Levinson, Lexicon, Infinity, Revel), it is also one of the biggest players in the automotive industry: 65% of its revenue comes from the connected car segment with its audio, telemetrics, embedded infotainment, connected safety and security systems. The company struck deals with car makers such as Fiat Chrysler and General Motors valued at $24 billion.
Samsung claims “HARMAN perfectly complements Samsung in terms of technologies, products and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time. As a Tier 1 automotive supplier with deep customer relationships, strong brands, leading technology and a recognized portfolio of best-in-class products, HARMAN immediately establishes a strong foundation for Samsung to grow our automotive platform.”
The combination of Samsung’s expertise in “mobility, semiconductors, user experience, displays” and Harman’s “long-term relationships” with car makers can help the former “create significant growth opportunities”.
This is not to say Samsung has no interest in Harman’s consumer audio brands. The company plans to “deliver enhanced customer benefits and elevate user experiences across Samsung’s complete portfolio of consumer and professional products and systems.” We can expect Samsung’s future products (e.g. Samsung Galaxy S8) to feature Harman-branded audio, similarly to what happened with the JBL-made audio module for the Lenovo Moto Z.
Harman will operate as a standalone company, though I expect the two to establish ever-closer relations in the future. Harman’s well-known brands could benefit Samsung’s handset business and bring better results to compete with Apple, who acquired Beats Audio two and a half years ago. I hope this acquisition will not shake up the current consumer product line, so that we will continue to see the same offering and quality we’ve seen up until now.