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Where's Samsung?

by Roger Lanctot | 11月 06, 2015

Two questions arise every year about this time in the automotive industry. Will Apple buy TomTom? Where is Samsung?

Apple and TomTom appear to be content with their current relationship, so I don’t anticipate any change there. In fact, some recent strategic wins may infuse new life into the perennial runner up to HERE in the automotive navigation and mapping business. (Watch this space.)

As for the second question, the Automotive News is firing up speculation (sparked by a Thomson Reuters analysis of Samsung patent filings) over Samsung making another run at the automotive business.

http://tinyurl.com/oe53lfn - “Samsung, a Smartphone Giant, Readies a Belated Push into Automotive Technology”

It seems so obvious. Apple’s making a car. Google has made a car. It’s only a matter of time before Samsung, Microsoft, Huawei, Alibaba, and Tencent all start making cars, right?

Not really. Samsung already tried and failed to make a go of automobiles, selling off the program to Renault years ago.  It’s important to understand motivation. It’s like my brother always tells me when watching basketball or soccer: “Watch the hips.” Don’t fall for the head fake.

Apple wants to sell hardware. Google wants to sell advertising. Alibaba and Tencent want to capture transactions. Samsung is a massive hardware and parts distributor.

The primary speculation around Samsung involves an acquisition with the Automotive News nominating semiconductor supplier Renesas as the most likely candidate. But this would simply dump Samsung into the same category with Intel which has been trying to buy its way into the automotive business with mixed success.

The reality is that the automotive business has changed and is changing. Like many other industries, the underlying value of a vehicle increasingly derives from the software, services and content associated with that vehicle.

Buying Renesas will only pile more hardware into Samsung’s kit bag of automotive solutions without advancing its agenda of establishing a leverage-able position in the market. One potential motivation might be to push Tizen on post-acquisition Renesas customers in the same way that nVidia is pushing Android and Intel is pushing GenIVI – but such a strategy is not a clear winner. Besides, Samsung has been working closely with Intel on Tizen. (Samsung recently launched its first Tizen smartphones.)

What is more likely is that Samsung will have to be content with its recently touted relationship with Seat for a smartphone integration offering as part of the Seat Connect system shared with Volkswagen. With Samsung’s help, Seat has enhanced the integration with gesture and voice recognition, wearable (smartwatch) compatibility, a configurable driver profile, trip reminders and text to speech.

Details: http://www.seat.com/carworlds/toledo/connect.html

Clever though Seat Connect may be, a bigger play from Samsung will have to wait. There are no easy or inexpensive paths to dominance in the automotive industry and pointless plunges into profitless failure are more common.  (Telmap anyone?  Cisco?)

The companies that have burrowed deeply into the industry and piled up profitable positions have done so the long, hard way working on standards, solving problems and delivering and standing behind reliable products. Samsung may be suffering from Apple and Google envy, but better to tolerate this envy than do something foolish.

Apple and Google will have and have had their own stumbles. Maybe Samsung could buy Nuance (last year’s speculation). That actually might make more sense, but Nuance’s perception of its own value ($10B?) may make such an acquisition prohibitive.

But the industry abhors a vacuum and there is a perceived vacuum within the automotive industry – a big hole that Samsung likely believes it ought to be occupying. The price is wrong, but the value proposition is right for server-based service and content delivery via voice (Nuance). Can Samsung tolerate a vacuum? Apple and Google couldn’t.

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