Samsung buys home automation platform SmartThings in Internet of Things push

Samsung Electronics confirmed it purchased home automation platform SmartThings (a 2014 Fierce 15 winner), which Samsung said will enable the startup to expand its platform and work with more partners and devices. The deal represents a significant new investment by Samsung into the Internet of Things market.

Rumors of the deal first stared swirling last month after TechCrunch reported that Samsung was eyeing SmartThings for around $200 million. The companies did not say how much the deal is worth but Re/code reported that it was for around $200 million.

SmartThings will continue to operate independently under founder and CEO Alex Hawkinson, and will operate under the umbrella of Samsung's Open Innovation Center (OIC), which is responsible for bringing software and services innovation to the parent electronics conglomerate. SmartThings will move its headquarters from Washington, D.C., to Palo Alto, Calif.

Founded in 2012, SmartThings lets people monitor, control, and automate their homes from wherever they are through a single mobile app. Currently, the platform supports more than 1,000 devices and 8,000 apps created by its community of device makers and developers. SmartThings has around 60 employees and $15.5 million in venture funding from the likes of Greylock Partners and Highland Capital.

The company has more than 1,000 certified device types in its catalog--ranging from remote door locks to motion sensors--and also hundreds of "use cases" in its app store. SmartThings' platform lets developers create apps, or "uses cases," such as having a connected speaker start playing a user's favorite song when they get home from work or getting a phone an alert when the mail arrives (thanks to a sensor in the mailbox). 

SmartThings had made the bulk of its money through the sale of its own home automation products, but was rapidly transitioning to a platform strategy where it takes a cut of the revenues from the connected services and devices that are sold by third parties through its store.

"It has always been our goal to create a totally open smart home platform that brings together third-party developers, device makers and consumers," Hawkinson wrote in a company blog post. "We're thrilled that Samsung fully supports this vision."

Hawkinson wrote that "there is an enormous opportunity to leverage Samsung's global scale to help us realize our long-term vision." He said the purchase means SmartThings will be able to "support all of the leading smartphone vendors, devices, and applications; expand our base of developers and enhance the tools and programs that they rely on; and help many more people around the world easily control and monitor their homes using SmartThings."

David Eun, who runs the OIC for Samsung, told Re/code that Samsung "has been committed to smart homes and connected devices and has tried to paint this vision for a while. But since consumers have lots of different devices, the trend is really toward open, and our approach is to be open and protocol agnostic."

Analysys Mason analyst Cesar Bachelet said Samsung will gain "a smart home ecosystem linking two of its previously separate core businesses, consumer electronics (smartphones, tablets TVs) and domestic appliances (refrigerators, washing machines, cookers, vacuum cleaners, air conditioning units)."

He also said the deal "places Samsung in a strong position within the emerging smart home market: its competitors Apple (NASDAQ: AAPL) and Google lack the appliances in the home that Samsung has, while domestic rival LG, although it also supplies domestic appliances as well as consumer electronics devices, lacks a strong presence in the smartphone and tablet markets." LG was the No. 5 smartphone player in the world in the second quarter, according to research firm IDC; Samsung was No. 1.

Despite the purchase, this isn't Samsung's only foray into the Internet of Things market. The company recently banded together with Intel, Broadcom, Atmel, Dell and Wind to create a new group, the Open Interconnect Consortium (OIC), aimed at coming up with an open-source standard to connect devices to each other across operating systems and wireless protocols.

Samsung also recently teamed with Google's (NASDAQ: GOOG) Nest Labs, ARM Holdings and others to create a new mesh wireless standard for the IoT market called Thread.

For more:
- see this release
- see this SmartThings blog post
- see this Re/code article
- see this GigaOM article

Related Articles:
AT&T exec: IoT standards groups need to work together
Rumor Mill: Samsung eyeing home automation platform SmartThings in $200M deal
SmartThings - Internet of Things - wireless startups - Fierce 15 2014
Intel, Qualcomm execs both say IoT will benefit from one standard
Intel, Samsung and others forge open-source Internet of Things connectivity group
Microsoft joins Qualcomm in AllSeen Alliance's Internet of Things push

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